Possible Subject 2 Deal?
I am currently looking at this property as a possible subject 2 deal:
Payoff amount 213k
Monthly payment 1400.00
Amount to bring the note current 8k
Repairs needed 8k
ARV: 270k based on recent comps.
If I turned around and sold it with "owner financing" how much of a premium on price can I add? 5%? 10%
The property would rent for around 1600 as a straight rental. Would it be resonable to ask for 1700-1800 a month payment with owner financing?
Greetings Andrew,
I think how much of a premium you can put on it depends a lot on your local market conditions. Typically, 5%-10% works fine. But if things have slowed way down, you may not be able to get anything over FMV.
And how you structure your owner financing will dictate what you should charge monthly. For example, if you’re selling with something like a CFD or wrap, you would want to figure it based on the sales price – regardless of what local rents are. But if you’re doing a Lease Option, and rents are at $1,600/mo, I would think $1,800 a month (or more) would be very doable.
Just my 2¢
I think one the biggest advantage of using a CFD (or Land Contract) is that title doesn’t transfer out of your name until they fulfill the terms of the contract – which means when they get their own loan.
Whereas with a Wrap or AITD, title is suppose to transfer as soon as the agreement is entered into.
Again…just my 2¢
: )