Ok, got a possible here!
3/2 1300 sq ft, 7000 ft lot, 2 car garage, home is very nice, in a nice area, first mortgage balance is $112k at 8.5%, 2nd mortgage balance is $28k at 13.9%, Taxes which are not included are $1930 year, insurance is $360.00 year, for a total monthly payment of $1365.63.
The owner bought the home a year ago with damaged credit to begin with, thats why the first mortgage is at 8.5% and then they took out a 30k second at 13.9%, guy looses his job and has been struggling to make payments any way he can.
OK, the total balance owed is $140k with the monthly (PITI) AT $1365.83, the problem is the area only supports a $1000.00 monthly payment.
This guy wants to walk away from the property. He wants me to take it over and do what ever to relieve the pain.
The home is valued as of last night between $155-$161, two houses with the same floor plans in that area sold at these numbers in the last two months.
My thinking is:
The house should appreciate at about 5% a year in that area, lets take the low figure $155 in three years at $7.350 a year would bring it to $177,050, I will list it for $165k on a three year, 10% down $16.500, I think with showing the new tenant-owner the value and being able to let them in on such a good deal the monthly payment would be $1450.00 a month.
lets see:
$16.500 plus 84.17 (the difference)a month for three years $3030.12 = $30,466.02
and then the cash out in three years $165.000 - $16.500 down = 148.500 - $140.000 = $8.500k
grand total = $38,966.02
Am I missing something here? 
Any help would be thankful......... 
I had a question,
You say the market can bear 1k in rent. Do you mean including the target audience you are seeking? Your looking for someone not to rent but to buy with no qualifiying, knowing that they are repairing credit/building credit etc and they OWN with interest benefits. If you add the benefits of the interest deduction, that in effect drops the payment right to the 1k you are seeking.
I think the numbers work if you market it the way you can offering equity and interest deductions.
Hi Askasalesrep,
Just a note on “No Qual” buyers. Because of their particular situation, (credit, new to area, likes to buy this way) they know and expect to have to pay more for a property, car or whatever.
I don’t see a whole lot of monthly cash flow (pack) on this deal so your money can be made of the down and the back end.
This is where I would concentrate my efforts.
Best of luck
John (LV)
[ Edited by jfmlv1950 on Date 02/17/2003 ]
As long as you buy sub2 I think deal works nicely (and as long as you find a buyer, but then that wil be covered in the sub2 language.) Sonds like you've crunched the numbers correctly