Need Advice | Would you do this Sub 2 deal?

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  • Dear Jackie and CFD members,

    My husband and I are realtors and investors in the Kansas City area. We have done some Subject to deals and seller financing so we aren’t new with creative financing. Here’s the problem:

    A friend from church is going through a divorce. She’s soon to be a single mom of 2 small kids and her mother is living with her. She bought a condo about 14 years ago on her own. She paid a lot for the condo (prices were high) and took out a $70k mortgage. She owes about $54k on it now.

    Current value in it’s present condition for this 2bed, 2bath condo is about $63,000 but with BOTH bathrooms in the middle of a remodel that was never finished, along with paint, possibly refinish the wood floors, a total of maybe $5,000 in repairs it could be worth about $75,000. She will give it to us for the loan balance. She just wants out and her husband doesn’t want the place either.

    Here’s the PROBLEM, I did a title search and there are TWO mortgages on the property. They were going to refinance their loan 12 years ago with Countrywide but after they signed the docs, they called their loan officer and canceled the deal. (3 day right of rescission). Bank of America bought Countrywide and they have NEVER collected a dime on the note but 2 years after they signed the docs, someone went and recorded it on the property! We think the file was audited during 2008 and someone mistakenly recorded it. There is also an $8000 loan from a local bank that is paid but not released.

    Bank of America’s Lien Release department says that it could still take another 15 business days before an answer. I sent them docs over a week ago.

    If the title wasn’t messed up we would have closed two weeks ago when she moved out to a much nicer duplex with a yard. I know there is money in it but I don’t want to pay the $750 ($525 loan & $250 HOA) for June and I don’t want to invest $5000 if we can’t get clear title to sell it.

    Suggestions? Would you do the deal anyway? Are we being crazy not to get started on this whole thing? She can’t afford two monthly payments, that is why we thought we’d be taking over in June.

    Any ideas or suggestions are greatly appreciated! 🙂

    Darcy Tafoya

    Hi Darcy

    it is too skinny! You should not buy this one… but you could get an option then do a highest bidder sale, selling it with seller financing wrapping the underling loan ( but make it subject to you clearing the title issue of course). A contractor or rehabber would jump all over that one.

    The down payment should be enough to catch up the June payment and maybe a little extra.
    You might even get a little cash flow out OR you could pass that cash flow on to the single mom who could surely use the $

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