Potential SUB2 DEAL

got a seller who is a retired and very alcoholic real estate agent

has a house that is currently rented at 1200 mo by a total of 3 tenants upstairs and
2 tenants down been there for 4 years

house has historical value as it is the first built in the city in 1894
it is in great shape as he has pretty much rehabed it all years back
seller wants to move to costa rica within 60 days

Some #'s to review

ARV 285K
a few payments behind bout 5 mo
back taxes owed as well
Asking 290 all cash

was able to talk him into setting up a seller finaced deal SUB 2

how would i go about putting this all together and how much is a good amount to offer him. what steps should i take to structure this for a good quick flip to a SUB 2 investor that i have in my database

any help would be great
this will be the first seller financed deal i put together
dont want to go into this :anon

thanks in advance REI CLUB

First if he owe taxes and 5 months behind you need to see if the lender is getting ready to foreclose or a tax lien on the property.

This deal sucks drain water. (I’m gonna be hard on you here…)

I can’t imagine why we would consider paying $5,000 over retail, on an old rental, with only $1,200 in rent, a PITI of about $1,600, a $212,000 first mortgage, and then paying on $78,000 in equity (less the back payments).

Even if we walked in with nothing, and the property wasn’t in default, it makes “negative” sense.

Bringing up $10k worth of back payments would be fine, if we were buying the house for the loan balance. However, we’re paying retail-plus with a negative cash flow. It’s no wonder the seller has loaded the house with misc. renters, because renting to one family means even less rent.

Let’s do some more math here for giggles.

$212,000 First Mortgage (Terms: 30/yr @ 5% fixed)

$ 1,138 Monthly Payment
$ 410 Monthly Property Tax Payment
$ 70 Monthly Insurance Payment
$ 1,618 Total Monthly PITI (not including maintenance,
management, repairs, vacancy, blahty, blah.)

$ 1,200 Monthly Rental Income
<$ 1,618> Less Monthly Mortgage Payment
<$ 452> Less 2nd Mortgage Payment
(Terms: 7% 30/yrs fixed)
-$ 870 Total Monthly Negative Cash Flow
(Before MGT, MNT, RPR, etc.)

Unfortunately, there is no deal here at this price, despite the terms. At least I can’t see it. Maybe there’s something you haven’t shared?

Run!!! :shocked :shocked :shocked :shocked