All Forum Posts by: Curtis H.

@Account Closed

That is just a weird product from the banks. Loaning $900K on a $500K property? So what you are saying is this makes no logical sense and I agree.

@Rick H.

You encourage and scare me in the same post :-)

So you have done plenty of RM deals, but at the same time there is a HIGH possibility of exposing yourself to kids protecting their meal ticket and claiming elder abuse. My area there is a high number of seniors, so the potential if I became educated about it is high. So has anyone ever claimed you did the same thing to their poor old parent? Did you come out ok?

@Account Closed

I guess I just need to get that info in order to move forward, but doesn't sound like much of an opportunity at all. What's confusing is if a RM is for people who own their home free and clear, and they did NOT take a lump sum of money, how can they NOT have equity? I don't get that. So if they own a $600K house free and clear, and get a Reverse Mortgage where they got $100K up front and have borrowed another $200K in monthly payments over 5 years, isn't there $300K left somewhere? Or am I missing something? Is that what the bank is counting on? Them dying with $300K worth of equity in a home they own the rights to?

@Wayne Brooks

"and the full price has to be paid by the buyer at closing"

Thanks that is all I needed to hear :-)

BUT...

What if the payoff is not that high, could I in theory have her do seller financing for the rest? So I pay off the reverse mortgage amount with fees, and she carry the rest? That's the part I'm not crystal clear on. Or are you saying there is no way to get out of paying AT LEASE 95% of appraised value in cash?

And thanks your answers have all been helpful and I think will be to others. I searched for Reverse Mortgages and not that many posts came up surprisingly.

@Wayne Brooks

@Account Closed

I just want to make sure I have this right...So if the amount is $735K, and she has been getting monthly payments for 5 years, and the loan term is for 6 years, that she may have gotten a lump sum already? I guess my thinking is if she never elected to get a huge lump sum in the beginning, and have only been getting payments, that she has not borrowed nearly as much as the place is worth?

Also, if she sells to me, they will call the loan due for 95% of the appraised value today, which say is $550K, then I would have to get a loan like any other house on the MLS and pay off the lender. Correct? So either way, once the banks get someone to agree to a reverse mortgage, they win. I thought maybe I could get away with paying only the balance she borrowed and some fees, and she gets the remainder in monthly payments that she needs to live off of, and the rest of the payments get passed to her sons when she passes.

So I have learned that when trying to create a list with owners who have less than 10% equity, I accidentally made a list of a bunch of reverse mortgage owners and mailed all of them. LUCKILY I only mailed one zip code. But the phone rang...

Situation...

85 year old lady with a BofA Reverse Mortgage and following details...

Amount - $735K in 2009

Home is worth $550K-600K MAX right now if completely dolled up

Loan term 70 months @ 2.74% ADJ

Lives with 1 dead beat son, the other son is in jail. Both supply no income. Believe it or not this is a good area.

She wants out but is too old to think about how to make that happen and what to do with her sons.

She is ok with living in an apartment

My thoughts so far...

From what I have researched, if she is the only borrower, when she dies the sons have to pay off the loan immediately or they are kicked out anyway because the bank will sell to get their money back. So either way they are going to have to move whether she sells to me or the bank sells it when she passes.

This is for me to live in, not an investment opportunity. So there doesn't need to be a whole lot of meat on the bone. My primary goal is to get into a place with as little out of pocket money as possible. Making the payments isn't a problem. This scenario may not work because my guess is a significant dollar amount will be required to be payed immediately when she sells. I don't know that figure, nor would she tell me how much she is getting monthly.

Has anyone bought a home that has a reverse mortgage on it?

@Mark Reynolds

I did not find a phone number but found an address. I forgot what service I used online but it wasn't very good. I mailed them a letter. Haven't heard back yet and it's been about a week since he probably got the letter. I guess I could pay more to use a better service but I don't need a subscription, I just need a one off.

