What would you do with this?

[suburbantim]

I found a homeowner that recently went into foreclosure. She is divorced and just can't afford to keep up the payments.

The first mortgage is $65,000, the second is $15,000. Both with the same lender she said was TCO/Charter One. After some internet research I determined the house is worth about $75,000. She confirmed in our telephone conversation that a similar house across the street sold for $74,000 and without looking I'm going to assume (for the purpose of discussion) $10,000 in repairs. Don't worry I have some experience in home repair and remodeling and I will do a very complete and detailed estimate before proceeding.

This is obviously a short sale candidate. I would like to tie it up, negotiate the short sale and flip it to another investor for 70% of retail minus the hypothetical $10,000 in repairs minus my $5,000 as wholesaler leaving a final number I can pay the lender $37,000. I can get all the info and forms from the internet or the lender but I have a few questions:

1. Should I just get the deed or put the property into a land trust with the owner as the beneficiary and myself as the trustee?

2. Is the proof of funds required at the onset of the short sale negotiation?

3. Where would I get a proof of funds. I don't know the final price. My lender is going to want the appraisal, etc, etc. before giving me a mortgage committment.

Thanks for you help. I'm going to search for more educational material and specifics but these are just the initial question that pop into my head.

[suburbantim]

Sorry folks. I'm really not an idiot but I didn't know the first thread posted.

[Debbie]

Are you saying that you typed it up as a practice?

Are you saying that you'd like to see this thread deleted?

[suburbantim]

No, the thread is fine. When I posted it there were two copies but everything looks fine now.

Thanks

Tim

[Debbie]

No, the thread is fine. When I posted it there were two copies but everything looks fine now.

Thanks

Tim

Ah...now that makes sense.

[brianb_cobbres]

I deleted the duplicate a few hours ago.

[Dan Auito]

Tim I don't see near enough margin in the above deal to even begin to worry about this deal. There are better deals than this in my opinion. I understand that if you don't ask you won't receive but 37K? I don't see the lender enetertaining that.

[Debbie]

I deleted the duplicate a few hours ago.

I thought so....:SM023:

[Invstr73]

1. Should I just get the deed or put the property into a land trust with the owner as the beneficiary and myself as the trustee?

Many in the short sale game will suggest you do, some won't. This is personal preference. I personally just get the house under contract with the proper disclosures etc.

2. Is the proof of funds required at the onset of the short sale negotiation?

Each lender is different with their requirments for a short pay. You need to speak with them and find out what they want. Some ask for proof of funds initially, others never.

3. Where would I get a proof of funds. I don't know the final price. My lender is going to want the appraisal, etc, etc. before giving me a mortgage committment.

Find a Hard money lender in your area and ask him/her to draft you a a funds letter. Conventional financing will not work for many deals needing a lot in repairs.

Now regarding this particular deal, it seems a bit too thin to get involved on the surface unless it has a large amount of repairs or some other issue I would proabably pass. Also, keep in mind that 70% - repairs was the old standard for what rehabbers are looking for.

I would like to tie it up, negotiate the short sale and flip it to another investor for 70% of retail minus the hypothetical $10,000 in repairs minus my $5,000 as wholesaler leaving a final number I can pay the lender $37,000.

I'm finding it increasingly difficult to find folks who will pull the trigger at 70% - repair number because their hard money lenders are not lending as much and are lowering their figures. So, in turn, we must lower ours.

I like to work deals that has a 2nd mortgage with a DIFFERENT lender. You will have a much larger chance of success on a steep discount. Make no mistake however, a steep discount on a house like this can be done. Depending on how well that BPO comes in. It has been done it successfully. It takes a bit more work. Hope this helps.