Help me work this deal out

General Real Estate Investing
1

I have an investor who has package or 6 properties that appraised for 528k last year.
He wants 20k cash and the buyer to assume the mortgage on all properties.

Here are two examples:
Twin home, 15k owed, appraised at 60k rented at $850

SFH 15k owed, appraised at 90k, rented $900

I have no cash and low 600’s credit scores. I was going to wait until I get a 10k in November before buying my first property.

He wants 20k cash and the buyer to assume the mortgage he is really asking less than 5k a piece.

I was going to offer him the 15k owed+10k to cover closing and he can keep the change. Since I will be 25k in on a 60k home I should be able to open a 15 HELOC to hold me over incase of emergency until I get my check in Novemember.

That at $850 on a 60k rental sounds good combined with the 35k in equity.

How does this sound?

If I can’t get financing, what kind of deal can I structure with a lease?

2

What is his reason for selling at such a discount?

3

He had 35 properties and was trying to get into developing. They have this area where the city gives grants to buy and fix the properties. They have to be low income and you have to keep them for 15 years. Guys are getting rich doing this here.

Well, this guy greased all the right palms and had a 2 million dollar deal coming his way. They were going to give him grants to build but he paid a lot of money in zoning and other engineering services. He stopped paying on 6 of his rentals, they were not occupied and he didn’t care because he thought he had a $2 million deal coming. He fell behind on six of his properties by 3 months and just wants them gone. The politicians are giving another development deal and he also has a property managment contract with the recent development that was done. I don’t know what I am talking about but I am repeating it as I heard it, as best I can.

4

So essentially just cashing out to upgrade to another strategy. Ok, was just curious as to why he’d dump them cheap and fast.

5

BTW, he called me from my bandit sign. Just for info on effective marketing.

6

what’s a bandit sign??

7

http://www.witnesswholesale.com/images/realestate/wbhrec225.gif

8

REINoobster,

$25K for a rental that generates $850 monthly rent is a very good deal. Are any repairs needed? Is the property vacant? What is the demand for rentals in the area? Are their liens on the property?

If little or no repairs are needed; there is only one mortgage lien; and the property can really be rented for $850; I would do this deal ASAP! It is imperative that you GET THE DEED at closing. In other words, this is a “subject to” deal. You are giving him money and taking over the property subject to the existing financing.

Good Luck,

Mike

9

Thanks. I am working on it. It is currently rented. I have to take a look at the propertinside and out.

Thanks for the “subject to”, I figured if I assumed the mortgage it would be mine. That was stupid, I never thought about that.

10

Definitely allow a lawyer to help you on this one, you don’t seem to have it all down 100% and it will be money well spent.