OfflineHi I'm brand new and just recently received Dean's materials in the mail. I am new so please bear with me but I'm hoping I can get some advice to help my friend.
Friend: Has a home that he can't afford and may allow the bank to do a short sale or go into foreclosure.
Background story: He paid $500K 2 years ago
Home right next door just sold for $250K. (I believe he said it was a foreclosure)
Renter: He has a renter in the house that pays $1600 a month.
What he pays: He pays $2600 a month which I think does not include taxes.
Solution: Do you think that if find a buyer that may have terrible credit but would like to buy a home I could interest them in a lease option for $2600 a month with $500 going towards the purchase price of the home? (Need to check rent comps in the area) Each year the amount of the lease will raise $100 dollars until the purchase of the home. Set a time line of 2 - 5 years in which to purchase and if they decide not buy my friend keeps the home. This would save his home, credit, and he still receives the tax savings.
My friend said if I can help he will pay a bird dog fee or use a portion of the lease money say a $100 or $200 from the rent to send me every month. Very nice of him but even more so would like to help him.
Thanks in advance for your help and look forward to any questions or advice you may have.
LBJ
Due to the large amount of foreclousers in my area there are a lot of reos I know someone who has been per-qualifide how could I get him in one of these houses. I have no money and not good credit.
Find him a house that fits his criteria and have him pay you a finder's fee for the one he closes on.
"I will NOT BE BROKE! ANYMORE!"
In the name of Allah, the Beneficent,
the Merciful.
22.He is Allah besides Whom there is no God: The Knower of the unseen and the seen; He is the Beneficent, the Merciful.
23. He is Allah besides Whom there is no God: the King, the Holy, the Author of Peace,the Granter of Security, Guardian over all, the Mighty, the Supreme, the Possessor of greatness. Glory be to Allah from that which they set up (with Him)!
24. He is Allah: the Creator, the Maker, the Fashioner: His are the most beautiful names. Whatever is in the heavens and the earth declares His glory: and He is the Mighty, the Wise.
I wouldn't say find a buyer who has terrible credit (they won't qualify as quickly for loan) but find a buyer that maybe needs to raise their credit scores a few points or meet some other criteria that the Lender requires of them to have before they will approval them for loan to lease option the house. Find out exactly what his monthly mortgage payment is including the property taxes and insurance. And also if he has missed any payments so you'll see the whole picture before jumping into this deal.
Friend: Has a home that he can't afford and may allow the bank to do a short sale or go into foreclosure.
Background story: He paid $500K 2 years ago
Home right next door just sold for $250K. (I believe he said it was a foreclosure)
Renter: He has a renter in the house that pays $1600 a month.
What he pays: He pays $2600 a month which I think does not include taxes.
Solution: Do you think that if find a buyer that may have terrible credit but would like to buy a home I could interest them in a lease option for $2600 a month with $500 going towards the purchase price of the home? (Need to check rent comps in the area) Each year the amount of the lease will raise $100 dollars until the purchase of the home. Set a time line of 2 - 5 years in which to purchase and if they decide not buy my friend keeps the home. This would save his home, credit, and he still receives the tax savings.
My friend said if I can help he will pay a bird dog fee or use a portion of the lease money say a $100 or $200 from the rent to send me every month. Very nice of him but even more so would like to help him.
Thanks in advance for your help and look forward to any questions or advice you may have.
LBJ
"I will NOT BE BROKE! ANYMORE!"
In the name of Allah, the Beneficent,
the Merciful.
22.He is Allah besides Whom there is no God: The Knower of the unseen and the seen; He is the Beneficent, the Merciful.
23. He is Allah besides Whom there is no God: the King, the Holy, the Author of Peace,the Granter of Security, Guardian over all, the Mighty, the Supreme, the Possessor of greatness. Glory be to Allah from that which they set up (with Him)!
24. He is Allah: the Creator, the Maker, the Fashioner: His are the most beautiful names. Whatever is in the heavens and the earth declares His glory: and He is the Mighty, the Wise.
Another thing, if he has mortgage in default and he uses a lease option agreement, the owner could specify a down payment which he could use to come current on his mortgage payment. But like Alana says you need all the facts.
Sandra
"You can never get to the top, if you are not willing to climb. Do not look at the difficulty of the climb, only anticipate the view from the top."
