Help with possible Sub2

This will be my first sub 2 deal, so I am a little unsure as to what a “good deal” entails. Do the experienced sub2 investors buy at a steep discount if they are selling on owner financing? If so, what is the typical discount or equity spread? I have a seller who is now 3 months behind. Tenant just moved out and is now vacant, was paying $3,000 monthly. Mortgage balance is for 499k option ARM at 8.125% and the property comps out at 579k conservatively. He is willing to deed me the property and walk away, and I was curious if it would be a good investment for me. I read the post on loan mods for ARMs and was thinking if I could negotiate with the lender to attach the 16k in payments on the back end of the loan, and maybe get the interest rate dropped, then selling it on owner financing. I am just wondering if the experienced investors would run from this deal or maybe try to work with it. Any help is appreciated…

Is that price range the norm in your area?

Each investor is different… You should always buy as deep as you can…

My general rule of thumb is the more money I have to put up front, the deeper the discount I want. if the house is newish, I would buy it up to 90% LTV as long as I am not putting any money down. I prefer the house payments (10%+escrow) little above the rental market for such houses that way I know I can move it fast.

If I have to put up 3k for example, I may want 80% or 85% LTV depends how fast I feel I can move it. I will probably want to retail it too.

If the house needs some work and I know I will be putting lots of money in it, I will definitely want to retail it so I can get my money out of it.

In the case you described, if the lender will do forebarance and fix the interest and the house price is the average price where you live then I would consider it. As it stands right now, it is more of a shortsale candidate.

I really appreciate the response Fadi. I was thinkng of a short but with the little bit of equity in it, and not having any jr. liens I was thinking of another avenue. I don’t think the lender(Countrywide) will short enough for us to have a profit on this one, so I think I might let it go. Yes, this is the average price in my area and this home was built in 1982!(I know right)… and was purchased in 2000 for 179k! Well, I will see what the lender will do as far as Forbearance goes and maybe I will be able to work it in my favor but if not…next! Thanks again!