Rents Not Covering Mortgage Payments - Posted by Mike

import · June 17, 2006, 10:25am

Posted by DP (ON) on June 19, 2006 at 20:52:57:

With no credit? Or just out of bankruptcy?

import · June 17, 2006, 10:25am

Posted by Mike on June 17, 2006 at 10:25:29:

Hi,

How are you guys dealing with the high payments that people have gotten themselves into?

Alot of these houses have 80/20 loans with no equity to speak of.

Payments are roughly 1700-2100 on a $250,000 house

These houses are only getting 1400-1500 max.

How best to do deals with this scenario?

Thanks

Mike

import · June 19, 2006, 2:36pm

Re: Rents Not Covering Mortgage Payments - Posted by Russ Sims

Posted by Russ Sims on June 19, 2006 at 14:36:55:

Ask the seller if they’d be willing to refinance to get the payments down. Hook them up with a lender that can offer an option ARM loan. The payments should be more in line with what you can fetch for rent, if not a little lower. Take over these payments via subject to and lease/option out to a tenant/buyer.

It’s kind of funny. We did this once with a homeowner who called me from his lender’s office to tell me about the loans he qualified for. He gave me 3 different loan programs to choose from. I selected the option ARM, the seller secured the loan and I took over the home under a subject-to contract. I re-sold via lease/option and got a $170 cash flow every month.

It’s worth suggesting this approach when you encounter these scenarios.

import · June 18, 2006, 5:39am

Re: Rents Not Covering Mortgage Payments - Posted by Frank Chin

Posted by Frank Chin on June 18, 2006 at 05:39:45:

Mike:

You’re talking about the “low down”, (and I consider 20% down in this category), to the extremely “low” down, and “no down” investors buying these as rentals, and cannot cash flow.

Not all investors invest this way. Some may come in with 50% down or more on a 250K house. High paid professionals have no problems investing 125K in a SFH instead of the stock market.

In most cases, properties will cash flow at 50% or more down. Not all locales are suitable for this type of investing. There has to be some appreciation upside, or little down side. The thing that appeals to these investors is that houses would not go down in price like stocks (say going down 90%)or bonds in a rising interest rate environment.

We talk so much about the “creative” investor here that we forget that there are doctors, lawyers, cash rich retirees out there that invests very differently.

How about flipping the house to them??

Frank Chin

import · June 17, 2006, 8:34pm

Forget Negative cashflow… - Posted by David Krulac

Posted by David Krulac on June 17, 2006 at 20:34:08:

and forget sellers who are not motivated. Motivated means willing to sell 50%, 60%, 70% etc. of FMV.

import · June 17, 2006, 7:17pm

Commonly called ALLIGATORS…the eat you alive (nt) - Posted by Bill H

Posted by Bill H on June 17, 2006 at 19:17:21:

nt

import · June 17, 2006, 3:57pm

Re: Rents Not Covering Mortgage Payments - Posted by DP (ON)

Posted by DP (ON) on June 17, 2006 at 15:57:37:

I flip those for a quick $10k profit.

import · June 17, 2006, 10:37am

Re: Rents Not Covering Mortgage Payments - Posted by dealmaker

Posted by dealmaker on June 17, 2006 at 10:37:16:

Easy, I ignore them, not everyone who’s “motivated” has a deal to offer.

dealmaker

import · June 19, 2006, 5:50pm

Re: Rents Not Covering Mortgage Payments - Posted by Mike

Posted by Mike on June 19, 2006 at 17:50:15:

Excellent idea…thanks

import · June 17, 2006, 8:08pm

Re: Rents Not Covering Mortgage Payments - Posted by Mike

Posted by Mike on June 17, 2006 at 20:08:28:

OK, How do you flip these things for a 10k Profit?

No equity, & payments are too high.

Please elaborate

Thanks

Mike

import · June 17, 2006, 11:02pm

Re: Rents Not Covering Mortgage Payments - Posted by DP (ON)

Posted by DP (ON) on June 17, 2006 at 23:02:55:

Simple, this seller’s problem is their payments. You can make them go away with a land contract.

Their payments also happen to be right in line with what a no credit buyer would expect to pay, maybe even a little lower.

Assign that land contract for $10k (4% down), and everybody’s happy.

With so many upside down sellers this buyer’s market is going to be absolutely overflowing with deals like this. If you already have them calling you then you’re all set!

import · June 18, 2006, 10:03pm

Re: Rents Not Covering Mortgage Payments - Posted by Mike

Posted by Mike on June 18, 2006 at 22:03:21:

Hey,
Thanks for the feedback everyone.

Mike

import · June 18, 2006, 8:54pm

Re: Rents Not Covering Mortgage Payments - Posted by lukeNC

Posted by lukeNC on June 18, 2006 at 20:54:20:

that buyer with $10k to put down can get a loan these days…no need for a land contract…at least in my area…