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There are several different scams out there
the most popular is to get the owners to pay $7500 to challenge the validity of their mortgage in hopes it will be deemed invalid. If they are successful (1% of the time) then the owners agree to a new mortgage at 2% and market value with the company who gets the old mortgage extinguished being the note holder.
Another tactic is to get the owner to pay $$ to someone to try to negotiate a loan modification or short sale. The short sale requires that they move. The loan mod does not.
Either way, there are better ways to make money with real estate.
As Jack Miller used to say, if everyone else ZIGS, you need to ZAG! Don’t follow the crowd.
Keep in mind that these so called upside down properties may be a chance to do a “Master Lease”. Some people will want to maintain their credit. They may loose a little each month to keep their credit. You don’t have to own all properties. Maybe control with a lease will put some cash flow in your pocket.
Don Wede
That’s correct Don.
But beware of entering in to a master lease situation if there is no equity and an ARM or balloon.
After awhile of the seller “eating” part of the payment, they usually STOP after 6-12 months. I know MANY people
who got caught in the middle of this kind of a very bad situation with the tenant paying on time, and in a 1-2 year lease
but the owner starts pocketing the payments (not paying the mortgage) so the tenant gets foreclosure notices
and YOU look like the bad guy.Jackie
I agree. You either have to be able to make the payments on the mortgage, or be able to view the payment history. If the latter is the case you need to have teeth in your agreement that in the case of non payment you make the payments directly to the lender with credits on your end. You need to protect yourself and your tenant.
Don Wede
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