All Forum Posts by: David Morgan

Reverse mortgage when she has 25% equity is unlikely to be approved. Life estate is a good idea if you don't need the rent. Buying the house and helping her move may be in everyone's best interest. Looking forward to hearing how this deal works out.

If you buy REO it's less likely, but a title search is still a good idea.

If her house is more than one bedroom, she wouldn't qualify for it on section 8.

@Mike Flora it's conventional, and I wouldn't qualify due to becoming an independent contractor this year. I can get a collateral-based loan from a local bank if the note is called, but nothing conventional. Good idea, though.

I've bought 3 in the past year from auction.com, all great deals -- a tear-down house on 4 acres for $17k that I sold for $35k, a SFR for $38k that now gets $850 rent after some rehab, and a doublewide on 1.5 acres for $7500 -- I'm practically giving the doublewide away as a short term capital loss, and renting the land for someone else's doublewide at $250, and adding pads for two more. All these were REO, so they were already foreclosed and sold by the banks. The outside conditions were fairly indicative of what I found inside. Some properties have broker commissions, so if you are an agent or know one, you may be able to get inside the property to check it out before you bid. I used their title company since they charge you for it whether you use it or not. I actually won a 4th auction and had it in escrow, but the bank eventually cancelled the sale. Got my earnest money back, only lost my $15 wire fee and lost opportunity. All of it was straightforward, and I'd recommend it. But driving for dollars or using a wholesaler will get you deals that are just as good or better, and you'll be able to see the inside of what you're buying.

Foothills Bank & Trust in Maryville, TN is a good one.

Talk to her lender about doing a short sale. Or buy the tax lien when it comes up and foreclose. At that point Section 8 approval for her should be quick, as she's technically homeless. Then let her stay as a tenant. Just throwing out ideas. Sounds like you could really help her, she's lucky you walked in her door.

Lease option might get you the price you want, but maybe not in the timeframe you want it.

My wife doesn't want to know anything about my rei addiction until the deal is done and she can say, "Great job, honey." That means, if I'm buying a house to rehab and rent, I don't say anything about it until it's bought, fixed, the lease is signed, the tenants are in, and a check is in the bank. It also means I have a great general contractor who takes care of the rehab. That leaves me the job of finding great deals, finding the money, and finding great tenants. I genuinely enjoy all those things. She is spared the anxiety of my decisions until it's too late to worry about it, and that's how she likes it. Since we've adopted this approach, things at home have been peachy. She likes the checks.

@Jon Holdman an attorney has me scared. In Tennessee, if someone procures or induces a party to break a contract, that person can be sued for triple damages. And a bank attorney might argue that the damages are the total interest they would have earned from the loan. On a $300,000 loan, three times total interest is a considerable sum. So by notifying them, I was hoping to at least alert them that we're attempting to be above board about it. 

I've seen posts by Bill Gulley and others here who list lender notification as one of the steps in a sub2, I'm just trying to get my head around what I need to do.

Thank you for your guidance, it's very helpful.