OfflineI got a tip from a friend that her dad's neighbor's house is going into foreclosure. (See how important networking is!)
Well my plan is this... I want to run it through you guys and see if it works, or maybe any drawbacks or if its legal all together or possible or... well you get the idea.
ANYWAYS.. the idea:
He's in foreclosure so I want to catch him up on his mortgage and take over payments, assuming his mortgage is assumable. (I heard that even if it is they'd have to check my credit, which is horrible... if so how can I find a way around this? And what if his mortgage isn't assumable... then what?)
I then want to sublease the property right back to him with option to buy. I figure since he already got a mortgage he may be able to get another one to finance purchasing the home from me. (Again, is that legal?? Can I do that? Even if I can, could he actually get financed to buy the house from me?)
I wanted to resell him his property back at remaining balance of his mortgage, plus closing costs, plus amount to take him out of foreclosure, plus profit. (Does this sound reasonable? And how would I get paid? Would everything get tossed into Escrow account and then after mortgage loan is approved I get a check? I'd like to know a little more about that as well.)
Anyways that's it, any ideas on how to do this is GREATLY appreciated... I mean if it wasn't for you guys telling me to take action, I'd have never gotten this far. Anyone with any sublease experience or ANY advice is greatly appreciated.
Also any contracts you guys might find helpful PLEASE let me know!!!!!
Thanks!!!
Knowledge is Power
-Pimpedoutgeese
Allow your fear to gently pass. Then genuinely ask yourself,
“What needs to be done?”
I hate to double post, but I begun thinking about it a little bit...
If I just optioned his house from him, he could take the money from me that I used to pay up his mortgage debt and run lol and exercise his option of NOT selling to me lolol!!!
Is it possible also then to "buy" his house under contract with no money... him basically "giving" me his house so I can sell it back to him... but then I guess he would think that I could just take his house and run.
Just thinking out loud... go ahead and think aloud with me.
EDIT: What if I did a land contract for his backpay of the mortgage, which would legally make the house mine, and then option it back to him for his mortgage amount plus a lil cash flow, then he pull another mortgage for what I explained above. The first mortgage wouldnt be a problem cause the second mortgage would cover it and the payments from the option would cover it till then... but what happens to that first mortgage? Who is responsible? Is it legal to sell the house w/o clearing the mortgage? AGGH lol I'm pullin out what little hair I have left..
EDIT2#: I might be able to pull if off but only if his mortgage is assumable AND I'm able to assume it. Im just trying to think outside the box here...
Allow your fear to gently pass. Then genuinely ask yourself,
“What needs to be done?”
Take the owner out of your plan all together. Not to say it is not possible he would end up renting/leasing, don't count on it unless you are looking for problems. I say this on all deals, don't count on a specific person in the equation, it has to work under best and worst scenarios.
But this person cannot make payments to the bank for an amount equal to or less than he would have to pay you - so chances are he won't be able to pay you.
If he is in preforclosure he will not be able to get a mortgage without either an rediculous amount of equity or a serious down payment. At least not for several years. So take the idea out of it unless he has a lot of cash stowed away (then why the payment problem?) or you are looking years down the road.
So... if he has a ton of equity, you can offer to buy it at loan balance, with a lease option, give him some free months, get first and last payment upfront. The free months + first/last gives him time to get things together to keep paying payments.
If not, you can work a short sale on it. I doubt by law/contract the owner can buy it back on short sale. That would be a heck of loop hole if they could.
Either way, it doesn't matter who owns it right now or what their intentions are. It matters what the deal on the house is when it is all said and done. How much is the house worth FMV and what is the loan balance. Until you know those two things you can't even come up with an idea of what to do.
Oh, and you can try assignment on either angle. But unless you are getting a deep discount on FMV it doesn't matter.
Thank you, you are awsome!!!
Actually I called the guy today, turns out he's not in foreclosure, he's getting divorced. He's doing some upgrades on the property and what not, it sounded nice on the phone.
I'm going to be doing my due diligence on Wednesday. Any ideas of what to look for? I know I seen the a list of things on here before...
Anyways he asking for 87. But said it was appraised for more. I'm not too sure what to do but I know I'm going to take action, that's for sure.
Allow your fear to gently pass. Then genuinely ask yourself,
“What needs to be done?”