SubTo on a property nearing foreclosure

[Quentin Johnson]

Hello All, 

I'm considering securing a property that's nearing foreclosure. The plan is to SubTo but I'm unsure of the deals viability. House was renovated prior to the initial purchase. It's move in ready. 

Original Purchase price: $235,000

Remaining: $230,000

Monthly Payment: $2282

Average rent in area: $1800

Zillow Estimate: $252,000

Equity: $22,000

Past due + Current month: $9200

Is there anything that can be done to make this an attractive deal for me and the seller?

[Randall Alan]

Quote from @Quentin Johnson:

Hello All, 

I'm considering securing a property that's nearing foreclosure. The plan is to SubTo but I'm unsure of the deals viability. House was renovated prior to the initial purchase. It's move in ready. 

Original Purchase price: $235,000

Remaining: $230,000

Monthly Payment: $2282

Average rent in area: $1800

Zillow Estimate: $252,000

Equity: $22,000

Past due + Current month: $9200

Is there anything that can be done to make this an attractive deal for me and the seller?

@Quentin Johnson

Where is the angle on this property when the monthly payment exceeds the rent by nearly $500/month?   I don’t see it for a hold.  Is this going to be a flip? 

Randy 

[Quentin Johnson]

[Quentin Johnson]

Quote from @Randall Alan:

Quote from @Quentin Johnson:

Hello All, 

I'm considering securing a property that's nearing foreclosure. The plan is to SubTo but I'm unsure of the deals viability. House was renovated prior to the initial purchase. It's move in ready. 

Original Purchase price: $235,000

Remaining: $230,000

Monthly Payment: $2282

Average rent in area: $1800

Zillow Estimate: $252,000

Equity: $22,000

Past due + Current month: $9200

Is there anything that can be done to make this an attractive deal for me and the seller?

@Quentin Johnson

Where is the angle on this property when the monthly payment exceeds the rent by nearly $500/month?   I don’t see it for a hold.  Is this going to be a flip? 

Randy 

Thats the same question I had. I'm trying to find an angle to make this work to save them from a foreclosue. Flipping will be difficult i think because she had it on the market for 60 days herself and no nibbles. I was thinking hold but saw the same $500 deficit you made mention to. Maybe a government program that pays more than market but not sure time is on our side to apply, get approved and fill with a tenant. Plus the mounting late monthly payment. Currently at $9200.

[Randall Alan]

Quote from @Quentin Johnson:

Quote from @Randall Alan:

Quote from @Quentin Johnson:

Hello All, 

I'm considering securing a property that's nearing foreclosure. The plan is to SubTo but I'm unsure of the deals viability. House was renovated prior to the initial purchase. It's move in ready. 

Original Purchase price: $235,000

Remaining: $230,000

Monthly Payment: $2282

Average rent in area: $1800

Zillow Estimate: $252,000

Equity: $22,000

Past due + Current month: $9200

Is there anything that can be done to make this an attractive deal for me and the seller?

@Quentin Johnson

Where is the angle on this property when the monthly payment exceeds the rent by nearly $500/month?   I don’t see it for a hold.  Is this going to be a flip? 

Randy 

Thats the same question I had. I'm trying to find an angle to make this work to save them from a foreclosue. Flipping will be difficult i think because she had it on the market for 60 days herself and no nibbles. I was thinking hold but saw the same $500 deficit you made mention to. Maybe a government program that pays more than market but not sure time is on our side to apply, get approved and fill with a tenant. Plus the mounting late monthly payment. Currently at $9200.

@Quentin Johnson

So I’ve done a number of purchases at auctions.  So I don’t know what you know versus don’t… so will try to tell you how they go (point being: I’m not trying to talk down to you if you already know this)…

The auction is the legal process the lender uses to establish the fair market value of the property.  This is important, because if the winning bid exceeds the lender’s claim, the homeowner gets the difference from the court as equity in the property.

That is why the minimum bid is set to be the amount the lender is owed (usually).

If the minimum bid is not met, the lender gets the property and the (now former) owner gets nothing.  

