Motivated seller property with numbers

[Scott B.]

Hi, so I came across a property today through a motivated seller. The property still has a 130K mortgage and is appraised at 160K. ARV estimated to be 200K

The cost for PITI is 1,300 per month.

It has not been updated in 55 years, so the electrical and maybe the plumbing would require replacing.

I estimate the rehab costs to be 50K. How could I help this person get out of the problem house?

It is about to begin the notice of default process. A lease option is possible, but what about a short sale with the bank for say, 70-80K and then rehab and sell for a 60-70K profit?

Also this house is my relatives home.

Tags: Flip, rehab, creative financing, flipping, ohio

[Shoshawna Merten]

Scott,

The best option is for them to sell or refi as mentioned above. There is no way to determine how much the lien holder will take for the short sale. When doing a short sale its a very lengthy process which involves a huge explanation as to why they need to sell, what caused the hardship, etc. It is not as simple as saying do a short sale and try to guess what they might take. The short sale is determined by how much is owed and the loss that the lien holder will take. Also keep in mind sometimes (most of time) the lien holder has a stipulation that the purchaser of a short sale cannot be related to the seller it has to be an arms length transaction. If you want to get something out of it you might be able to wholesale it but it doesn't sound like there is enough meat on the bone for a flipper to come in and make anything. As Brent mentioned sometimes giving good advice has its own reward. My advice is to tell them to for sale by owner or list it for sale with an experience broker.