Subject to / Fire damaged property?

[Daniel Ayala]

Hello everybody,

I found a property with extensive fire damage to it. The garage is gone, damage to the roof, and I have no idea how bad the inside is. The owner said that the insurance cannot cover all repairs, so the house just sits there... calling to me. The owner is still paying a mortgage on the property.

What would be a better strategy for this scenario?

I want to get a hard money loan to cover the purchase and brrrr the property.

Or...

Offer a subject to, get a hard money loan just to cover the rehab, rent, refinance, repeat.

Hmm, I just realized I have two options to offer this owner. 🤔

I would still appreciate any advice.

[Shiela R.]

@Daniel Ayala how much equity does this seller have?  What are the terms of the existing loan? Have you met the seller in person?

If the terms are good (meaning they allow for cashflow on top of the loan), then you want to use SF.  Also if you put your own money into it, you want the deed before you spend a dime.

Make sure you have an inspection clause - during that time you bring in an expert (or 3) on how to mitigate fire damage and make this house a home.

If it feels like too much you could wholesale it to a more experienced investor as @Eliott Elias suggested.