Spreadsheet Using Other Methods - When Markets Are Tough, The Tough Use Brains

[Ken M.]

Buying an "Off Market" property "Subject To" and Selling "Lease / Option"

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When buying a property to cash flow, you need to know what your expenses are. The following is one I actually purchased that was a pre-foreclosure. The seller and I negotiated the terms. I did not offer a number to him, he told me what he needed. This first portion is the end result. The following portions are how we got there.  Click on image to enlarge.

The house was not suitable for the MLS. The seller had waited too long to fix the problem and just wanted out. He said he needed $10,000 so he could move back to his home state. So, this is how we put the deal together.

First, you determine ARV (After Repair Value) so you can see if this one is actually worth buying. In this case it’s worth 245,00 fixed up. (ARV) You enter the existing 1st loan payoff. It’s probably the one in pre-foreclosure. We’ll take care of the arrears in a minute.

We always go through Escrow and Record, so we need to account for those costs. We Record because it’s the right thing to do and we want to know about any actions that come up against the property. Some people say don’t Record because of the Due On Sale clause, or to use a Land Trust to defeat the DOS which is bad information. If a lender wants to enforce a Due On Sale, a Land Trust violates the DOS anyway so it is ineffective in stopping the Due On Sale call.

Line 35 is always negotiable, but the seller needs enough to rent an apartment and move their belongs or they will become squatters which causes serious problems.

And of course, since this is a pre-foreclosure, the arrears have to be brought current.

Sometimes, a property will have a second loan or lien. Usually those can stay in place, but sometimes you have to pay those to buy the property.

If you have questions regarding details of the Spreadsheet or want a free copy

https://housecashaz-qloag.wpcomstaging.com/2024/01/04/dm03-learn-10-low-cost-ways-to-buy-a-house/

Or email a request to [email protected]

When you are new, looking for lenders & considering Fix & Flip, BRRRR, or rental, as a buyer, I'd ask the owner/seller to be one of my private lenders with creative financing. This works in Southern California (CA), AZ, WA, and GA & TX.