Posted by Tom NH on May 10, 2006 at 05:41:17:
Plan A: Wholesale. I will do a double closing and wholesale it to a rehabber.
Plan B: Partner w/ my Uncle who has $150K in equity in one of his rentals. I’d use it to pay cash, then fix it up myself and sell it for retail.
Plan C: Same as Plan B, but sell on a lease option. I already have a potential buyer lined up for this option that I met on the plane ride back up to NH from the CRE Convention! I mentioned this to him and he was excited, because he knew he had bad credit and probably won’t be able to get a loan.
Here are the numbers:
1st Mortg = $190K
2nd Mortg = $33K
For a total loan balance of $223K
both are interest only, variable rate loans.
She’s behind 2 pmts on the 1st, and 1 pmt on the 2nd.
Asking price (she has it listed with a Realtor) is $237K. She purchased the property back in '04 for $235K.
She told me she doesn’t want to make any money on it that she will just give it away or let it go into foreclosure. She also told me that she called her bank (I believe the 1st mortg holder), told them her situation, and they said if she found a buyer right away that they’d be willing to discount.
I ran some comps in the area and that true value is more like $200K (it looks as though the Realtor use properties that were not of the same type, and those that were directly on the water; oh yeah, this house has deeded rights to the near by pond).
She’s had this house listed since Sept of '05. The house directly across the street also has a very inflated price and has been sitting on the market for 486 days.
My initial offer is going to be for $85K, cash, as is, close within 30 days from acceptance of short sale. My highest bid will be $110K (=$200K x 0.70 - ~$30K in repairs).
Now when I contact the seller this morning, I’m going to let her know what my intentions are (of wholesaling and/or selling retail). I’m going to say something like
“…well you can present the offer to the bank, but typically the reps in the loss mitigation dept have anywhere from 400-500 files on their desk and they usually don’t want to bother with people who don’t know what they are doing. I know you don’t want to have this foreclosure looming over your head, so it is best that I handle the negotiation process with the bank so that we can get this deal done quickly.”
Also, the authorization to release information, the limitied power of attorney, and acknowledgement forms will be faxed to her. Some of these forms should be notarized. How does this work if she’s too far away for me to have the forms notarized??
Thanks for all your help. This could be my first deal, and I’ve set a goal that I would get my first one done by the end of the summer (Aug 31st to be exact), and my goal for the rest of the year is to make enough money to pay back my father the $10K I owe him (which has been like 1.5 years now and I haven’t given him a dime) and when I do pay him back, I want to give him $15K, because he’s so skeptical about this REI and I want to show him otherwise. I also want to raise enough money to pay for my wedding next year. This all needs to happen by December, so I’ve got my motivation and my goals in place to make this happen.
I appreciate all your help, and the convention was a life time changing experience for me. Thank you all!!
Tom NH