Adam
New Contributor
First, while I understand the strategy, you have to be careful when guiding people that are about to go into a foreclosure situation. When it comes to residential properties, that are owner occupied or owned by a non-professional landlard (IE - property mgmt is not their primary occupation), I would NEVER recommend that they not make a mortgage payment.
By doing so, especially if your motive is to purchase the property, you are opening yourself up to incredible amounts of liability. In many states, there are now implied agency relationships between a loan officer/realtor and the client. Recommending that a client not pay their mortgage (while it might make sense) is clearly not within the boundaries of an agency relationship. Andviv, i'm not sure if you are in the real estate/finance business, but those that are, need to be careful when giving this advice. Before not making a payment, they need to talk to both lenders (1st and 2nd). I have seen lenders cut interest rates to make the loan work for a borrower that is current. It tougher with investment properties, but I have seen it done.
I'll get off my soapbox on this topic...
Anyway, what this client needs is someone that can get the property rented. 60 days of vacancy is unacceptable in this market. After the property is rented, if their credit allows, they need a new loan. 9.5% on a investment property is a good 2.5-3% above market. However, lets assume that a new loan is not an option. They need to find an agent, like andviv said, that works only with investment properties and short sales (it goes hand in hand). Contrary to popular belief, it is very hard to SUCCESSFULLY negotiate a short sale if you don't know what you are doing.
This goes back to my firm belief that unless you are a seasoned investor, you need to keep all your properties within a 50 mile radius. The farther away they are, the tougher it is to manage. A 2-unit can be managed by a 3 year old, there is nothing to it. However, when your properties are spread out too far, management and property oversight is very tough.
By doing so, especially if your motive is to purchase the property, you are opening yourself up to incredible amounts of liability. In many states, there are now implied agency relationships between a loan officer/realtor and the client. Recommending that a client not pay their mortgage (while it might make sense) is clearly not within the boundaries of an agency relationship. Andviv, i'm not sure if you are in the real estate/finance business, but those that are, need to be careful when giving this advice. Before not making a payment, they need to talk to both lenders (1st and 2nd). I have seen lenders cut interest rates to make the loan work for a borrower that is current. It tougher with investment properties, but I have seen it done.
I'll get off my soapbox on this topic...
Anyway, what this client needs is someone that can get the property rented. 60 days of vacancy is unacceptable in this market. After the property is rented, if their credit allows, they need a new loan. 9.5% on a investment property is a good 2.5-3% above market. However, lets assume that a new loan is not an option. They need to find an agent, like andviv said, that works only with investment properties and short sales (it goes hand in hand). Contrary to popular belief, it is very hard to SUCCESSFULLY negotiate a short sale if you don't know what you are doing.
This goes back to my firm belief that unless you are a seasoned investor, you need to keep all your properties within a 50 mile radius. The farther away they are, the tougher it is to manage. A 2-unit can be managed by a 3 year old, there is nothing to it. However, when your properties are spread out too far, management and property oversight is very tough.