Property with money owed on it

[Justin Porco]

Got a caller from our mailing campaign. Their parents are behind on payments and owe 119k on the property. Property has not gone into foreclosure but eventually will with the family not being able to make payments. This is in a prime location of Pittsburgh (Bethel Park)

4bed 2bath 1400ish sq/ft

Property needs probably 40k in work

Comps are anywhere between 180-200k depending on finishes. 

Thoughts on this deal? Anyway you could come in under the 119 owed? 

[Ron Flatt]

Are they willing to move out or moved out of property already?  Would they be willing to sell "Subject to"?  Can you afford to make up the past due payments, make monthly obligations and do the rehab?  Remember in most states you have taxes due in Dec also.  If they are behind on the mortgage, are they behind in taxes, when is the insurance due etc?

With a note over your head, it will make you want the rehab done fast and efficient, to get it back off your books.  

If they have not already been discussing with the bank, I would doubt a short sale would happen.  I usually bid my rehab a little high, so I would probably be willing to do it.  If you have not done a rehab or fairly new, I would take a closer look to make sure on the cost of a rehab.  

119K + 40K + 9% for closing 180K (16K) = You make nothing for your efforts at $180

119K + 40K + 9% for closing 200K (18K)= You make 20k for your efforts less interest

9% closing covers a realtor, misc. fees etc.