How to Structure an owner financed deal?

Question

Have an opportunity to buy a property which ARV is between $85K and 90K. Seller has a HELOC of $65K with payments of $645 a month. The house needs approximately $20K worth of renovations and I believe I can rent it for a minimum of $1000 a month with some minor repairs/upgrades.

Here are my thoughts:

Offer $65,000 with a down payment of $5000 and a monthly payment of $400.

What does everyone think?

Here are my thoughts:

Offer $65,000 with a down payment of $5000 and a monthly payment of $400.

What does everyone think?

Dennis M. · Answer

I don’t think you can either .unfortunatly  After that payment and a few additional ancillary expenses you’d be in the negative for cash flow at 1000 a month in rent . The numbers must work and the deal needs to stand on its own two legs ! Don’t give up hope, keep looking bro

Joe Villeneuve · Answer

No he won't.  Why would he?  It doesn't solve his problem.  In fact, it makes it worse.

There are only two ways to solve his problem:

1 - Cash to him equal to the payoff of the HELOC, or...2 - Payments to him equal to the HELOC payments

Samir Shahani · Answer

If his HELOC is $645/mo , would he accept $400/mo?

Will Jimenez · Answer

Thanks guys. Was trying to come up with a creative solution but I don't think I can justify the $645.

Dennis M. · Answer

I’d agree with Joe . Your solution is no solution at all . The guy has still gotta come up with 245$ Negative every month and he can’t live there . I’d offer 5k down and 645$ a month and set it up in a trust with a third party paying out tax insurance expenses . Even though your payment will be higher you can do this for a shorter period of time than the 400$ payments but of coarse you may not cash flow any at that point which really sucks .personally  I don’t think this is even a good deal to be wasting time and money on given the risk involved .

Will Jimenez · Answer

He has a variable interest rate and it recently increased the $400 which has caused the hardship. I think he will take it.

How to Structure an owner financed deal?

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