Is This Underlying Payment Too High?

$650K house in Bowie, MD (DC suburb), seller is behind 2 months and can’t afford the $4,486 PITI payment. She’s ready to deed to me sub-2 for the mortgage payoff balance of $550-560K.

My exit strategy is to get this deed and sell owner-financing for $679K, bringing the payments current from my buyer’s down payment. However, can I expect a buyer to cover a $4,486 note or am I in La-La Land? I have no earthly idea how to get an analysis on how much a 3,600 sq ft 3 level, 2 car gar house would demand per month.

The way I see it, if someone went to the bank and financed $679K they would pay $4,400/mo P&I at 6.75% so is it reasonable to expect to charge that per month for this house owner-financed?

Also what would the be the minimum I should get for a down payment from my buyer for a house in this price range?

Thanks for the feedback in advance. By the way this will be my first deal…if the numbers make sense I might just wholesale this.

If it’s a $650 house, why are you going to try to sell for $679? Does it need work, do recent comps support this price?

I’m assuming the premium price is due to the ability to owner finance.

My concern would be that buyers in the price range wouldn’t get “pulled-in” by your offer to seller finance with those type of payments.

It’s hard to say for sure until you try, it just seems you will have a much smaller pool of buyers in that range.

As a fallback strategy is it possible to carry the mortgage a few months and sell for a little less than $650k for a quick sale?

Also, have you signed anything yet? If you haven’t I would make your contract subject to a 30-60 day inspection period (whatever you can negotiate). Make sure your contract gives you right to market the property prior to closing. Then go out and get yourself a buyer locked down before the inspection period lapses, if you can’t find one you can always walk away. I’d hate to see you stuck locked into a $4500/month PITI payment on a house you can’t move…6 months stuck with it is $27k out the window.

Isn’t that “inspection period” unethical? I read an article here on this site stating it is.


If you are not using that “inspection period” for that purpose…but to market your property, you can back out of the deal if the property is not filled. This is an unethical approach to investing, regardless if it’s legal or not.

As long as you’re up front with the seller and they understand what’s the issue?

I agree if you are upfront it’s not an issue, but if you are not upfront, and you are negotiating a 60 day “inspection period” with only the intention of using that period to fill your property, it would seem to be unethical. It becomes unethical when at the last minute you state a business partner found a flaw and wants out of the deal just because you couldn’t fill it.

Thanks to all that replied.

Due to the high payment I decided to do a straight “Option” for 180 days on this house for the payoff balance, which I estimate will be somewhere between $560-$575K. Comps are anywhere between $625-675K. So I’m thinking of marketing this to owner-occupants for $599K, using some type of “Desparate Seller, Kick Me While I’m Down” type of ads.

Got the signed option back today! :biggrin She ordered the payoff which won’t be back for 7-10 days so I approximated the purchase price at $561K. Ordered title today as well.

Any advice from those experienced in options, or is there anything else I need to look out for? This will be my first deal. I’m nervous but I don’t know why, I really don’t have anything at risk other than the $100 option deposit which I haven’t even given her yet.

By the way if anyone has (or knows of) any owner-financed properties for sale in the DC area let me know. She’d rather not rent when this house sells because she needs the interest deduction for tax purposes (she makes $130K/year). She can afford up to $3K/month and would prefer northern PG county or western Montgomery. Her score sucks due to the fact that she’s 1x60 on her mortgage, but her income hopefully would compensate.

QUESTION: what is the short-sale potential of this deal? And how do I go about it, just get a signed authorization from the seller and call her lender? And what do I say? I only know what a short sale is, but don’t know exactly what goes into getting one done. Any feedback will be greatly appreciated.


Payoff is $609K :rolleyes I had planned on selling it for less than that. LOL.

She’s 3 months behind. I sent her a short sale package to execute and return to me. But can I short sale on an option?

What’s my new exit strategy here? :help

The problem is usually investors get desperate to do deals and contract the wrong deals hoping they can make money so they need escape clauses not to be “stuck” with the property. Frankly, I personally think the concept of wholesaling without the intention of buying the house if no buyer was found as unethical myself specially if dealing with desperate people who must sell.

Now, on the other hand, sellers want to sell quick and do not want to contribute to closing costs. So the investor is faced with two options, spend money on inspection, or take the risk. Option period in this case is justified. I have backed out of contracts before because after re-evaluating the repair costs the numbers did not work for me but I referred the owners to a short sale specialist who managed to sell it and I collected $500 bird dog fee (even though I initially had a contract).

Now, why did I go on that tangent? I hate wholesaling and wholesalers for this specific reason :slight_smile:

Haven’t done a SS (yet!) but as I understand the procedure, have her sign a Purchase & Sale agreement for the amount you want to offer the bank. BTW, is the debt all on one mortgage, or is there a second as well?

Hello Arwen,

Ended up selling this deal to another investor and a short sale attorney for a $500 finders fee. I’m glad to just be out of it LOL. My first real estate investing revenue dollars! Small but it’s a start!