What To Do With Upside Down Properties

Are you seeing more and more properties coming at you where the seller is financed to the hilt and just looking to get out from under their debt? Maybe this sounds familiar…

"This week I have had maybe 75 properties come across my desk and a majority of these properties are in the exact same situation. They have 80-20 loans and are at 100% of value. While I know from my education that it dose not qualify for a short sale. The reason being that the properties need no major repairs and while the payments are behind many of the owners especially out of state have other assets. The owners are afraid of the lenders coming after them. Even though I believe Az. law does not allow this.

My question is are there any other ways to attack the situation that you might add? Taking properties "Subject To" is not an option with such high payments and the fact that it seems harder to move with a lease option of late. Is it just a waiting game, still?"

Patrick

Patrick is not alone because overfinanced sellers are a dime a dozen. So what can you do if one of these "deals" comes your way?

If you are lucky enough to live in a market where you can cash flow the property then buying them "subject to" is an option. Yes, you’ll become a landlord with tenants or lease option buyers but it can put you on the path to becoming wealthy. My advice would be to make sure you net $150-200 per month and that is after all expenses including taxes, insurance, maintenance allowance, and property management.

Some of us are lucky enough where we can cash flow these properties and if that is you consider yourself lucky. Now is a great time to build your inventory and later when the markets change you can cash out for the big bucks.

NOTE: I did not say buying properties without equity is a good idea. There is a viable strategy in buying for cash flow and it can be done at full price… although I prefer to get fr.ee equity even when getting the deed.

Unfortunately Patrick is in Phoenix Arizona so buying for cash flow is pretty much a thing of the past. So what can you do if you are in a market where the mortgage payments exceed the market rent for the homes? Short of moving there is an alternative.

If the payments are behind you can go for a short sale and In.stant Real Estate Profit Pro, www.realestateprofitpro.com, can prepare the entire packages for you.

As the times change so must our investing strategies. A year ago I would not have chased a property that is 100% financed with an 80/20 loan. But today I would consider it. Why? Because the banks are changing with the markets and accepting discounts that are hard to believe.

For instance this week I was speaking with a seller that purchased a house just 5 months ago and is now having trouble making the payments. I forget the exact loan balance but it was around 500K. To make matters worse home values have dropped substantially in her area and newbuilds of the same model are selling for considerably less from the same builder.

Right now she is not even in foreclosure and she has spoken with the bank - they told her they would be willing to discount the loan to around 70% if she could find a buyer. Imagine what they will do after she misses a few more payments and they have to start a foreclosure. (Please read this paragraph about three times. It's that important.)

So forget everything you thought you knew about foreclosures and what banks are willing to do. Times are changing and new opportunities are coming our way.

My advice would be if the payments are not current to consider a negotiating with the lender for a discount or short sale. You never know what they will accept. And when you want to create short sale packages in under 5 minutes the In.stant Real Estate Profit Pro is the answer. www.realestateprofitpro.com.

Just so you know the short sale section of In.stant REPP does the following:
Creates two offers to the first lender
Creates two offers to the second lender
Creates estimated Hud 1 Settlement Statements
Creates Cover Letters to lenders
Creates Offer Letters to lenders
Shows the lenders how you arrived at your offer price
Includes Financial Statement for sellers to complete

And that is just the short sale section. There is an entire get the deed section that has every document you need to buy the property including the right addendums to use when dealing with foreclosures. Or the Automatic Offer section when you want to buy wholesale or with owner terms.

Now go buy a house!