Updated 3 months ago on . Most recent reply
Evaluating a Sub To Rental in Mount Morris MI Looking for Feedback on Underwriting
I’m evaluating a subject to opportunity in Mount Morris MI and wanted to get feedback from investors who’ve done creative finance or long term holds in smaller Midwest markets.
The property is a 2 bed 1 bath approximately 1,159 square feet built in 1954 with a fixed rate conventional mortgage at 3.625 percent. PITI is about 805 dollars per month. Total cash in is roughly 20k which includes catching up arrears. No cash to seller.
On the income side conservative rent estimates look like
About 1,000 per month as a traditional long term rental
About 1,100 per month with Section 8
There may be higher upside with MTR or STR depending on management but I'm underwriting this primarily as a long term hold.
What makes it interesting to me is the low fixed rate and control of the debt without a new loan but the downside is obviously tighter cash flow on a straight long term rental unless rents increase or taxes adjust favorably.
For those who have experience with subject to deals or holding rentals in similar Michigan markets I’m curious how you would underwrite the risk here. Would you view this more as a long term hold a hybrid strategy or something you would pass on. Are there any local considerations in Genesee County that would materially change the analysis.
Appreciate any insight and happy to clarify numbers if helpful