You all convinced me an HML is not the way to go with this;
350K value–backed by comps
200K total 1st and 2nd—at 6.5%
25K the owner wants as “cash to start over”
I’m thinking scrap up the $25K cash and the other 200K is sub2
I already have a renter that will cashflow
Well if planning on renting, so HML was never an option to begin with. Also, if you are going to put $25k cash into it, why renting it? I would at least try and refinance it to get my money out.
Maybe I’m slower than I thought, then.
I don’t think I’d be able to refi at a rate of 6.5% (it’s probably lower since the first is 5 7/8 and that’s 170K of the 200K)
If it gets too high then it’d be harder to get it to cash flow :help
I would think that if you can’t get a better rate, then you shouldn’t refi. How much would your cash flow be monthly?
What is the market rent? What’s the underlying mortgage payment?
Mortgage payment is total 1600/mo for 1st and second combined.
It may only cashflow 50/mo, but after 1 year I may sell for nice profit
That’s an attractive underlying payment for a $350K house. Sounds like a great deal.
But I wouldn’t throw $25K at it unless I knew exactly how I could get it back in quick fashion. Have you considered a split funding offer to the seller? See if he’ll take like $5K now and the other $20K when you cash out.
My goal is to get out within a year so I may be able to hold him off.
Thanks for the suggestion. :biggrin
If I were in your shoes, I’d start marketing the house the day you get the contract signed with the owner. No reason to keep $25k tied up in a property for a year, which is probably not going to cash flow a very good rate of return.
Just my 2 cents. Sounds like you have a winner on your hands either way. :beer
If the owner wants cash, why is he/she not selling themselves? Even if it was put on the market for 300K for a quick sale, the owner could still walk away with almost 100K. Why are they settling for so little?
Inquiring minds wanna know… 
The answer is time. They’re out of cash. I’ve suggested the same thing.