Upfront/out Of Pocket Cost Of Doing Sub-2
Wondering what a ball park figure is for the up front cost of doing a sub-2 and what items are paid out for. Are back payments always paid for the seller? This could easily be 3-5K on nicer homes. Also wondering what the most popular exit strategy is? Sounds like seller financing is a common out. Trying to put togethe some "ratios" to work with. I do realize every deal is unique; yet there's got to be some guidelines for a newbie just starting out. Is there? Thanks. Dennis
I'm not sure there is one answer to this question--I think your financial situation will dictate some of the upfront costs. By this I mean that if you have the money to make up back payments, then you will make offers on those kinds of deals. If you don't, you'll try to focus on the "moving money" type of sellers--the ones that must leave and aren't behind in their payments (divorce, job transfer, some pre-foreclosures, etc.).
That being said, there are costs associated with any purchase, sub2 or otherwise that should be budgeted for:
1. Purchase costs: moving money, arrears, recording fees, transfer taxes; items you may spring for depending on your experience and/or comfort level: appraisals, inspections, title searches, title insurance.
2. Selling costs: cleanup, holding costs (time you pay for the property while selling it), closing costs, marketing costs (ads, signs, etc.)
Andy