Off market lease back opportunity

[Lindsey Johnson]

Hey BP fam!

I’m looking for your thoughts on a deal I’m currently working.

Here are the details:

Location: San Diego County

Owner is in pre-foreclosure: $30k in arrears

Total payoff is $490k

Mortgage payments $3,300 (Tax and insurance included)

NOTS date coming up in about one or two weeks

Owner is applying for Cal Mortgage Relief.

ARV = $700k

Repairs = $80k - 100k

Owner has received offers of $550k

Owner is adamant about not moving out and wants to own the home still.

I am the contingency plan for the owner.

This is my idea: Purchase the home subto to it for a total purchase price of $490k. The entry Fee = $30k (the cost of bringing the loan current) + Closing costs. Offer a 24 month lease option for 620k with monthly rent of $3,300 (mortgage amount). Market Rent in the area matches this mortgage amount but may be able to increase it to $3,400-$3,500 and have the extra $100-$200 be written as a seller financed down payment for the option.

Upsides: Low entry fee and great 2yr ROI with little/no work.

Downsides: The issue I see is that if the current owner doesn’t want to cooperate in the future regarding the subto then the buyer could be in trouble. Dealing with eviction if they don’t pay the rent.

Questions:

• Do you think this is a deal worth pursuing?
• What do you think would make this a win?
• How do you think the numbers stack up?
• Are you interested in purchasing this deal if I wrap it up? The Entry Fee would be $40k on a potential $120k return in two years or less.
• Are you interested in JVing it?

Thankful for nay input!