Need guidance on this deal

I have a homeowner who is one payment behind on his mortgage which has a principal balance of 173,000 and he purchased the property for 177,000. He has owned the property for 3 1/2 years. He refinanced to a 6% interest rate last June and his current monthly payments are 1270. He can’t afford the payments anymore and is motivated to sell. I am thinking about doing a subject to and lease option to a tenant-buyer but I do not know if this is the right strategy.

If you must, do the LO there’s not enough spread for a Sub2. herbster

Hi Kellenhomes,

You’ve left out some important details in your post:

  • What’s the house’s CURRENT value after repairs?
  • How much in repairs does it need?
  • What are market rents in your area?
  • Fixed or adjustable rate mort? If adjustable, when does it adjust again?
  • Pre-payment penalty? If so, until when?

Depending on the market in your area, the homeowner may be upside on this house, so you may need to do a short sale to make any sort of profit. As many wise investors have told me, don’t make the homeowner’s problem your problem.