Think I got it

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… :wink:

The answer is time. They’re out of cash. I’ve suggested the same thing.