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Greg
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Deal or No Deal
Wednesday, April 23 2008 10:37 PM
Here's a recent house I've been looking at. Owner had his bankruptcy discharged last July. Getting divorced in May this year, and hasn't paid his house payment since January 2007. Reason? His house is severely damaged from fire. We are talking total gut job. Kitchen, LR, 3BRs, 1.5Ba and garage all need to be demoed to the studs. Basement is okay though-haha! New flooring and siding as well as roof repairs. He is VERY motivated and would sign something tomorrow.
He has a check for $117k from the insurance co with the potential to get another check from $30-40k from the insurance company as long as work was being completed on the house AND the seller was on the title/deed. His soon to be ex wife quit claimed the deed to him. She wants nothing to do with it.
He has 3 mortgages. 1st for $105k, 2nd for $40k, 3rd for $10k. Total debt $155k. This is near a wash with his two checks from the insurance.
Here's where I come in. I am thinking I can call the 1st lender and negotiate a discount. Say 10% to be conservative, but hopefully more. If they say yes, can't I then go to the 2nd lender and tell them the first is willing to take a discount, they should as well (or risk getting wiped if the 1st forecloses)? Maybe they give me 50c/$. Then repeat with the third for 10c/$. Can I do that? That would be $116k right there with my conservative numbers.
The sticky part is he really wants to keep the house. He would like to possibly rent to own from me or do something (maybe a pure option?) in the future. Knowing how foreclosure laws are, I don't want to do time in the slammer. Doesn't SB2349 prevent me from buying then renting it back to the owner? He even wants to help with the repair. I am leery of putting him in the title, but maybe him as trustee with me as beneficiary and director, may be the way to go. He is willing to walk if he has to though since its been a tough ride. My plans would be to wholesale it for a quick $10k but maybe more. What should I do?
REPLY
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Randy Hughes
SFH Master Advisor
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Re:Deal or No Deal
Wednesday, May 28 2008 02:02 PM
Greg,
You picture looks very familiar!
Anyway,
see my comments below in BOLD.
Here's where I come in. I am thinking I can call the 1st lender and negotiate a discount. Say 10% to be conservative, but hopefully more. If they say yes, can't I then go to the 2nd lender and tell them the first is willing to take a discount, they should as well (or risk getting wiped if the 1st forecloses)? YES, YOU CAN AND SHOULD DO THIS. ONCE YOU OWN THE FIRST YOU CAN FOR A DISCOUNT OUT OF THE SUBSEQUENT LIEN HOLDERS.
Maybe they give me 50c/$. Then repeat with the third for 10c/$. Can I do that? YES
That would be $116k right there with my conservative numbers.
The sticky part is he really wants to keep the house. He would like to possibly rent to own from me or do something (maybe a pure option?) in the future. Knowing how foreclosure laws are, I don't want to do time in the slammer. Doesn't SB2349 prevent me from buying then renting it back to the owner? YES, THIS IS NOT A GOOD IDEA.
He even wants to help with the repair. I am leery of putting him in the title, but maybe him as trustee with me as beneficiary and director, may be the way to go. YES, MIGHT BE A GOOD SET UP. He is willing to walk if he has to though since its been a tough ride. My plans would be to wholesale it for a quick $10k but maybe more. What should I do?
CAN YOU GET A QUIT CLAIM DEED FROM HIM?
Randy Hughes
REPLY
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