Can I Lease Option or Sub 2??

Question

Hi Guys, I have a owner that wants me to take over her payments. She is 6 months behind ($3,785.98 approximately)with a notice if default included in her last statement. She intends on letting the property go into foreclosure whether I take over payments or not. According to her statement she now owes $86,609.68. Her payments are $612.00 piti and the house is located in Georgia. She has taken excellent care of the house and it is move in ready. Just needs to be broom swept then its good to go. Chase has the note and they are estimating that the market value is between 68k-78k. The owner is fine with leaving the loan in her name and me putting a owner occupant in the house. I just need to see if there is anything here I can do. All help is greatly appreciated.

Bill Gulley · Answer

Sorry, you said notice of demand was sent. After notice, an owner may not further encumber the property, they may not grant any interest in or to it except in a sale where the mortgage in default is paid.If you were to pay her anything, it would be equity stripping, same with any rents received above the note payment as all interests in rights to the collateral become due to the mortgagee.If a bank allowed a mortgage to be brought current and allowed her to rent, of sell, that might be different, this bank won't I'm sure......this is a "sorry & walk away" if you can't buy it. There are also new laws concerning those who have received notice, no more "I can help you" arrangements or interfering with any foreclosure process, banks don't due lease purchase deals. Fines are stiff and the bank can nail you. I suggest new investors stay away from foreclosures unless they can actually buy. :)

Brian Gibbons · Answer

What @Bill Gulley just wrote is what happens with banks and loans in arrears, and mortgages in default.Watch out.Look for current mortgages and make some money on sub2, lease options and wraps as acquisition strategies, or just pay all cash with JV Partners, Private Lenders, tradiional 20% down banks, or Hard Money Lenders.ever read your "foreclosure rescue" internet threads on the FBI site or the Attorney General sites? It is a Brave New World in foreclosure investing.See GA http://dbf.georgia.gov/foreclosure-rescue-scams

Brian Gibbons · Answer

@Patricia McleanShe owes 87 it's worth 68 to maybe 78, call it 70It takes about $4000 to cure the noteWhy would you overpay for the property and why would a tenant buyer overpay for the property because they need to get a loan?Master lease comes from commercial property where you lease from a seller and sublease to a tenant for a difference in rent

Patricia Mclean · Answer

What is a master lease anyway?

Patricia Mclean · Answer

How would I be able to do that considering what she now owes? Also, if she where to get mortgage assistance would that help at all and I still be able to do a lease option?

Brian Gibbons · Answer

@Patricia McleanIf this property is upside down (another words she owes more than the property would be worth) I would seriously walk away and passIt's important to "buy equity with subject to" because if a loan gets called it has to have some kind of equity to deal withIn my view $100,000 house is only worth 90,000 because it cost 10% to sell with commissions and closing costs, that is at zero profitSo I start to get interested around 80,000 and really interested around 70If you got a pretty house and quiet street it's four bedroom two bath and it's good market rent and the PITI payment is cheap, that I might reconsider those rulesOne other consideration is to do a master lease or you leased the property for a cheap price and sublease it out for greater price

Patricia Mclean · Answer

The seller is not looking to get anything out of this deal at all. She just wants to be rid of the property. She has health issues and says she want to get this done. I expected to use a third party to make sure the mortgage was paid. Not thru the seller.

Patricia Mclean · Answer

I was told that I should not do a sub 2 because of the problems she is having and the DOS clause. I would prefer to take it sub to but, I dont want that to happen. At least if I do a L/O I may not have that as a problem. Do you for see any problems taking it sub 2?

Brian Gibbons · Answer

One of the things you got to ask yourselfthis seller has financial difficulty and how can you protect the new tenant buyer if you do find a tenant buyer, to prevent the seller from not paying the mortgage?See www.notecollection.comUse this company to collect payments from the tenant buyer sent to the note collection company, and they disburse funds for principal interest taxes and insuranceThe other issues you got to think about is what if creditors attached liens against the seller's house? That's going to affect the tenant buyer from buying the houseWhen I have somebody that's in arrears and has a reasonable amount of equity, I would buy it on subject to, or cash, or a wrap, and either rent or lease to own as an exit strategy@John JacksonWhat do you think about dealing with the seller that's in arrears?

Patricia Mclean · Answer

Thanks Brian, I spoke with the owners lender and they said as of today she is not in foreclosure but she will be sometime in the next month or so. They say she has the option of making 4 payments or mortgage assistance. If she does mortgage assistance and sends the info in whatever action if any will be stopped. I was thinking if I can't do s sub 2 I can do what Bill suggested and Lease option it to a tennant buyer, collect 5k as a deposit and pay what it owed. Can this work?