Stuck with house - Posted by Bill (Fl)


#1

Posted by Bill (FL) on October 13, 1998 at 20:46:35:

Doug I am your Neighbor I live off Lutz Lake Fern and Gunn Hwy. I talked to you around 10 months ago. Maybey you can tell were I can get a lease option.
Thanks Bill(FL)


#2

Stuck with house - Posted by Bill (Fl)

Posted by Bill (Fl) on October 12, 1998 at 22:13:00:

I finished my first rehab 11 months ago. Paid 12k wanted to put 10k in it and hopefully sale for 37k. I put 16k in found things I didn,t count on.
Had it with a realtor and no one has Qualified. It is in a bad area of s.St. Pete (Fl). Another investor says she found a buyer she Qualified for 30k. The Bank is giving her a 1st for 26k and 2ed for 4k. and I will carry 10k on a third. I will walk with 22k and 3rd with 125.00 a month for 2 year ballon. My payment on 25k I put in house is 366.00 month The girl get in the house for 0 money down my realtor and the investment company that found the buyer is complaining because I am asking for a credit report and credit application from the buyer they said the bank is williny to loan 30k what are you worring about. I am worried and they want to close this friday.The girl only makes 879.00 monthly and her payment will be 525.85 monthly with taxes and ins. I am despart but dont like this. some advice please ASAP thanks Bill (Fl.)


#3

Re: Stuck with house - Posted by FJW

Posted by FJW on October 13, 1998 at 17:52:19:

It doesn’t sound as if your realtor and the “investment company” are looking out for your best interests. Who is the “investment comapnay” and what’s their relationship with the realtor and what are they getting out of the deal?

Get rid of them and refocus on marketing. If need be, try to sell it at cost. Lesson learned; price is time and effort and advertising, not commissions.

Get active in advertising. Neighborhood flyers, signs. Visit local businesses…tell everyone within the vicinity of the house. Like “Excuse me, mam, do you know anyone interested in buying a house around here?”

Good Luck


#4

Re: Stuck with house - Posted by nnn

Posted by nnn on October 13, 1998 at 16:14:33:

Be careful on this
There are a lot of lenders that lend to people and then forclose
this leaves you out in the cold
ALSO who gets paid
The bank and the broker
Go down the list to doug jones comment
If they forclose they get the house not you
Find out why they are so negative about a credit check
IT sounds like they might be hiding something
and or ask to look at the report they have
Get some type of down from someone
Remember if there is any type of loan (in your name)
you are responsible for it.


#5

Re: Stuck with house - Posted by phil fernandez

Posted by phil fernandez on October 13, 1998 at 08:08:09:

Bill,

I agree with JPiper, you will never see any of the 3rd mortgage payments. there is no way this woman can pay $525 on a salary of $879. Also she has no money into the deal so no big incentive .


#6

Re: Stuck with house - Posted by JPiper

Posted by JPiper on October 13, 1998 at 03:28:15:

I see two things wrong with this. First, you’re losing $6K unless you collect on your third mortgage. Second, the probability of this buyer making that payment is extremely low, if not nil.

If you’re experienced at working with bad neighborhoods, there might be a way to come out of this situation. But based on the information contained in your post, it doesn’t sound like you are.

One way to look at this is that you made some unfortunate choices at the outset of this investment. You bought in a bad area, and put too much money in the deal?and evidently had no marketing plan for the house. One way out of this situation is to sell to this buyer?.you lose $6K?but you’ve hopefully learned a few lessons. Again, the likelihood of collecting on your third mortgage are slim to none.

I would also question whether any lender is going to approve this situation IF they are aware of your third, unless the buyer or this deal has been misrepresented to them. But that’s another story.

Given the nature of your post, I would take my loss and move on. Consider it a tuition from the school of hard knocks. The lesson?.have a good handle on your rehab costs, and a method of marketing, in any neighborhood, but ESPECIALLY a bad neighborhood.

By the way, why are you only coming out with $22K on a $30K sale?? Kinda high commissions and closing costs aren’t they??

JPiper


#7

Re: Stuck with house - Posted by Rob FL

Posted by Rob FL on October 12, 1998 at 22:37:12:

As for the credit check, if the bank OK’s her I would go with it. How much will her PITI payment be on the 1st loan? It must be very low. Because the ratios for total payment certainly don’t add up. 525/879 = 59.7% of her income going to her house payment. It really doesn’t sound like she is qualified. I would be very skeptical about holding paper on this deal, if I were you.


#8

Re: Stuck with house - Posted by Bill (FL)

Posted by Bill (FL) on October 13, 1998 at 05:35:27:

You are right it is a learning experience. I have a woman who wants to lease option with 500.00 down and 500.00 a month her credit is she has no credit at all. claims she got a devorce 5 years ago and never got her own credit. My friend a mortgage broker ran the credit check and verified her income . Worked for the same company for 4 years makes 9.75 per hr5 days and 11.98 per hr. 1 day a week good report from job. My friend says if she would pay by money order on time for around 6 to 12 months he could get her a loan to by. at 40 thousand purchase price if I give her a good amount of the payment toward the down payment. I sort of feel a little more comforble with this deal. What do you thank .
thank Bill (FL)


#9

Re: Stuck with house - Posted by Bill (FL)

Posted by Bill (FL) on October 13, 1998 at 05:37:23:

Rob check the follow-up I sent to piper and tell what you thank .
thank Bill(FL)


#10

Re: Stuck with house - Posted by Bill (Fl)

Posted by Bill (Fl) on October 13, 1998 at 05:12:22:

Rob her payments are as follows roughly from Mercantile Mortgage Co. 1st 336.88 26K, 2nd 53.00 4K, Sellers Mtg. 125.00 10K, 50.00 Taxes/Ins. I cant figure how the mortgage co. is letting her do this she has nothing to lose by walking out on this.