Usually the lender incurs all sorts of costs maintaining the property through the foreclosure… legal expenses, taxes, insurance, etc.  so all those fees get tacked onto the balance owed on the loan.  So it is more common than not that a recent mortgage that defaults will not offer an investor a ‘winning angle’ to buy the property and be able to make money.  

I don’t see an angle on this property.., and given the purchase price versus the remaining mortgage this makes perfect sense.  The lender will remarked the property to recover as much of their funds as they can.  An investor is unlikely to bid on the property.

All the best!

Randy 

[Chris Seveney]

@Quentin Johnson

Ok you can sub2 it and be upside down because z estimate is useless or you can buy it at foreclosure for the money owed on it at worst?

Hmm 🤔

[Quentin Johnson]

Quote from @Randall Alan:

Quote from @Quentin Johnson:

Quote from @Randall Alan:

Quote from @Quentin Johnson:

Hello All, 

I'm considering securing a property that's nearing foreclosure. The plan is to SubTo but I'm unsure of the deals viability. House was renovated prior to the initial purchase. It's move in ready. 

Original Purchase price: $235,000

Remaining: $230,000

Monthly Payment: $2282

Average rent in area: $1800

Zillow Estimate: $252,000

Equity: $22,000

Past due + Current month: $9200

Is there anything that can be done to make this an attractive deal for me and the seller?

@Quentin Johnson

Where is the angle on this property when the monthly payment exceeds the rent by nearly $500/month?   I don’t see it for a hold.  Is this going to be a flip? 

Randy 

Thats the same question I had. I'm trying to find an angle to make this work to save them from a foreclosue. Flipping will be difficult i think because she had it on the market for 60 days herself and no nibbles. I was thinking hold but saw the same $500 deficit you made mention to. Maybe a government program that pays more than market but not sure time is on our side to apply, get approved and fill with a tenant. Plus the mounting late monthly payment. Currently at $9200.

@Quentin Johnson

So I’ve done a number of purchases at auctions.  So I don’t know what you know versus don’t… so will try to tell you how they go (point being: I’m not trying to talk down to you if you already know this)…

The auction is the legal process the lender uses to establish the fair market value of the property.  This is important, because if the winning bid exceeds the lender’s claim, the homeowner gets the difference from the court as equity in the property.

That is why the minimum bid is set to be the amount the lender is owed (usually).

If the minimum bid is not met, the lender gets the property and the (now former) owner gets nothing.  

Usually the lender incurs all sorts of costs maintaining the property through the foreclosure… legal expenses, taxes, insurance, etc.  so all those fees get tacked onto the balance owed on the loan.  So it is more common than not that a recent mortgage that defaults will not offer an investor a ‘winning angle’ to buy the property and be able to make money.  

I don’t see an angle on this property.., and given the purchase price versus the remaining mortgage this makes perfect sense.  The lender will remarked the property to recover as much of their funds as they can.  An investor is unlikely to bid on the property.

All the best!

Randy 

I truly appreciate the information. It’s given me deeper insight that I wasn’t aware of and you ultimately confirmed my findings. No deal. Thanks for your reply sir. 🫡

[Quentin Johnson]

Quote from @Chris Seveney:

@Quentin Johnson

Ok you can sub2 it and be upside down because z estimate is useless or you can buy it at foreclosure for the money owed on it at worst?

Hmm 🤔

I was hoping to save them through subto but it’s not going to be a fit. However, I’ll keep my eye on the foreclosure list. I appreciate you. 

[Account Closed]

Zestimates tend to be fairly inaccurate, I would definitely run your own comps. 

[Quentin Johnson]

Quote from @Account Closed:

Zestimates tend to be fairly inaccurate, I would definitely run your own comps. 

Thank you. I sure will. 

[Jay Hinrichs]

Quote from @Quentin Johnson:

Quote from @Chris Seveney:

@Quentin Johnson

Ok you can sub2 it and be upside down because z estimate is useless or you can buy it at foreclosure for the money owed on it at worst?

Hmm 🤔

I was hoping to save them through subto but it’s not going to be a fit. However, I’ll keep my eye on the foreclosure list. I appreciate you. 

just B/C you can get someone to sell you sub too does not mean its a deal.. this is a perfect example. Unless there is some serious upside while you ride out the negative cash flow.