Title Representative · Fairfax Station, VA · Member since 2017 · 3 posts · 2 votes
So I am a new investor that doesn't have problems finding great deals. The question that I need help with is how do you determine what is a solid offer on their house that they are about to lose? So far what I have come up with is to work backwards from what their house is worth. For instance if their house is $600,000 and you know that they still owe $90,000 on the mortgage, another $50,000 in taxes, it needs $150,000 in repairs, plus $16,000 in real estate fees, and a few grand to carry it for 4 to 6 month waiting for it to sale. So what I'm thinking is to back out those prices for the value of the house then you are left with profit. How much of that profit should be offered to the home owner? Is there a percentage that works for everyone? Or maybe a great program that could calculate what the offer should be? I would very much appreciate any information or help that I can get in this area.
Rockledge, FL · Member since 2016 · 493 posts · 427 votes
9y
John,
Consider that the homeowner in a foreclosure (most likely) won't get a penny. So, your offer is the mortgage balance. If you are feeling a little guilty for making money... I wouldn't. You are taking on the risk of over 300K.
If you still really feel badly for them, like can't sleep at night badly. Offer to set them up in an appropriate rental; first, last, security deposit, and maybe a few months of the rental payments. You could do a profit sharing arraignment with the sellers, but again, if the FC happens, they get $0.00.