Thanks Bill (Fl)


#11

Re: Stuck with house - Posted by JPiper

Posted by JPiper on October 13, 1998 at 12:21:49:

Bill:

On the surface of it this sounds like a good solution. You create your own buyer and get them financed down the road. I do this all the time?..I use a l/o and get it refi’d later. I like to get more upfront money. As an alternative, I raise the payment to compensate for the lack of it. On a $30K-$40K house I can usually get $2K-$3K upfront as option consideration.

The negatives however to this approach are that you need to be a strong manager. This means that you need to lay down firm rules with this buyer, and make sure you follow through at all times. Otherwise, this neighborhood and this buyer can potentially eat you alive?..and you will be back in the same situation except that you may have to repair the house again.

The other negative is that this doesn’t pull your cash out of the deal. So now you’ve moved from a house you can’t sell, to a house you’ve rented out that you still may not sell unless you manage the situation correctly. Things can and do go from bad to worse.

Bill, I would probably give this situation a shot. Just don’t delude yourself. It’s still a tough neighborhood with an unqualified buyer. This is going to require continued vigilance and effort on your part. Make sure you’ve got a good contract, and let this buyer know that if she can’t make timely payments she’s gone. Let her know that upfront. Let her know that if she does make timely payments you’ll help her buy the house.

Good luck.

JPiper


#12

Re: Stuck with house - Posted by Jennifer(NH)

Posted by Jennifer(NH) on October 13, 1998 at 08:34:55:

I would go with this woman. She seems a lot more stable and more able to pay than the other person. You could have her pre write and pre date all the checks if that would make you feel more comfortable that way all you would have to do is deposit them.

If you have two different potential buyers you are doing great. I agree with JPiper if you are going to work in a bad area you need a different and a good marketing plan as these types of properties don’t generally attract your perfect buyers.

Good Luck!

Jennifer


#13

Re: Stuck with house - Posted by Karen McCall

Posted by Karen McCall on October 13, 1998 at 07:14:55:

This one sounds a lot less risky.


#14

Re: Stuck with house - Posted by Rob FL

Posted by Rob FL on October 13, 1998 at 06:23:36:

336/879=38.2% for housing costs …FHA requires 29% max…I would be very skeptical to even rent to this person let alone sell them a house


#15

Re: Stuck with house - Posted by Bill (FL)

Posted by Bill (FL) on October 13, 1998 at 20:40:59:

JPiper were can I get a good lease option I can,t find one.
Thanks Bill(FL)


#16

Re: Stuck with house - Posted by Bill (FL)

Posted by Bill (FL) on October 13, 1998 at 20:37:24:

Jennifer What is a marketing plan for a bad nieghborhood.
thanks Bill (FL)


#17

Re: Stuck with house - Posted by Carol

Posted by Carol on October 13, 1998 at 08:05:57:

Is she buying this to live in or rent out?


#18

Re: Stuck with house - Posted by Jennifer(NH)

Posted by Jennifer(NH) on October 14, 1998 at 08:41:02:

A plan might include on how you are going to let people know that your house is for sale. Also, the back door plan if selling it out right doesn’t work out.

Your plan might include putting up flyers at nearby apartment complexes or putting them on people’s windshields. I’d only focus on nice cars. Or hanging up flyers at local police stations, hospitals, churches, libraries, grocery stores and laundry mats.

Other thoughts might include that since its in a bad neighborhood you might have to focus on terms versus finding the perfect buyer. Part of the America Dream is owning your own home. Terms will attract more buyers that are less fussy about location; however, their credit won’t be perfect or they may have some other problems that prevent them from getting a mortgage right away.

As far as the back door plan, this is what you do if you find you can’t sell the house either with terms or being bought outright. This might include lease/optioning it or just keeping it as a straight rental. If you bought right you could refinance to get your money out and then rent to own it with easy downpayment and monthly payment plans or just hold as a long term rental.

Hope this helps a little

jennifer


#19

Re: Stuck with house - Posted by Clark

Posted by Clark on October 13, 1998 at 08:39:22:

Possibly you could refinane this house . You could pull out 80% of ARV. Then sell home with owner finanacing like a lease /option. Then you could get 2K-3K down(option consideration). Also you could most likely get premium Money for home even 5% above market value. You will make a little extra on the spread.


#20

Re: Stuck with house - Posted by DOUG Jones

Posted by DOUG Jones on October 13, 1998 at 15:43:55:

I agree with this post. In this kind of an area, I would
have sold it on soft terms. I am in Tampa, and there are
successful investors who have an in with a mortgage broker.
They do many “creative things” to get the loan. I just
didn’t have much luck or “success” in this price range.