Where are all the "cookie cutter" deals, another one I need help W/ (BTW ads are working!) - Posted by Mel FL

Real Estate Investing
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Posted by charley on June 20, 2000 at 16:52:19:

thanks for your insight.

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Where are all the “cookie cutter” deals, another one I need help W/ (BTW ads are working!) - Posted by Mel FL

Posted by Mel FL on June 19, 2000 at 19:13:19:

Thats two calls today that I am not quite sure how to handle. This one I’m not sure if I can make a deal or not but the seller is as motivated as they come!

The details;
Very nice house in nice area with no problems, physically that is. Worth about 90K.

The Encumbrances are the problem here.
First Mort. with Conti Mortgage for 64K @10.9% with 605 mo. pmt. AND A $5000 PRE-PAYMENT PENALTY. Ouch!

Second is a seller carry-back for 6K @8% W/ $46 mo. pmt.

Also a lien on the property for 6K for the CH/A her original pmt on that was $142.

Also taxes and insurance are NOT escrowed and are about $700 per year for the taxes (a year behind) and $600 per year for the Insurance.

She is three pmts. behind on her two Mortgages. She is desprate and will probably take any offer that I put together. Problem is I’m not sure how to put together an offer for her.

Her total debt, as it stands now, is 84K (with the premayment penalty, the back pmts. and the tax.) Thats not much equity. But I was thinking that If I got the second for a big discount then I could get the lien cheap too. and maybe create some equity then option the property and sell it retail. Or even then take the property “subject to”, then…?

Truthfully I’m a little lost when it comes to this deal. I need some help from some pros. I dont have alot of $$ to work with but I have some if Im sure I can get it right back.

Any Ideas?

Thanks, Mel FL.

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What I might do… - Posted by B.L.Renfrow

Posted by B.L.Renfrow on June 19, 2000 at 23:46:25:

…is make a subject-to offer, contingent upon successful negotiation with the second mortgage holder and the lien holder. Then, I would get on the horn with that lien holder and point out that the homeowner is three mortgage payments behind and is rapidly headed for foreclosure, and offer them a few hundred bucks to release it. Next, I would get in touch with the holder of the private second and have the same conversation, pointing out how it would likely be wiped out if the first forecloses. You might offer, for example, $1000 to take an assignment of the second.

Now, as a junior mortgage holder, you can bring the first current to protect your interest. Then, you take title subject-to, sell on a wrapped land contract, lease option or whatever and leave the first in place and forget that prepayment penalty.

So, you have control of a $90k property with $26k equity with only about $3k out of pocket: $1800 to the first, $1000 (or less) to the second, and maybe a couple hundred to the lien. Taxes, in many areas can get up to 36 months delinquent before the municpality takes any collection action, so depending on your local policies and procedures, you might not necessarily need to address that right away.

I’m sure there are other ways to approach this deal, but it definitely looks to be worth pursuing.

Brian (NY)

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Re: Where are all the “cookie cutter” deals, another one I need help W/ (BTW ads are working!) - Posted by John Tx

Posted by John Tx on June 19, 2000 at 19:43:57:

Mel,

From one newbie to another what ads are u using.

Thanks,

John Tx.

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Re: What I might do… - Posted by charley

Posted by charley on June 20, 2000 at 12:17:02:

what exactly is a wrapped land contract? and how does it work? thanks

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Re: What I might do… - Posted by charley

Posted by charley on June 20, 2000 at 12:13:05:

what exactly is a wrapped land contract? and how does it work. thanks

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Re: What I might do… - Posted by Steve-Atl

Posted by Steve-Atl on June 20, 2000 at 08:54:45:

Brian is exactly right about how to approach this one. By getting an assignment of the second, you are in a stronger position.

Good Luck!

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Re: What I might do… - Posted by B.L.Renfrow

Posted by B.L.Renfrow on June 20, 2000 at 16:22:30:

It’s where the seller sells on a land contract, also known as a contract for deed. In this case, title does not transfer until the buyer fulfills the obligations of the contract. The land contract can be “wrapped” around the existing financing. The seller holds legal title until the buyer pays off the amount due under the contract, while the buyer holds “equitable title” and is, for all practical purposes, the owner.

Here are links to a couple of Bronchick’s articles, which further explain the concept:

http://www.creonline.com/legal/legal168.html

http://www.creonline.com/legal/legal126.htm

Brian (NY)