Creative Financing Help!

2 Replies

Hello all, Thanks in advance for the words of wisdom. This is my scenario, the seller is trying to get out of a duplex he rents. One of the rooms in the duplex recently experienced fire damage. He still owes 50,000 on the house and his mortgage is 400 a month. He told me before the fire he was collecting about 1100 a month from the duplex. After renovation rents should go up. He is looking to sell for 126000. Estimated ARV is 160,000. The duplex has two rooms on each side. Based on the little experience I have, this scenario, in my opinion, calls for a lease option. But I'm not too sure, how would you structure the terms so that it’s a win, win for both parties? Could other strategies be implemented? Subject 2? Should I stop him before he starts renovations to get a lower purchase price and do the renovations myself? Thanks

@Lawrence Adeniseun I cant answer the financing question but on the remodel there are some things to consider. How old is the duplex? If it is more than 15 years old there will have to be an update in the fire wall. The new fire wall will have to go under the roof deck which means you have to redo some of the roof. I cant really speak for your jurisdiction but that would be a worse case scenario. Being that it is fire damage its likely it wont be grandfathered and they wont let you slide. Check into that first. 

OTOH, since it only affected one side it may already have it done. If you can see sheetrock under the roof deck near the firewall its all good as long as its not damaged. Best of luck. 

Based on the numbers you mentioned, I don't see this property cashflowing for you in the end. To me, it seems like to much unknown risk for to little upside.

Happy Investing

Derek Dombeck

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