First Deal

Hello all-

after a few months of searching i finally have found a deal that looks pretty good…

3 bed/2 bath
1700 sqft
2 car garage

owner is 5 months behind on their mortgage
payment is $2k per month 7% interest
Mortgage balance is $360k

Property comps out at $470-$480 k

Needs $3k in repairs

Owner will sell it for $395-$400k.

How should i structure this deal. Please help as i’m a newbie.

I’d like to someone how assume the mortgage, bring it current and flip it out if possible.



So you are saying that the owners will take approx. $10,000 cash? Figuring your back payments, repairs, and other holding costs, and assignment fee. To re-instate the loan and flip, you would do a subject to. What were you thinking of offering the owners?

Where is a 1700 SF house worth $480,000? Just curious.

Where did you come up with the seller wanting 10k? He said balanced owed was 360k and owner would take 395k. That equals 35k- 13k(arrears+repair), - holding cost and assignment fee… ok I see how you can get to 10k. But it sounds to me the seller is exepecting a 35k payday.

To my newbie ears this sounds like a good deal, especially if you can move the property within a couple of months. As I have heard if you can not get the price you want get the terms you want. If you want to assume the payments you first need to come to an agreement with the seller. Not all sellers want to keep the mortgage in their name. It depends on how motivated they are. Explain to them the process and find out what their needs are and address them. If push comes to shove and you do not have the cash to purchase their equity at a discount, offer the seller an equity split. That means a little cash now and more later, after the sale of the home. If I am correct you could offer the seller moving/relocating money, say(2k-5k) for a quick sale. You then have your lawyer draw up an agreement whereby at the sale of the property, 1,2,3 years, the original seller would get whatever percentage or amount agreed upon.

You seem to be going in the direction of a sub2 deal where you get the deed and make up the arrears and take over payments. Make sure you confirm those numbers work.

Others please chime in.

Here is what the seller wants…

-$10,000 past due

-$3,000 repairs

-$360,000 mortgage balance
=$22k for the current owner

$470,000k - $395,000 = $75,00k potential profit

This property is located on the water in SWFL. It has a boat slip and screened in pool.

I’m really new to the sub2 process. Can someone please offer help in this area?

Also, we have an apt with home owner today. I need to figure out all the docs i need to get him to sign and where to locate these.

Thanks everyone!

First off, why aren’t these people just trying to sell the house FSBO or Realtor? Are they very unsophisticated people?

My numbers included:


  • $12,000 past due and late charges, etc.
  • $ 5,000 repairs - its always more than you think
  • $10,000 holding costs for you to carry this house in case it doesn’t sell, have to pay a realtor a commission to sell it, taxes, closing costs when finally sold to new buyer, other expenses
  • $ 5,000 minimum assignment fee to you if you flip it immediately


  • 360,000 balance on existing mort.

$ 3,000

Actually adding this up - it comes to $3,000 left for the sellers unless you give them part of the potential profit which you could do. Just show them how much it will cost to get this reinstated and work a fair deal.

Bovine explained the sub2 below. I just can’t understand why they just don’t sell it if it is worth that much. Are they very near a trustee sale happening? If so, the bank won’t want to reinstate and may ignore you. Also, maybe the owners should just wait for the trustee sale if its close, they will get the remainder equity anyway from the sale. Downside is … they wil have to wait for it.

If the seller is five months behind then more than like this is a preforeclosure.

So what that being the case, the homeowner owes more than 10k, if the lender filed NOD, then you have interest and legal fees to add to it. So the homeowner could really end up owing the lender 15-20k in back payments. Plus the repairs, the homeowner is really looking at around 12k in equity. Which i would not give them until the property is sold or refinanced. I would probably give the half when they move, but not the whole 12k right now.

the owner wants us to bring his mortgage current and give him approx $20k.

thus now we are looking like the following…


  • $12,000 past due and late charges, etc.
  • $ 5,000 repairs - its always more than you think
    = $378,000
    -$360,000 mortgage balance
    =$18k to the owner

$470,000 New Sale Price
-$10k holding costs
-$21K in Real Estate commision (liquidate the property)
=$439,000 - $395,000 (my purchase price)

=$44k in profit

Did i miss anything?

How would you present this to the owner of the house?

Does anyone have docs they can send me that i can present this to the owner?

Are there any legal fees? Has the lender files NOD? If so then the homeowner owes more than 10k.

Here are the steps to follow:

Get the deed from the owner. Also get a Signature Authorization, and possibly a Special POA. Tell the owner you’ll give them $3-4K now (so they can move), and the rest is a ‘cash for keys’ program, so when their stuff is in the truck and they are handing you the keys, they’ll get the rest of their money.

Never give a Home Owner most of their money while they are still in the house.

Now you’ve got a deal. Now you’ll reinstate the loan, clean it up and flip it.

If you don’t have any money, find somone to partner with you on the deal, or bird-dog it to somoene for a few bucks to you.

Make sense?

I’m not sure about the NOD yet. We will know shortly the status.

Can someone point me to where i can find these forms?

Signature Authorization form?
Special POA (not quite what this one is)

Do i need him to quick claim the deed to me?

Some of the forms you need, you will have to pay for them, whether through your attorney or a course that you order.

Sounds pretty good. I may get blasted for being nice - but I would try to sympathize with your homeowners and make them know that you are trying to help them out of their bad situation. They are already scared and embarrassed so - empathizing helps them feel you aren’t just after their house.

You should do a preliminary title search to make sure there are no other liens. If you have title companies there, they should do it for free if you promise to use them in the future. Also get authorization to speak to the mort. co.

Do a simple purchase contract and with a subject to mortgage clause and any other clauses you want to protect yourself. Make sure both spouses sign or have a disclaimer deed signed if a spouse has an interest. They won’t record if only one party signs and two own it.

What I’ve been told by a lender is to get a Warrantee Deed from the homeowner. Then when the deed is recorded, give them 1/2 the money. You can record the deed the same day but make sure its recorded or they could do another deal with someone else then its who gets to the recorders office first. Then after they move out and their stuff is on the truck - give them the rest. Give them a time limit to leave too.

Then assign the deal or find some HM to do fix up and flip.

Here’s a link to some forms:

Then go to “downloads” on this site and you’ll find some forms that might help.

*** Don’t take my word for all this - check things out and get other advice, possibly from another flipper or wholesaler in your area. Everyone does things differently so do what works for you. Good Luck!!!


My advice to find someone to flip this to, make some money and go find another deal. Not that this is a bad deal, but you really deserve to have someone do the deal right. Your going to be asking 50 questions, coming back and forth to this post through this whole process. Is that going to work for you?

Another option is to take someone here that is knowledgeable and partner with them. You found the deal but they are going to cover all the loose ends, get the paperwork straight and the homeowners resolved.

My suggestion is you choose one of those options.