Sub 2 deal

Out of state seller responded to my absentee mailer with their intention to sell their half duplex. Seller had tried to sell with a real estate agent unsuccessfully several times, last listing was for $195k. They stated that their payoff amount on mortgage is $175k. Comps are sketchy at best but I believe come in anywhere between $125k - $135k. They have long term tenants paying $1500 month. Taxes are $5,500. Not in terrible shape. Would this make sense to do a sub 2 as an investment property for myself? Is there a deal here? Owner is sufficiently motivated. Thanks

This property is not cash-flowing, and will require baby-sitting, with zero profit whatsoever for at least a decade.

I’m not sure there’s enough tax benefit to amount to anything helpful.

At best, this is a portfolio builder for someone who has no credit, and needs to show they ‘own’ something, while they’re trying to establish some credibility.

This would be an enormously upside down credibility builder, but I’ve seen worse happen.

Meantime, consider how many years are left on the mortgage? How fast will it pay off?
Are the rates and terms fixed or ARM? If ARM, forget it.

Current rent/loan/balance/price ratio is .85%, or less than 1%, which indicates automatic negative cash flow, due to the financing costs.

Current Cash-flow summary:

1500 Rent

  • 750 Expenses (all, including insurance, taxes)
    - ?? P.I.
    = ____Cash-flow

Thanks for your reply. The p.i. is $1010 mnth. And yes it’s an adjustable rate mortgage. No easy solution for them, wish I could help them but is a bad deal all around. The quest continues.

I’ve always wanted to try and do a lease option!!!