Help me analyze possible deal

[Curtis H.]

Hey all,

So here is an opportunity I came across and need to see what makes sense here. I know the owners personally and are family friends, but they are DONE with the house they said. Ready to move out and move on with their life. Details are as follows.

* Home in Round Rock, TX but I live in SoCal. I have other rental property out there already as I lived there years ago.

* $150K ARV, has foundation issues probably $15K to be safe. Rest is cosmetic. Good neighborhood

* Bank threatening to foreclose, but haven't started process yet.

* Owe $94K on loan, but after two weeks got another notice saying they now owe $131K after fees and penalties. Owners think that was done to make sure if they tried to do a quick sale they wouldn't walk away with any equity. They said the $131K amount is totally inflated. Not sure how true or common that is.

* Payments are $1300 per month, but they were paying $1100 because that's all they could afford. Interest rate is 7.5%. Loan has been in place for 20 years.

* Fixed up, could rent for $1500 per month

Owner "would rather give the house to someone he knows instead of letting the bank take it" so is pretty motivated. He also doesn't want the embarrassment of being put out, vs leaving on his own terms.

Is there a deal here? I would assume that this is 100% dependent upon the bank willing to take less than the $131K they are saying the owners have to pay. Could I start the short sale process with the bank and that would stall the foreclosure? Owners seem to think they will take less because they haven't foreclosed on them when they were in this situation a few years ago.

If they want to leave now, could I start the short sale process and rent out until the short sale goes through? I know there is an investor out here who does that with short sales and raves about it. Not sure how ethical or safe that is. But heck if they WANT to leave and are not making payments anyway, why not let it generate income until the process goes through and rent out month to month at a discounted rate?

And finally, what amount would you offer the bank on a short sale?

Thanks!