Posted by John (WA) on December 08, 1999 at 16:20:32:
Coming out of pocket when their is equity to salvage is one thing but in this case there’s nothing there. Personally, I’d pass.
Seeking Creative Ideas On Low-Equity Deal - Posted by kf_az
Posted by kf_az on December 08, 1999 at 14:39:16:
In the interest of being a problem-solver and not just an equity hound, I’m posting this situation on which I just got a call in response to my I Buy Houses postcard. The woman is in foreclosure due to her thinking that her estranged husband was making payments and he was not. Her sale date is in mid-January. They had this home built about a year ago and only put 5k down…no equity to speak of. Realtors and mortgagors have already told her “sorry”. She knows she doesn’t have any equity and just wants to avoid the foreclosure on her record. Numbers: 1st morgage: $94k, back payments/penalties/etc. to bring current: $8k FMV: $103k
The only thing I can think of is a lease option purchase…taking over subject to on the $94k, could probably squeeze $110k from a tenant buyer. The only problem is the $8k to bring current. Should be able to get $3k to $5k from tenant-buyer in option money. So, I’m looking at putting into the deal $3k to $5k of my own money plus any payments I’d have to make while finding the t/b.
Would you pros touch this or run from it? Are there any other possible ways to work this? Thank you in advance,
kf
Re: Seeking Creative Ideas On Low-Equity Deal - Posted by Bud Branstetter
Posted by Bud Branstetter on December 08, 1999 at 22:49:01:
The first question has to be what is she willing to put up to avoid the foreclosure. If she thought the ex was paying does she have money to keep making any kind of payment(to you). Because you would have a harder time with L/O then you would aim at a direct owner financed sale for the 10K down. Whether a straight subject to/land trust or Bill’s Pac trust is used can be debated ad nausium. The time is short so a contract with nothing down will give you the option to look for a buyer. Would I put any of my own money into the deal? No.
Re: Seeking Creative Ideas On Low-Equity Deal - Posted by Jim Pasquini
Posted by Jim Pasquini on December 08, 1999 at 21:41:29:
Skinny deals like this are not the way to put food on the table on a regular basis, but here is something you can do.
Have owner grant you an option to put it into a PACTrust. Advertise something like Owner Financing, Bad Credit OK, etc. and see if you get any callers. people that answer this ad will likely not split hairs on price or terms. You can build equity into the property and possibly share in the appreciation and realize monthy cash flow. Deal breaker may be that you need roughly 10% down plus closing costs but that you will not know until you offer it to the market. If you need more information check out http://www.cal-equity.com/ or click on the NARS banner at the top of this page.
Do not waste your time - Posted by Jim IL
Posted by Jim IL on December 08, 1999 at 19:42:55:
kf,
I am not a pro, and am known for doing some “skinny” deals, but ONLY when I KNOW I have a buyer in waiting.
Take a few days, scour your buyers list, and ask them if they are interested?
If they are, put them in it for $9k down, and payments, or the $8k and payments, creating cash flow.
But, only place some cheap ads, or FREE ones, and flyers around.
Then, if nothing comes up, …NEXT!
Maybe have the seller sign a contract with you that says you will take the home “Subject to” the existing loans, and “Subject to” you finding a suitable T/B’er within a short time frame.
Go find another deal,
Jim IL