“Subject To” deal , first investment questions

[Stefan Ujkic]

Hello All, I’m trying to buy a triplex for $600k. Owner has a mortgage of $300k @3.375% and will carry $100k @ 2% if I put $200k down. Owner wants ballon payment of total balance in 12yrs. Current rents total $3500 mo. and property in OK condition in SoCal. I thought the property was paid off when I was offered the seller financing. I was advise if I purchase this property to put the deed into a trust, but I’m not sure what else I need to do to protect my investment besides make the payment to the owners mortgage company directly and the $100k loan payment to the owner. Any help would be appreciated. Thanks

[Dan H.]

Quote from @Stefan Ujkic:

Quote from @Scott E.:

Quote from @Stefan Ujkic:

It’s worth $600k, story I was told is the seller needs the $200k down specifically 

That doesn't make sense.

If it was worth $600k and the seller needs the $200k for something, they would sell on the open market. It would sell for $600k, they would net $570k after commissions, and they would walk with $270k cash after they pay off their 1st mortgage.

I don't even need the address to tell you that this property is not worth $600k.

 12003 1st St, Yucaipa, CA 92399

 That property sold for $451k in February.  Has it been improved over $150k in the last 6 months because it certainly has not appreciated that much.  From the photo it looks like nothing has been done.

At $451k the deal looks much more palatable.   I suspect someone purchased it at a good value and is looking for someone to reward them substantially for their purchase, but $150k is too much. 

The property is not worth $600k. The low LTV kills return even if paying a fair value.

Good luck