Should I take this deal?

Hey guys, been a reader of these forums for years, but have never posted anything since I have been too afraid to make a deal all this time. But the (potential) time is close, and I am just wondering if it’s just anything I should even be considering.

I have a lady that is going through a divorce and wants to get rid of her property. She doesn’t want to make any money on it, just getting rid of it, and so she is wanting me to assume the VA loan.

The loan had 106k remaining on it, and she bought the house for 111k in 2007. The comps in the area have the house priced at around 120k, but the last appraisal was done in 2007 for 113k.

She currently has a renter in it for 825 a month, but her monthly payment with mortgage, insurance and taxes is 850.

I know with that cash flow (or lack thereof) should make this a no go, but with the loan assumption, would it be worth it?

I am at a total loss, and want to make my first deal, but want want it to be a good one! Any help would be appreciated.


Now that’s out of the way… Where’s the upside here for you? You would be getting a house for basically full retail value. If you had to turn around and sell, closing costs would eat up most of that difference between 120k and 106k. That’s assuming you could even get that. From an ongoing perspective, you have a house that’s already $25 upside down from the beginning. That’s assuming the house is fully rented 100% of the time and nothing ever ever goes wrong.
Don’t do a deal just to do a deal. There should be some potential reward to your risk. For this one, I’m just not seeing it. Don’t count on future appreciation as an incentive to buy this house. I believe most people would bail out of REI if they have a bad experience in the beginning. Give yourself a fighting chance by finding something better.

Thank you for the reply, Justin. Now would a deal like this be worth it if the owner threw in some cash as well?

I saw an advantage here as I wouldn’t have to put any money down, and she had already paid 5 years worth of interest on a 30 year loan. But I can see that the equity just isn’t there.

There’s no equity and it’s a loser as a rental property…the rent doesn’t even cover the payment and you can expect another 50% in expenses. Based on historical averages, this property is losing about $450 a month.


  1. Following the 70% rule, you’d lose
  2. Following the 2% rule, you’d lose
  3. Following the breakdown of that 2%, it’s a negative cashflow house