Exit strategy for Subject to agreement

6 Replies

So I have a deal that I am evaluating. The owner just wants out of the property and wants what he owes on the mortgage. (35k) The property is worth about $65-70K fixed up.  I need to put about $25k into repairs.  I cant offer him 35K with the 25K rehab and make any money on this deal. So what I have proposed to him is that he could deed the home to me subject to the existing mortgage in place. I would take over the payments and put in the 25k in repairs and rent it out. 

My question is that once I have rehabbed the property and installed a new tenant, can i then go to a lender and refi the mortgage at 75-80% of the new value? Eccentially cashing out my investment and paying off the existing mortgage?

Have at it BP'ers, you always come up with the best advice.

Regards,

Marlon Long

Originally posted by @Marlon Long :

So I have a deal that I am evaluating. The owner just wants out of the property and wants what he owes on the mortgage. (35k) The property is worth about $65-70K fixed up.  I need to put about $25k into repairs.  I cant offer him 35K with the 25K rehab and make any money on this deal. So what I have proposed to him is that he could deed the home to me subject to the existing mortgage in place. I would take over the payments and put in the 25k in repairs and rent it out. 

My question is that once I have rehabbed the property and installed a new tenant, can i then go to a lender and refi the mortgage at 75-80% of the new value? Eccentially cashing out my investment and paying off the existing mortgage?

Have at it BP'ers, you always come up with the best advice.

Regards,

Marlon Long

 Yes, those are the basics. That would work.

@Marlon Long

Something to consider.

I'm assuming the existing loan has been in place for awhile. So, you are realizing decent principal reduction with each payment made. Why not keep that loan in place as long as possible and try to find a private lender to put in 2nd position? There's a lot of people with small IRA's that would love to make 4-6% secured by cash flowing real estate. This way, you are not tying up your own credit or even personally guaranteeing anything.

Happy Investing

Derek Dombeck

Marlon might be missing something but how are you going to refinance if the loan is in the original sellers name because you bought the property subject to?

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