How can I make this deal work?

[Tyler J.]

So there is a property for sale by owner for 700k, market 1mil. The inside is completely demolished. Looking at Propstream they have a loan of $580k at 5.3% due on 06/15/2023 (Est. Balance of loan is $200k)
Rent on a finished home here is 4.5k (Im local, so confident in numbers). I can not get a loan for 700k, conventional or FHA due to interior.

What can I do to get this property with low or no money down? Whether or not I do it, Id love to know possible ways to make this deal work

[Randall Alan]

Quote from @Tyler J.:

So there is a property for sale by owner for 700k, market 1mil. The inside is completely demolished. Looking at Propstream they have a loan of $580k at 5.3% due on 06/15/2023 (Est. Balance of loan is $200k)
Rent on a finished home here is 4.5k (Im local, so confident in numbers). I can not get a loan for 700k, conventional or FHA due to interior.

What can I do to get this property with low or no money down? Whether or not I do it, Id love to know possible ways to make this deal work

@Tyler J.

The short answer is that you can't. It is the lender that has to be satisfied, and they won't be satisfied unless they are paid off. They will take this property to foreclosure and investors (with real money) will bid what they will pay at the foreclosure auction. The lender has the right to set what offer they will accept there. (Max what they are owed... but sometimes less based on condition and their preference). If it doesn't meet reserve, the lender would retain the property and likely list it on the MLS through a local realtor where it would become available to the public at a market price for its condition. Trying to insert yourself anywhere in-between is highly unlikely to work. The only angle might be to find the money and work a deal with the current owner to prevent him from going to foreclosure... but like you said, if in disrepair, it's unlikely. By the way, if the loan plus foreclosure costs was $200,000 and the property sold for $500,000 at auction, the person being foreclosed upon gets the extra $300,000 that was paid at auction. (nifty fact). So the equity in the property is the owner's, not the lenders at the auction. If the property DOES NOT sell at auction (reserve not met) the owner gets nothing and loses the property to the lender. The lender could then sell it for whatever price and retain all the proceeds. So if it sold for $400,000 and the lender was only owed $200,000 - lender keeps it all at that point.

All the best!

Randy