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no equity - negative cash flow - no money down... would you AFS/POA/JV ?

Alvaro Sanchez

Ottawa-Gatineau Investor
Registered
Joined
Jun 5, 2009
Messages
966
I was presented with a case where there is no equity; mortgage payments + condo fees are higher than possible rental income in the tune of -200 month. These numbers are yet to be confirmed.





I am looking to offer a solution via AFS/POA/JV where I take control of the property so that I rent it out, sell it or RTO at a later date. They are moving away to another province due to work (new job) so they want debt relief.





My plan is:





a) Having AFS/POA or even JV type document.


b) Asking three months of payments. (if I find tenant then they are not required)


c) Make sure that mortgage/taxes get paid every month.


d) There is not term but current mortgage is not due until 2 years from now.





There is "potential" to turn it around for a break even scenario or private sell with minor work for a 10k forced equity or get it into RTO deal (Yet potential)





The ideal scenario is having positive cash flow (+free equity with no money down) but it is not the case` so would you entertain a deal like that?
 

Sherilynn

Real Estate Maven
REIN Member
Joined
Oct 22, 2007
Messages
2,803
Maybe I am misreading this, but it sounds like you would be working for free. Are you thinking of doing this just to help the person or are you doing it to make money? I could understand doing this for a friend or family member as a favour, but it is a lot of work to just break even.



If you offer it as a Rent-to-Own then you should be able to get a bit higher than current market value, but your rent would still just cover your costs so you wouldn't see any income until they buy you out, and what if they can't?
 

Aaron Moore

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REIN Member
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Oct 22, 2008
Messages
114
Do you think it's likely you can find a rent to own tenant that would do the following:

-pay a monthly amount to break even or give positive income.

-give you substantial deposit money up front.

-buy out the house in 1-2 years for $10,000+ more than the current mortgage value.

-renovate and fix the minor repairs.



If you think it's likely, then you may want to proceed. I'd probably make the offer conditional on finding a tenant-buyer. And you can let the seller continue to try to sell their house privately... as long as you have a good chance of finding an RTO buyer faster.
 
L

lanedry77

Guest
Guest
Alvaro,



For me, I was out from just your subject line; "no equity - negative cash flow"



how many of those kinds of deals would you need to become wealthy? (hint: it's a negative number!)





Thanks,



David.
 

Alvaro Sanchez

Ottawa-Gatineau Investor
Registered
Joined
Jun 5, 2009
Messages
966
It's nice to have other set of eyes.... after looking into more details, I just could not see how I can help them out (while making $ on the side). It's hard to walk away when you get a house with no money/mortgage qualification, etc.



On to better deals, thanks!
 
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