Possible Foreclosure Situation

[Braindan]

Hello Friends,
I just got a call from a friend of mine who indicated that his rental mortgage banker is about to foreclose on his property. He has just listed it with a realtor and is asking about $240,000 (a duplex aorund yellowhead trail and 97 street). He wants me to buy it if possible. This is all the information i have at this time though I have scheduled to meet with him either on Sunday (11 Apr) or Monday (12 Apr) to get more info.

My question is how should I approach this potential deal/circumstance? Can we do a win-win deal and if possible how? Any ideas on possible scenarios to tackle this will be greatly appreciated. In the interim, I have asked him to suspend the MLS listing for a few days since he has just signed the contract and it`s yet to be activated.

Thanks a mil in advance!

Brendan
(780-242-4785)

 

[invst4profit]

Doing a win/win deal will depend entirely on the sellers situation in this case. He needs to avoid a foreclosure and you need to get a good deal.
What is most important is whether he has any equity left in the property. Ideally if you can buy 20% below market and that price pays off his mortgage then win/win. You get a deal and he avoids the negative impact of foreclosure. If he also walks away from the deal with money in his pocket all the better.
However if you can not buy below market you might as well let him list.

If on the other hand if he is upside down on his mortgage then the likely hood is he will end up in foreclosure unless he is willing to accept less than is owing and eat the loss.

The question is are you doing a friend a favour or making a business investment.

 

[Thomas Beyer]

QUOTE (Braindan @ Apr 10 2010, 04:18 PM) ..

My question is how should I approach this potential deal/circumstance? ..
Assess how much money this friendship is worth ! $2,000 ? $10,000 ? $50,000 ?

Buying his asset is an option AT THE RIGHT PRICE if it makes sense to you if he were not your friend. Then consider if you wish to pay him slightly more because he is your friend.

A second option is perhaps you lend him some money in return for equity in the asset / future cash-flow or upside !

Also consider after purchase work and $s, like fix-up costs, mortgage carrying costs, arrears both legal and interest), operating expenses, vacancies, property management ..

The worst case for your friend in a foreclosure in Alberta is: he loses his investment/equity and his credit. He may keep you as a friend .. possibly a great asset for the next deal together !