How to Buy: Distressed Seller on verge of Foreclosure

[Charles Schram]

Looking to write an offer on a distressed property where agent told me homeowner is on the verge of foreclosure and will reduce it another $50K less on an already reduced asking price. I plan to offer another $50K less on top of that. Question: Is there a smart play here for seller financing and doing rehab (or any other plays when dealing with a pre-foreclosure)?

Was originally priced at $385K. Price reduced to $350K. Owner paid $392K back in 2020, and agent says he truly got screwed in her opinion. Owner’s mortgage was $2100 and bought if for. It was rented out for $1500.

From agent: “It’s perfect for anyone looking for a vacation home, rental, Airbnb. It just needs some work or maybe an extra bathroom would be the key.”

As an architect, I’m happy to put ~$50K of work into this if I can finance it. Only looking to put 5% down max. 

Plan would be to treat it as a primary residence with conventional loan and possibly an FHA rehab loan to do some upgrades and bath addition, then refi then and roll into a short term rental at ~$3000/month+. Goal is to stop paying rent in Los Angeles and start BRRR'ing and BRRSTR'ing.

Looking for opportunities 1-2 hours surrounding Los Angeles for under $350K to do some level of a house hack (although don’t want to rent in same unit so duplex+ is preferred) or live in it for 6 months then rent out and repeat  

Appreciate any and all thoughts!

Thanks! 
Chad

[Chris Seveney]

@Chad Schram

Your offer is irrelevant if it’s less than what he owes on his mortgage as the bank will not release the loan and it will go to foreclosure.

If you do subject 2 you are paying off the past due and still the balance which seems like you would be overpaying

This home is going to foreclosure