Quick turn/JV

[Joel30]

I`m working on a deal that is a little odd in my opinion and I am looking for some input from someone who has DONE something similar to this.
I Got a beautiful well equipped home that is up side down by about 50k. Mort $406k appraisal $353k market value $360k and my offer of 335K to be accepted.
Genworth is the insurer and is willing to be very cooperative with the owner as the owners have split up and the house will be empty at the end of the month. Their options are foreclosure or sell the house and pay on 70k back to genworth that will be the shortfall after selling the house and paying commissions. Obviously Genworth will be flexible on this, it smells of foreclosure. What I was thinking was I get my built-in equity with my purchase price of 335k and today`s market value of 360k. I would place a tenant buyer in the property for a min two year term, helping mortgage pay down and splitting market appreciation 50/50 on anything over the 353k appraisal until the property is sold to the end buyer. Over three years the outstanding debt would go from 70k to 30k using only 3% / year of appreciation. After looking at it again, it`s more like a JV, they hold the mortgage I manage and we split the appreciation, But I`m going in with built-in equity of 18k. HOW would you structure this? JV, AFS, or something else? I will be talking with Genworth on Thurs to see what flexibility I can get, any advice on this for experienced members. Cheers Joel

 

[antaynguy]

Hi Joe,

A couple of questions that I come up with after reading your post:

1) Are you planning to get a new mortgage for 335000 purchase? Or are you planning to take over an existing mortgage with AFS at 335000 with the seller(JV Partner) makes up the shortfall?

2) What if the value of the property does not go up?

3) How did you get Genworth to talk to you? via power of attorney or are they that flexible since you don`t own house yet. Did you get a lawyer to talk to genworth or just yourself? If you planning to do an AFS, not sure if you need bank involved at least not until your tenant buyer cashes you out and there is still a shortfall.

4) If you get a tenant buyer`s downpayment, does your seller(JV Partner) get half?

Thanks!

 

[Joel30]

QUOTE (antay @ Jan 20 2010, 09:30 AM) Hi Joe,

A couple of questions that I come up with after reading your post:

1) Are you planning to get a new mortgage for 335000 purchase? Or are you planning to take over an existing mortgage with AFS at 335000 with the seller(JV Partner) makes up the shortfall?

2) What if the value of the property does not go up?

3) How did you get Genworth to talk to you? via power of attorney or are they that flexible since you don`t own house yet. Did you get a lawyer to talk to genworth or just yourself? If you planning to do an AFS, not sure if you need bank involved at least not until your tenant buyer cashes you out and there is still a shortfall.

4) If you get a tenant buyer`s downpayment, does your seller(JV Partner) get half?

Thanks!
1)Taking over the exsiting debit with a AFS, and 2)I supose it`s possiable that it might not go up, but thats not my opinion. 3)Genworth is being very flexable as there are liable to lose close to $100k, so they are open to option.
4)no the down payment is mine
Has anyone seen something like this, or am I out to lunch.

 

[antaynguy]

QUOTE (joelast @ Jan 20 2010, 09:00 PM) 1)Taking over the exsiting debit with a AFS, and 2)I supose it`s possiable that it might not go up, but thats not my opinion. 3)Genworth is being very flexable as there are liable to lose close to $100k, so they are open to option.
4)no the down payment is mine
Has anyone seen something like this, or am I out to lunch.

Hi Joe,

1) Not sure if if you would be able to cashflow if you are taking over mortgage payment that is worth more than the value of the property. You would have to consider the tenant buyer`s monthly payment aswell. It would be okay if the number works.
2) I am not saying the property would not appreciate or not, noone can predict that. I am simply referring to how will you handle the loss? 50/50?
3) If you are buying via AFS, why would you involve Genworth? Were you planning a short sale?

I have not seen a deal like this before, but it does not mean you are out to lunch. I would love to hear how it pans out.

Thanks!