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I talked to a lady that has a property that is around $6000 behind on payments because she had a bad tenant and some medical bills at the same time. The bad tenant is out. She is willing to have me catch up on the payments and take over the existing loan. The loan is fixed 6.25% and has 20 years left on it, amortized over 30 years. Their PITI is $1210 and gets $1340 for rent. Not much cashflow at all. However, this is were i thought it might be worth it.
She has around 6 properties in the same area. All are cashflowing. I was going to catch up on her payments but for each $1k above $2500 i get to put a long term option secured by a mortgage on one of her properties. So, i would get options on 4 of her other properties. I would be pushing for a 10% discount today on the market value and the price is fixed and can be purchased anytime after 10 years down the road. Then i would go sell 50% of those options for $2000 dollars to get my initial investment back and pay for the other $2500. So, it would be a no money deal at the end of it all. Any thoughts?
That would work but…
I’d do it a little differently to avoid risks and I certainly would not want to own a proeprty with only $100 a month in cash flow. Yu did not mention what the house is worth and what the mortgage balance is. Keep in mind that there will be penalties and late fees. YOu need to get a letter of authorization so you can contact the bank to get a pay off . I really need those numbers before I can advise you on a game plan.It would be better to get an option on property 1, then do a highest bidder sale for the down payment. You should be able to get the $6k to make up the back payments. (OPM) You might still get the $100 a month i cash flow.
Solve that problem.
the go after options on the other properties but without your cash involved.
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