Structuring Sweat Equity as a Down

I have the following opportunity (owner will let me Sub2 immediately) but have never had a sweat-equity deal in lieu of a down before. Owner lives in CA and his TX tenants trashed the house and he can’t carry both notes:

Here’s the situation:

ARV: $ 145k (but I’m thinking could be $135 in 60 days)
Current Loan: $104k

Home Needs:
Carpet: $3600
Paint In & Out: $3600
Door/Wall Repairs: $500
Misc (various small things): $500
Total Repairs Needed: $8200

When you do a sweat-equity down…here’s my question. I don’t want to let the person in the home without a guarantee they’ll fix it up. Do you charge the Down then return it to them? How have others structured this transaction?

Also, do you think I’m being too conservative on this? I just don’t like Sub2ing houses in this market without a 15% - 20% margin.

Thanks for your thoughts

If you are buying Subject To, you use the repair list to drive down your purchase price. Your goal is to take the property “subject to” the existing mortgage loan without any down payment.

Maybe I misunderstood your question.


I’m talking about my Buyer’s down. I’d like to have the buyer do the work, not me.

Then sell as-is. Your price will be whatever you are willing to accept and the buyer is willing to pay for the property in its current condition.

If you are selling the property, why do you care if the buyer does any work or not?