Sub 2 or Lease Option?

[TC Greenwood]

Hello

I have an existing house that the owner is willing to sell (she owes 75k) and it needs 20k in repairs. I want to make sure I protect myself but my plan is to fix it up and put it on the market ARV is 130k.

The repairs will take about 6 weeks.  I normally pay with cash but I don't have the cash to do all of it right now.  So I talked to her about seller financing and she is fine with that.  I need to make sure I pick the right kind of financing to make sure I am good.

Any help would be appreciated

[Mitch Messer]

Hey @TC Greenwood and welcome to BiggerPockets!

In situations like this I always want the deed, so I would only do this as a Sub2. A lease/option won't protect your money spent on repairs, for one thing.

That said, I'm somewhat skeptical of this deal. It's very skinny: I see about $20K in net profit. Plus, if you're even a little off on the repair estimate, you could make less than $10K. If the property is currently occupied, I can almost guarantee there are issues you'll only discover once all the furniture is gone.

If it takes you only 30 days to find a buyer and close (which isn't likely), then you will have spent nearly three months to make $20K. You could make that in a month with 2 - 3 decent wholesale deals.