@Brian Gibbons

Thanks for taking my call! I updated my picture so I don't look like a felon who doesn't want to be identified :-)

So I took all of your advice and decided against trying to go around the property manager. Had a good talk with the guy, but he works for a company and the head of the company is some big realtor lady. So yeah, that's going to be interesting if the seller even SEES my offer.

The guy who showed me the house was very informative and indeed told me the owner was an 80+ year old man who didn't want to sell when they initially tried to get him to. I assured the property manager over and over that there would be compensation for them if the owner sells to me, but I don't know how far that will fly.

I presented him with two options...

1) I pay him full market value for the house on favorable owner financed terms. Installment sale as Brian put it. This makes him the bank but allows him to cash in on the home's current high value. Guaranteed payments for over 20 years to leave to his children. I get a house without having to get a loan from the bank.

2) Standard Rent To Own contract. I rent for a few years with a portion of the rent going toward rent credits. I cash him out at the end of the term or I walk. If I don't cash him out and want to re-rent again, I lose my rent credits. The benefit to him is he still doesn't have to take care of minor repairs and I treat the place as if it's mine. Better than a standard renter.

I will follow up with the prop manager tomorrow to see what happened. If I get the feeling he is lying I am going to skip trace the owner and make sure he got my offer. Not sure how else to play this.

@Brian Gibbons

I am right around the corner from you in Burbank :-)

I'm going to be ramping up my marketing and may even have to pass some deals to you if I'm not ready to close them. Lease Options just seem like a good strategy out here with all these homes with no equity.

I will ask the property manager as you guys suggest. You just never know if it will get back to the owner the right way, if at all.

When you say installment payment at 70% market rent, are you suggesting that I offer him 70% of market rent guaranteed for the least term?

@Elizabeth Colegrove

The part I didn't mention on the repairs is that I would put in the contract "up to $500". That number can be higher of course. Any major repairs they have to take care of. All of the small middle of the night stuff I would handle.

@Elizabeth Colegrove

Ok that was my initial thought. The hesitation was because my plan is enticing to the owner because of the property manager being out of the picture. They are paying him first month rent ($2500) and 8-10% of monthly rent ($250/m). So really they are only collecting $2250 net profit per month on a home that could fetch $2700 easy with some sprucing up. If I guaranteed them $2400 per month for 3 years, and have the first option to buy them out with say 50% rent credits if I do, that would be a winning situation for the owners. Especially if I'm taking care of repairs. This is of course if they are motivated to NOT be landlords and want to cash out. I would only do this if they allow me to sublease of course. That way if I find something better, I will just turn around and do a Rent to Own with a tenant buyer whom will give me option money on top of higher rents.

I just want to make sure my thinking isn't off :-)

@Brian Gibbons

What ya think?

Hello BP,

So there is a home that I looked at today that is available for lease. It was shown to me by a property manager. It looked like a classic case of someone who accidentally turned into a landlord. The home needed some updating, DIDN'T have a dishwasher or a hook up (first time I saw that), etc. House has been unrented for a month at a decent price. Unusual for this market. I did a property report and all that came up for loan info was that it was a $0 Grant Deed in 2001 and the seller was Veterans Welfare Board. Sellers seem in their 80s at least so we may be talking family members here.

I want to see if the seller is open to selling on a lease purchase where I guarantee rents for 2-3 years and then buy them out at the current market value of the home. No realtor commission and no repairs on their part, and I get a home without having to immediately get a loan. Or I could simply sublease it and get a $300 spread and whatever option money I can collect from a tenant buyer.

I am hesitant to tell this to the property manager for obvious reasons, but I have no info on the owners unless I skip trace them. I can guarantee the prop manager that if the owner approves I will cut him a check for his "first month's rent and his 8% for this year". Looking at about $5K to have him on my team and it would be worth it if they said yes, and he would have a lot of influence on that decision I bet.

What would you do? Skip Trace or team up with prop manager?