Subject To Deal Opinions
Hi folks,
I have an ACTUAL DEAL that I'm looking at and would like your opinion if you would do this. Here goes:
1st : $169,000 current
2nd: $42,000 current
mortgage total: $211,000
comps show homes going for $210-220
house is 5 years old, needs no work, great area, seller relocating
seller would give deed if put into escrow.
with a value of $215, I would try to sell via lease option for $240.
Is that feasible? too high of a price......too little? What should I ask as a down payment? I was thinking 10K
Would you guys do this deal?
thanks for your help,
Jason
First, no way would I accept the deed on the condition it had to be put into escrow--they still own the house until that deed is recorded--which means they can borrow against it.
Second, you might find it beneficial to invest in a subto course before jumping in to a deal.
The numbers look like they could work, but it's very hard to ask specifics on a deal and hope to get an accurate response from people who don't live in your market area.
I'm not trying to belittle your post because I know a first deal makes you salivate (It did me!), but this business has a learning curve for most people.
So lesson number 1:
1. Always record the deed as soon as you get it!
Yes, listen to FirstPsalms!
Jason,
Your first question, ' would you guys do this deal? '
The simple answer is NO.
Here is why?
There's no deal here.
Easy terms, does not equal a deal.
Seems like you are new, good.
Welcome to our world.
Don't be so hungry that the first motivated seller ready to sign what ever you put in front of them happens by.
There is one golden rule in this business that MUST be followed, no matter what method of purchase you employ.
Here it is, ready?
"ALWAYS MAKE YOUR MONEY WHEN YOU BUY!!"
Get that?
Meaning, PAY LESS than market value, significantly.
This allows you to leave WIDE open your exit strategies, and make money with ANY ONE OF THEM.
Take a look at your numbers again:
House worth $210k-$220k.
They owe $211k.
Now, think about this, the payments are how much?
Are the sellers going to cover them until filled with a tenant or buyer?
If not, will you?
The house is already upside down, so you'd be throwing money away.
Your exit layed out here for us was to sell with L/O for $240k, right?
Okay, your T/B'er is in place, 6 mos down the road, and they get funding.
They put in say $10k option money, probably more like $5k.
So, they owe $235k to you.
you will still owe the $211k, because 6 mos ain't gonna reduce the loan amount much, if at all.
The buyers, and you will have closing costs, etc, another 10%
That's $23,5000
Take that away from the $235k, leaving you with: $211,500
Remember, you owe $211k now.
And, Since the values show at $210k to $220k NOW, they probably will, or close to in 6 mos........meaning, your $240k price, just don't cut it, because the house needs to appraise out to fund the buyers loan.
Keep plugging away, this is not a deal.
Tell the sellers, "thanks but we only pay up to 80% of value, and in order for me to buy your house, it would cost you $20k for me to take over."
They walk, as should you.
If they don't, take their $20k, and sell with owner financing for your $240k, and make the spread.
Just my two cents, keep the change,
Jim FL
[addsig]
I have a friend in the Navy. He was just transferred to Charlesston, SC a couple months ago. He left his house here listed with a realtor.
The house is worth maybe 148-159K. He owes 141K. The wife and kida are living on base becuase he can't afford 2 mortgages.
He just got shipped to Iraq for god knows how long. They have agreed to:
Rent
Sell outright for what is owed,
Lease option
Sell Subject to
They want out. How do I help them???
Hey jay what's up, why don't you buy the house, help out your firend and make some money at the same time.
[addsig]
That Actual Deal would be much better if there was no 2nd mtg there. Seems like the 2nd ate up the equity, probably a 100% loan. Why would the L/O buyer buy a home for 15% + above market price. Very risky for your first deal (or 100th) if you asked me! Walk away man, Walk away.
[addsig]