OfflineI came across this property from one of my lead generations site. The owner has recently moved out of the home, she’s had it up for sale for the last 3-4 months and no takers. It’s a beautiful 2000 sq.ft. Home on a 1.5-acre site. Plenty of trees and an above ground swimming pool that needs a new liner, It’s in a really nice country setting.
Anyway she is asking $92,500.00 the home and she owes about 88,000.00 on it. She is willing to do let me take over payments in a lease option with no down payment. The home is actually worth about $75,000.00 and it needs approximately $3000.00 in repairs mostly cosmetic. Well here are my questions: What documents, other than a lease option contract and an authorization to release information, do I need to execute with her? Do I need a purchase & sale agreement to go along with the LO? Do I need to get a copy of her loan statement? If and when I get this property and I go to Lease it out what documents do I put together with the new buyer? (I’m going to go back and review the videos of Greg Murphy)
This will actually be my first Lease option that I will be marketing to a new buyer. So any help that I can get would be greatly appreciated.
Thank you,
Gene.
"It's not what happens to you that determines how far you will go in life,
it is how you handle what happens to you.
Zig Zigler
You could do this two ways, get the deed subject to the existing morgage then you would actually have title to the property or lease with option to buy. Is she in arrears on her loan? You also want to do title search and make sure there are no other liens on the property. Will the rent cover the mortgage payment with taxes and insurance? Make sure that the price you are selling to the end buyer covers what is owned, since property is upside down you may have to have a long lease in order for it to work. Good Luck
Cathy B
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Wow that was fast! The Sept. Pyt is still due. Not sure what her plan is on that but I will find out when we speak later today. One other thing I didn't mention, I don't know if this make any difference or not but she has moved to North Carolina to live with her children.
Thanks,
Gene
"It's not what happens to you that determines how far you will go in life,
it is how you handle what happens to you.
Zig Zigler
You could explain to her that what the property is worth and what she is asking is not feasable. You need to figure out two exit strategies and also figure out a deal that would be a win win for both parties. Show her on paper after you put something good together how it will benefit her if she gets rid of it at your price. Find out what all circumstances she has, you already know one she moved back to be with family so that helps. You could also offer to find her a place where she now wants to be since you have the real estate investor knowledge. You shop for her and find her a great deal and make money in the process. Tell her by doing things this way you can move fast without the worries of realtors. Anything you can do, another is show her what improvements if any need to be done so you can bring the property value up forced appreciatio stuff, paint, landscape, simple quick eye catching things that don't cost a bunch of money. I also agree with cathy get deed subject to mortgage. You a lot of people say its illegal but its not because the banks do put a clause in the paperwork about this stuff. But here's the thing they are not going to send the mortgage police knocking on your door or anythig as long as they are getting there money every month they could care less really who it belongs to. If you moved fast you could do this in under 90 days and move the property to another buyer and make a handsome profit. Goodluck!
My youngest son and I.
You will need to find out if her mortgage rate is fixed or adjustable, too. VERY IMPORTANT!
Tell her that she will have to continue making the payments until you can get a Tenant/Buyer in the house. Also, she will need to keep ins and utilities on so that you can show the house.
You need to see what the laws are regarding L/Os in MI--as far as the length of term allowed, because as Cathy said, with the prop being upside down, you will have to sit down and use the amortization table with her mtg rate vs value of house to see how long it will take for the numbers to meet. That is how long you would have to do a L/O to make it work. Just Google "Lease Option guidelines in Michigan"
You will need a Lease With the Option to Purchase Agreement and a regular Rental Agreement with the seller. And, as you said, the authorization for the bank to give you info. You want to have the rental agreement because if the T/B quits making pmts it is faster and cheaper to evict than to foreclose. In the rental agreement make absolutely NO mention of the Option to Purchase Agreement.
Do all this and then we can talk about what you will need for the T/B, if this is still a go.
Karen
"You're never too old to be what you were meant to be!"
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The seller owes 88K, the house is worth 75K and needs repairs, seller wants 92k? Sometimes u have to stand back and let the seller make a few more payments on a vacant house and their motivation gets in gear.
I wud offer to take it over for the loan balance only, and then wait, sometimes I offer $2,000 to get the seller motivated. Dont be in too big of a hurry to jump on this, the seller needs u more than u need this deal.
Rando