How do I make a deal happen with a house that is overleveraged and has a large default amount?
The new house is worth $500,000. Loan balance is $480,000. Default amount is $12,000.
I am new to real estate investing. With this situation, I am thinking lease-option. What about the default amount, is it due immediately? Please give me your ideas/experience/advice. Thanks.
- acermillLv 71 decade agoFavorite Answer
Without prior agreement with the lender, you are expected to pay off their encumbrance on the property at the time of closing. That would mean, if I am reading correctly the information provided, that you would be expected to pay off the $480,000 loan, plus the $12,000 which the borrower is in arrears, for a total of $492,000. Technically, of course, you would be paying these amounts to the current owner, who would be required to immediately turn over these funds to the lender in order to obtain clear title from the lender to transfer the property to you.
If this is a property which is facing or in foreclosure, do not expect the lender to become involved in any type of lease-option arrangement. Lenders are not in the business of owning real estate. Their focus is on lending money for a profit. When faced with a default, a lender looks to get back their investment in the property, and generally wants it sold without future financial entanglement on the part of the lender.
You also do not state in which manner you came to the decision that the house is worth $500,000. Do not take the word of anyone relative to this valuation figure unless you have satisfied yourself that due diligence has been exercised in reaching this value. Given the volatility of today's real estate market, your $500,000 house could end up being worth $460,000 in a few months. The location of the property in question combined with the real estate market conditions in that area are of utmost importance to you as an investor.
I am located in a real estate market which generally remains quite stable in the face of the swings in the marketplace in other areas. Nonetheless, I have seen market values slipping slightly. Be cautious and do your homework !
- dubykLv 44 years ago
Why would not they cord you the money? And as well, in case you deposit the verify right into a business enterprise account, the business agency might want to carry it till it cleared. If THEIR verify bounces, they are those who might want to get charged a cost. you at the instantaneous are unlikely to be able to apply any of that funds till that verify clears. also, in the adventure that they are sending a verify, they extremely might want to deliver a economic agency verify or cashier's verify, on condition that those type of checks are certain through the business agency that writes them. Did you signal a freelance with those human beings? beware if that is a scam, sorry.
- EnderLv 61 decade ago
Sub to where seller contributes to the monthly payment. Either that or a short sale.