"Can't even walk without you holding my hand." (Song)
"Is anything too hard for the Lord ..." Genesis 19:14
"In all things, wait on the Lord."
"Think not of your own deliverance, but trust in God who will give in abundance."
"When you are down to nothing, God is up to something." Unknown
"Our lives begin to end, the day we become silent about those things that really matters." Dr. Martin Luther King Jr.
Hi Prezlbj,
If I am correct to say your friends intention is not to out right sell the home, but to sell in 2 to 5 years? Your correct to find out what the comps are for renting. In my opinion I would rent to a person with a greater credit status. At this point his mortgage is not being covered by his renters now. The idea plan is to at least find a renter that will cover his payments to give him relief. Is his intention to pay you and the difference of the rents needed to cover the mortgage from his pocket? Because the lease option that is mention above doesn't cover the expenses. Does he have a recent appraisal of the property? Does the home have equity? If so are you in the position to take over payments yourself. Much success to you........Lubertha
"GOD IS STILL IN CHARGE, HE IS THE AIR WE BREATHE"
Hi, again I'm just starting out in looking over Dean's information but I assumed you could do a lease option with out involving the bank and use a lease option contract, promissory note or something similar yet still legally binding.
a)He has not missed any payments
b)His total Monthly including Mortage, taxes, and insurance is $3,100 and told me if he received $2,600 a month it would be worth it for him to keep the place and make the extra $500 a month payment.
c)The house that was sold next door was foreclosed on and sold for $200K and is back on the maket for $299K.
I still need to run comps of homes in the area and his home is larger than the one back on the market for $299K. He seems to think it may be worth $330K. Again he paid $500K 2 years ago.
Thanks,
LBJ
His intention was to let the property go so he did not have to deal with the payments and limit his monthly out going bills. If he could find someone to rent for the amount of monthly which is $3,100 that would be great and he would keep the home but he has not been able to find someone other than the current person renting the house for $1,600. He pays an extra $1,500 a month to keep the property.
I thought by offering a lease option someone may be more apt to pay the price and avoid him ruining his credit and lose of home. Give him some time to still receive tax savings and you never know someone may not decide to exercise the option and he would keep the home.
Also I was hoping to find a buyer to agree to pay fair market value at the time the option is exercised and upon exercise of the option they do not receive the money for the down payment but rather it is removed from the final purchase price of the home. However, I understand that most buyers want to lock in the future purchase price and receive the agreed upon monthly towards the down-payment but everything is negotiable...
He has not missed any payments and has no equity as the current value of the home may be $300K to $330K and he paid $500 two years ago.
He would be willing to pay an extra monthly fee to me out of his own pocket if I help him or a finders fee.
I would not wish to take over the payments myself unless I had an exit strategy. I'm hoping someone may be able to spark some creative idea for me to use while I'm looking over the information and trying to get up to speed with where the rest of you are at. I'm light years behind at this point...
Thank again to you and everyone for your guidance!
LBJ
Greeting,
I can not believe in all of the current options.The song remains the same...I WANT MONEY AND FRIENDS.Still LBJ! You have the right idea(money)!!!!!!!!!!!
Invest in yourself!
you can find out the rental rates; by asking a brokerage firm in the area that has a rental management office to get exact ideal of what tenants are willing to pay for rent. You can also check out zilpy.com and rentometer.com to get a general ideal what over landlords are asking prospective tenants to pay to rent their properties. Is the property near any military facilities out that way? When is the tenant (who's in there now) moving out? Once they move out raise the rent to $2000 if the rental market tolerates that rate.
Look into the possibly of doing a short sale (need the bank's approval). See if he can get a loan modification. Never know until he asks. Oh lastly have him get an appraisal if he hasn't done one recently.
"I will NOT BE BROKE! ANYMORE!"
In the name of Allah, the Beneficent,
the Merciful.
22.He is Allah besides Whom there is no God: The Knower of the unseen and the seen; He is the Beneficent, the Merciful.
23. He is Allah besides Whom there is no God: the King, the Holy, the Author of Peace,the Granter of Security, Guardian over all, the Mighty, the Supreme, the Possessor of greatness. Glory be to Allah from that which they set up (with Him)!
24. He is Allah: the Creator, the Maker, the Fashioner: His are the most beautiful names. Whatever is in the heavens and the earth declares His glory: and He is the Mighty, the Wise.
