Flipper · San Antonio, TX · Member since 2016 · 101 posts · 17 votes
ARV: $255,000
Sub2: $155,000
Owner Finance: $15,000 ($5k given at actual closing)
Rehab: $15,000
I'm trying to make a deal work with the above numbers in San Antonio Texas. I am set to buy the home with hard money, then negotiated down the price for a new roof which seller didn't repair. Closing is now delayed for some old lien issues that the seller didn't know about/inform me about. She is seeing her profit dwindle and is getting anxious. I get it and want to help, but in a way that is workable for me too. My offer...I can give you about what I'd be giving the hard money lender at closing ($5k), then the rest when I sell it on the back end ($15k). For me it's a cheaper monthly payment, cheaper at closing and overall less cash in the deal since she'd basically be funding the rehab at zero percent interest.
Am I approaching this the right way, or is there a better way to look at it? I've done a sub2, but without the other complexities.
Uvalde, TX · Member since 2016 · 141 posts · 45 votes
8y
I think it's fine as long as those lien issues arent killing your numbers and there are no weird clouds on the title that may be a challenge to clear up. worse case scenario, you go with the hard money if she refuses to owner finance.
Flipper · San Antonio, TX · Member since 2016 · 101 posts · 17 votes
8y
That's what I'm thinking too. I did have a small hiccup in my numbers given where we are at in the year and assuming for a quick sale I will not be paying the bulk of the 2018 taxes...which swings the numbers significantly more favorably and makes the hard money more acceptable.
Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
8y
Sub-to is great for a short term flip or to give you the time to rehab then refinance. I have done what you are talking about. It takes a little skill in negotiating, but will work out great for you if the seller will take a small chunk now and payments for the next year with the balloon at the end of the year.
You will have to get a deed of trust drawn up so that the seller is secure with their loan. Also, title company will pick it up and pay them off at closing when you sell it or refinance. With the costs of hard money, you can pay quite a bit more to the seller and NOT use the hard money and come out about the same.