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Lydia

Seller Behind On Payments

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I've been called about a $250,000 house. No equity. They refinanced at 95% and filed for divorce. They are one month behind. What should I do? I don't have the money to make up their back payment. They have "mostly" moved out. I plan to go see the house and meet with the owners within the next day or 2.

 

This is an extremely nice house in a good area in a county that seems to be in an expanding market. The whole county seems to be booming.

 

I guess I have nothing to lose by just not making any promises, agreeing to make up the back payment if and when I get a big option deposit from a tenant/buyer.

 

Any comments?

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Lydia,

 

I'm new and still learning but I'm out at sea right now, on watch at 0430 in AM and theres nothing else to do so here are my thoughts.

 

My first question, what's the rate of appreciation for the area?

If its high then there is still money to be made here.

 

If thats the case then give up some money on the front end (paid by T/B of course) but negotiate the price on the back end, My guess if they are behind on payments then they should be very motivated and open to any suggestion, correction Solution ;) , you give them. Get it under contract, then market like crazy for your T/B. Depending on what rent rates are for that area you could end up making a couple hundred of positive flow above what their mortgage payments are but then again they just refinanced but you might still make a little.

 

A small sacrifice to get to the pot of gold at the end of the rainbow.

Like I said I'm new and trying to think creatively, so lets see what everyone else thinks?

 

Guys :D

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Hi, Lydia.

I plan to go see the house and meet with the owners within the next day or 2.
Why? Without a plan in place all you're doing is keeping busy. You need more specifics: today's FMV for the property; homeowner's mortgage info, (monthly payments, interest rate, terms, balance, etc.); and the rental market for this property.

Then, you need to formulate your exit strategies. If you want to set this up as a sandwich lease, which is what you hinted at, will the market accept the higher price you need to make this deal work for you? Will the rent cover the monthly payments? How long do you estimate it will take to find a qualified t/b with several months option consideration to put down. Keep in mind, Lydia, the clock is ticking on this one. They are one month behind, the second month is looming quickly, and a third isn't far behind.

Finally, have the homeowners said what it is they are willing to do?

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This house appraised (full blown appraisal, not "drive-by") for $250,000. I think they owe $238,000. I did go look at it today. I didn't consider it a waste of time at all, even though I don't know it will be something I'll be able to work. I feel like I learned some things by making that trip.

 

I was thinking I'd buy it subject to the existing financing as soon as I found a tenant/buyer and lease it out. The bad thing is that I've been talking only to the wife. She told me the husband would do whatever it took to keep it out of foreclosure. He's been out of town on business. I am getting the feeling, though, that he might not be as cooperative as the wife hopes.

 

I'm still researching the rental market. The bad thing is that the higher the price of the house, the harder it is for me to determine fair market rent.

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Lydia, taking it over Subject To is fine, as long as you can cover the payments that need to be made up, and then the monthly payment. This means you'll need to collect enough option money to cover those missing payments, (and that could be several months by the time you fill the property), and then being able to handle any vacancy that might occur.

Move carefully, and in the meantime you'll need to know the monthly payments on the property, and the rental market, and determine if the two are compatible.

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I'm new and still learning but I'm out at sea right now, on watch at 0430 in AM and theres nothing else to do so here are my thoughts.

What do you do that has you awake in the middle of an ocean at 0430? Just curious, sounds peaceful :wacko: , can I come along?

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I'm new and still learning but I'm out at sea right now, on watch at 0430 in AM and theres nothing else to do so here are my thoughts.

What do you do that has you awake in the middle of an ocean at 0430? Just curious, sounds peaceful :D , can I come along?

 

 

I'm a network administrator in the Navy(IT2), that particular morning I was on watch making sure that all of my backups were complete and servers got rebooted properly. Its a rather boring job I must say, but you asked could you come along heck you can take my spot :D ......................No serious want to trade? :lol:

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