She said, "take my house please?" - Posted by Jim IL

Real Estate Investing
1

Posted by JohnB_NJ on June 17, 1999 at 22:15:24:

Hey Jim,

You are on fire, man! Let me know how you make out on the Subject To deal. I have a very similiar situation. The loan is current but the owner said “Take my house, Please” Only difference is there is only 5k in equity, maybe a bit more if I L/O it. I just don’t know which is the best to take title. Quit claim with me as Trustee and my partner as benificiary? This is a new type of deal for me. i have to hit Bronchicks book again.

Best of success!

John (NJ)

2

She said, “take my house please?” - Posted by Jim IL

Posted by Jim IL on June 17, 1999 at 21:16:30:

Hello all,
Well, today we met with a seller who has already agreed to “sign the house over” to us.
The woman is facing foreclosure, and has some time left, but not a lot.
Here it is:
FMV: $60k-$63k (according to recent sales data)
Loan balance: $46k (a little high)
Re-instatement fee: $5k, give or take
No repairs needed.

I’ve never really delt with this type of deal alone before, so I am at a bit of a loss.
The seller has agreed to just allow us to take the home “subject to” or whatever vehicle that will get the home into my name. She is not concerned with the mortgage loan remaining in her name. In fact, she likes the idea, because I’ll make the payments and she feels that will help save her credit a bit.

I got her to sign a Release of information form tonight, so that I may contact the lender tommorrow, and find out the specific numbers.
Has anyone EVER had any luck getting a lender to discount or re-arrange the arrearage?
What steps should we take, other than a title search to make sure of the liens etc.?
Should I just have the seller sign the contract “subject to” the existing mortgage loan, or can we use a “quit claim deed”?
We would like to avoid having to pay any closing costs.
Also, what about a land trust deal? Where we have the seller put the home into a trust, and then assign us beneficial interest?
What works best here?
The payments are at least $250/month less than market rent for the area, and there is approx. $10k in equity.
We want to be sure and do all our appropriate due diligence.
I know there is not a lot of room here, but if we can get this all squared away, we can sell “No qualifying” and make a few bucks. I am hoping the “terms” will compensate for the lack of equity.

Any ideas or input are GREATLY appreciated.

Thanks in advance,
Jim IL

P.S. Thanks again to everyone here. The last few weeks we had a slow time and got a bit frustrated, but this week we have been on fire. Thanks for all the advice and encouragement to “keep at it”.
Today we met with 2 sellers, the one above and another that is going to be a L/O. The L/O deal is REAL sweet. The home was listed for 30 days with a Realtor at $70k, appraised at $82k and today we go the seller to agree to a 24 month (2 renewable terms) L/O with a sale price of $54k.

If the “subject to” deal goes thru, it will be number 4 for the week!!!
Rock and roll baby!

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Painfully long reply - Posted by Jim (TX)

Posted by Jim (TX) on June 18, 1999 at 17:01:51:

You might be a little thin. Not much cash on the front end but you should be able to work it for some cash flow now and a pay day sometime in the next few years. Here is a deal I just signed up 2 weeks ago with the real numbers. Very similar to your deal.

Guy has a house and he just wants out. He owes $39K on the first mortgage and $8.5K on the 2nd for a total of $47.5K. House needs $3K in repairs and he is 2 payments behind on the first mortgage (total of $800). The 2nd mortgage is current (who knows what this guy was thinking). I buy the house for $800 (paid directly to the bank) subject to the underlying mortgages. I take title in a land trust. I am trustee and he assigns his interest to my financee.

So I am going to be out of pocket for almost $4k. I will have it on the market in 2 weeks with non-qualifying owner financing for $66K (about $4K over priced). I am asking at least $5K down which will put $1200 in my pocket now. Cash flow will be about $100 per month. I will sell on a balloon note for 4 to 5 years so I should have another payoff then.

Of course, I am negotiable. If they offer to get a new mortgage, I would entertain a price of $59 or 60K. Putting $8-9K in my pocket today.

A couple of important things to do: get a verification of mortgage or a payoff statement. Get a title abstract run to make sure nothing is floating out there to cloud the title. If you have time before the sale, you could use your buyer’s down payment to catch up the loan. I would definitely use a land trust. But other than that, you seem to have everything in hand.

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Re: She said, “take my house please?” - Posted by Bud Branstetter

Posted by Bud Branstetter on June 18, 1999 at 12:38:36:

Jim,

It sounds like you want to get this even if there is not the equity because of the cash flow. Most foreclosures have some fix up costs to be able to resell at the top of the market. Theoretically you would like to save the mortgage(land trust) and sell on a wrap. The question becomes how to get your cash for acquisition and fix up out. If market rents are really over the 1% mark I would look at shortening the time period or raising the rate to make the payment near rent rates.

When deaing in foreclosures you get a warranty deed and a contract. You record a memorandum to stop other intruders. If the title is not screwed up then record the deed.

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Re: She said, “take my house please?” - Posted by Stacy (AZ)

Posted by Stacy (AZ) on June 18, 1999 at 11:32:43:

Hi Guys-

As you may know, I haven’t done any L/Os or Subject-to deals, but here’s the way I’d try to approach it. Get the seller to put the house into a Land Trust using a Warranty Deed to Trustee, with your friend as trustee (form is in LaGrand’s course). Record this one. Have the beneficial interest assigned to you (don’t record this).

If you don’t want to go the Land Trust route, just have the seller sign a Warranty Deed to you directly.

This is all still theory for me, but I think this is correct. I’ll be watching for replies from others to see what they have to say.

Good Luck-

Stacy