I found a seller who is willing to a sub to deal. This will be my first deal. Below are the details:
3 Beds, 3 Baths
Built in 1996
Two stories
Mortgage Balance: $155,00
Current interest is high and the PITI is already $1,650
Wants: $5,000 additional ( I think I can negotiate this)
Tax appraisal this year is $175,000
Good neighborhood
Exit Strategy: Owner finance or lease to own to those with bad credit
The only thing I didn’t like was the layout of the house. All the bathrooms are inside the rooms. If there is a visitor, he would have to go in one of the rooms in order to use the bathroom. Would this be a harder house to sell coz of that?
What do you think about the numbers? Would this be a good subject to deal? This will be my first one so any thoughts will be appreciated?
What is the house worth in this market today? Tax appraisal is not meaningful information. You need a comparative market analyiss to know whether the property is worth more than the mortgage balance.
What will the property rent for in your market if it does not sell?
Does the property need rehab or cosmetic repair? If so, at what cost?
Do you have the cash reserves to pay the holding costs until the property is sold? How many months until your money runs out?
You don’t want to get stuck with a property that is upside down, that you can’t sell for the mortgage balance, and which will drain your cash reserves because you can’t rent it for enough to cover your monthly payment.
You need more than one exit strategy in this market. Without additional information, no one can tell you whether there might be a positive outcome available to you for any exit strategy you may choose.
If the house is really worth the 175k and assuming it needs no repairs and is ready to sell and the seller is willing to take 1k to sign over the deed and if you can at least get what you can rent it for it would probably be a good move. But the layout would kill the deal for me. You need more equity in the deal to fix the layout if people decide not to buy because its weird. I’d move just move on to the next deal. To much to overcome. Theres much easier deals out there.
Unless you have deep pockets, I would find a ‘credit impaired’ owner finance buyer before you commit to this contract. I did hundreds of these deals prior to mid 2006 and it worked well, but when the mortgage and R.E. markets crashed, everyone including builders with new homes were offering owner financing to ‘any’ credit risks…hard to compete with new homes with no credit requirements. Get a buyer first!!! Then you can easily negotiate a ‘sub 2’ deal. Alternatively, find sub 2 deals in lower pricing and rent Sect. 8 until the market returns.