need help structuring subject to

Here’s the deal
1st mortg…$101,000 @ 5.375%
2nd mortg…$ 16,250 @ 7.75 % (15 yr)
Monthly payment for both loans…$800 per month
Rental potential $1200-1400 per month


Starting point
I can take over (subject to) 1st & 2nd
She wants $100,000 cash
She will carry up to $40,000

I do not have the cash. This is the first round of negotiations. I need some creative ways to put this deal together. She does need cash to pay off debt and move to midwest. Smart lady…worked in escrow biz for 25 years. She is very motivated and somewhat flexible.

Thank you for any responses

Worth 225K
Owe $117K
Wants $140K

140/225 62% of value.

This home cannot afford what she wants.

I would take sub2 and work out maybe 50K. Some cash now and some later. At least try to get 10-15% spread.

How about a local HML… With LTV at 62% an HML might possibly work. Of course, you would have to refi at some point…

How about a partner on the deal…? Something is better than nothing…

Prop cannot afford it… just do a L/O or plain option… for mortgage bal… give some money now to do deal and then the remaining bal when you sell…

I’d have to go with Hard Money. At 62% ARV you shouldn’t have any issues taking the house down and getting it refinanced.

Are you saying the seller will let you take over the mortgages if you also give her $100K? In other words, is the sale price is really $217K?

Yes. she wants 217K. I would like to do a lease option but do not know how to get here the money she needs to move and pay some bills

These numbers suggest she’s not really very motivated…yet. And she may know enough to think the idea of trusting a stranger to take over her loan is just weird. I’d offer to give her a $50k backend, less a few k that you might be able to pay her now. You might put her mind at ease by putting some of your upfront into an escrow account to make a few of the first payments on her loan, address any concerns she might have about you making the payments. (Better yet, pay it to her bank now, which would reduce the principal balance). You could offer to embed an 8…10…12% interest rate on the back end of the note she carries, or maybe even make small payments on it along the way to cash out, made from your cash flow.

Reference your silent “partner(s)” in the wings, who advised that, given the nature of today’s market, that’s the best you can do for her, that you have had lots of calls and are getting offered other lower-hanging fruit (even if you aren’t). Say things like “you’re in the business, you’ve seen the news about the uncertainty of the RE mkt right now. It’s a risky business right now, isn’t it?”

Be matter-of-fact, act like you’d be willing to inconvenience yourself to take this deal, but this is the best you can do, and that you suppose since she’s . Then wait, call her in a month or two. Or just let her know that though you can’t guarantee anything, to call you if she really just needs out. I picked up a nice condo that way a couple years ago, offered $1000 cash and $9000 back end on a note, she balked, but two weeks later, she called me, was ready to go, signed the docs, handed me the keys, and drove off leaving me a fully furnished condo with a $250/mo pos. cash flow and a nice fat back end.