subject two deal on two houses by same owner

I have a question which I need help on can someone please advise. I have a deal where both houses has a 100k in equity combined. The owner/realtor is selling because of health issues. He wants 30k down for each home. The his market comps on each is 265k -325k the loan against each is 245k. He is willing to carry both and be the bank but wants 30k up front for each home. The homes are in a nice area with good schools and tons of sq ft 3000-4000. Is the down payment too high?, and can I wholesale this deal. examples

2 story 4bd 2.1 bath plus inlaw setup
last lease was $2100/ month
The interior had recently been totally redone prior to last tenant. They moved in April 1 and out Nov 30
Currently needs carpet and some minor things put back in place. I have an estimate of $2300. for carpet, $1k for remaining things put back in shape that tenant damaged upon move out and a time frame of 40hours to do it. The home is very large and ready for new owner/ tenant with minimal work.
Mortgage balance $248,500
Payment $805/ month interest only currently 3.7% Matures 12/01/2015
Taxes $5643/yr
Current value is $310-325k

In town all brick ranch with a huge family room addition on back with woodburning fireplace, full basement, hardwood floors thruout main level, cathedral ceilings. A really nice home.
4bd plus 2 more rooms in basement that would make good bdrms/ other?
the last tenant paid $2400/month
Mortgage balance is $215,000
pmnt is $1389/month 217/ princ. 1172 interst matures in 2035
Taxes 4375/yr
Current value $300-325

My question is how can I make this work and not lose money on the deal? would a option to buy work best? along with a lease option and lease. How can I make it work. The owner is open to a creative deal the is a win win deal. I wish the downpayment was less. Please advise!

Hi James,

You may have something here, but I think the seller is wanting too much down especially with you repairs. It really is eating away at your equity here.

First double check your rental comps to make sure what you’re getting into. Sellers will say anything to move properties these days.

Next double check your ARV on each house. Make sure you have them firm.

You may be able to get an option to owner finance the houses for you. Find an end buyer (preferably one that is ok with minor repairs) and simply flip it to them.

to make this work your seller needs to take much less than what he’s asking. Perhaps $10 k each.

thanks

Dennis

James,
The rent on those houses is so high that most people in that range are buyers, aren’t they? Or are you in a special resort-type market? How would you handle 2 or 3 or 4 months vacancy?

Better figure out the worst possible case and what you would do to solve it. Don’t take on that owner’s problems unless it is profitable for you.

Furnishedowner

I’m not an expert, but that deal seems pretty risky to own outright. You say 50K equity each and he wants 30K of that? There’s still money in it though. I’m looking at it from the angle that it’s a steal for an end buyer but not an investor. So why not try to set up a sandwich lease option (owner is obviously well enough off to not have huge worries). You either find the tenant/buyer or back out. Or get a pure option for 40K more than the mortgage, find a buyer, and assign it to the end buyer for a 10K consideration. Just some ideas to think about.

Thanks for the advice, I like all the comments and advice I appreciate it very much. I like the sandwich lease option and the low down towards it. I kinda figure he is being very clever and did at one time hoped to get a ton of money out. He is a realtor so he knows the market is a buyers market. He recently show me comps on the houses back in 08. I go by a six month comparable in the general area. I do understand he wants money out and is selling me on what the houses was worth then. Yet I am not that desperate to be had! Basically he is testing my understanding. I will move very careful with this deal and go with the advice I recieved on here. I just wanted to confirm and make adjustments. If there are more advice I am all ears. Thanks