Is it a possibility that the tenant already in place could do this lease option in the time frame he is looking to sell down the road? Even with not so good credit now in 2 years things could definitely be better. When does the lease expire? Continued success........Lubertha
"GOD IS STILL IN CHARGE, HE IS THE AIR WE BREATHE"
We know that your friend will not qualify for a loan modification or short sale since he is not in default of his mortgage agreement. You have to be at least three months in arrears. Have he considered refinancing the loan to a fixed rate with another lender. Is this mortgage an ARM that is coming due? Then he wants to do something quickly before further escalation of the mortgage. He needs to speak to other reputable lending firm and see what programs they have available to assist him. He could also call 311 and find out where the government counseling services for mortgage owner experiencing difficulties are, and they will provide several alternative to him experiencing foreclosure. Good Luck to your friend.
Sandra
"You can never get to the top, if you are not willing to climb. Do not look at the difficulty of the climb, only anticipate the view from the top."
"Can't even walk without you holding my hand." (Song)
"Is anything too hard for the Lord ..." Genesis 19:14
"In all things, wait on the Lord."
"Think not of your own deliverance, but trust in God who will give in abundance."
"When you are down to nothing, God is up to something." Unknown
"Our lives begin to end, the day we become silent about those things that really matters." Dr. Martin Luther King Jr.
Does your friend know the exact payoff of his home? Is that amount within the range of any comp you have found? How long is his renter in place for? Is the renter willing to stay if someone else comes into the home on the lease option agreement? Can you find someone to do a lease option with a renter in place? Is your friend in a market that has already bottomed out or are the prices still going down? You said he paid 500k 2 years ago and has no equity so I am thinking he is upside down as far as the comparibles. If you do a lease option you will have to ask at minimum the balance due on the mortgage, unless your friend is willing to pay the difference. Once your tenant exercises the lease option your friends house belongs to them, and it kinda sounds like he really doesn't want to lose the house just his share of the payment. If that's the case he can rent his portion of the house for 1500 or more to have a positive cash flow or contingency money for repairs etc. and move into something smaller while his tenants make his payment. Really when you lock up a property with the intention of doing a lease option you should be doing everything you can to help your buyers increase there credit so they can exercise the lease option in the required time frame. If you take a down payment you must be clear on how that is to be used. Is it non refundable for any reason, or only if they fail to exercise the option can the option be extended, upon exercise of the option is it applied to the final purchase price. Lots to consider. Hope this helps.
Donna
Thanks for the response and I will definitely check out the recommended sites to compare rental prices.
Not near a military facility so no chance of providing rental from that but good thought.
The tenant is on a month to month so anytime my friend ask and provides a month or more notice so she is able to find another rental. (Hopefully I can help her)
Not sure if he can get the $2,000 a month for rent as he had a Realtor look for sometime to find someone to rent the home for $1,600.
He may do a short sale but he was hoping to save the home if possible.
Yes he does need to get an appraisal.
Thanks again,
LBJ
Not likely, as she told my friend that the $1,600 a month had her tapped out. He felt bad for her and wanted someone in there right along with the fact that he had already moved out and needed something to help with the payments.
He has a month to month with the current tenant. He could ask her to leave at any time with of course some notice.
Thanks again,
LBJ
You are right about the loan modification he is current with all his payments.
I'm not 100% sure but I believe he currently has a fixed rate but could look to refinance. Not sure if he can come up with something lower but I need to find out what the current interest rate he is paying.
I'll mention the 311 thanks.
Thanks for the help,
LBJ
I need to inquire on the exact payoff on his home, I believe based on the payment history and price of the home a rough ball park number would be around $425,600k.
The comps in the area for his home are $300K to $330K.
Renter is on a month to month.
No very doubtful the current tenant would share the home and rent even though the home is a two bedroom. But that is an excellent point and I will inquire but again I very much doubt it.
Perhaps market to someone that may wish to lease option with a friend.
Prices are supposedly stabilized but at this point have not really seen them rise yet.
He is actually not to afraid of losing the home but would prefer to keep it. Credit history is a concern obviously but I think if he could lease option with someone at a later date paying FMV say 2-4 years would be great. Likely hood may be difficult but would hopefully help him ride out the storm and receive his investment back or hopefully more.
Thanks!
LBJ