Subject To Deal...question

Hey gang...have come across a pretty decent opportunity. House is 3/2, approx 2100 sq feet, with a basement. Balance owed is 84K. Payments in arrears is 4K. Estimated 7K in repairs. ARV (by sellers reference) is $130-140k range. I am running my own comps now. Basement has paint and carpet, so I may can rent it out seperately. Payments are 570/month. I have a partner, so how is it best to structure the agreement between he and I? He has the cash we will need and perfect credit to refi if for some reason the DOS clause kicks in, which we hope it won't. I basically will agree to pay back my portion of any cash he has to spend or he will receive said amount upon sale of property. Does this sound fair? He is in another state, so I will basically manage the rental and the numbers as well. He is a good friend, just not REI saavy. I feel like we make a good team.

Also, is it possible to have the payments in arrears added on to the back end of the loan? Will this trigger the DOS to kick in?

Thanks in advance.

Brian

Comments(3)

  • InActive_Account31st March, 2004

    Brian,If this is your first venture into REI,rehab and sell the house. Be conservative $130,000.00ARV-$84,000.00 1st mortgage+$4,000.00 arrears+$7,000.00 repairs=$95,000.00. Do the owners want anything for their equity? If not by selling you and your friend could split the potential $35,000.00 profit less closing and carrying cost.

  • suntzu1831st March, 2004

    Michael, thanks for the reply. I am definitely not opposed to rehabbing it and flipping asap. One quick quesion..there will not be a "typical closing", correct? So what is the best way to determine closing costs? I fully understand holding costs. Thanks again.

    Brian

  • arytkatz31st March, 2004

    Brian:
    Don't know about GA, but here in IL, closing costs run about 3-4% of the purchase price. Hope that helps in your calculations.
    Good luck,
    Andy

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