Sub2 and L/O

2 Replies

Hello everyone,

I have a question about a strategy I think will work but I would like to pass it by y'all before I pull the trigger. I have an owner who contacted me today and was looking to sell her property. Now at first, she did not sound extremely motivated, but I dug a little deeper and it sounds like she has debt issues that she needs taken care of pretty quickly--she is also not interested in the idea of repairing anything or the other issues asscocitaed with putting her house on the market. Namely: cash out of pocket,inspections, appraisals, open houses, waiting on offers etc. Now, she owes 109k on the property. It is a 3-2 1567 sq ft house in Fort Worth, Texas built in 2010, and in the area she is in the houses ARV at about 135k. (still waiting on comps from my agent--I am famliar with the area) I was thinking about doing a sub2 and then offering a lease option to the end buyer. I do not want to hold this property, I just want to get in and get out. I have her getting the exact payoff, monthly payments, pmi, insurance etc. I think it would work but I am a little fuzzy on exact terms that would make sense for both of us. She started by saying that she wanted 125k and I let her know that number was too high for what I do and she said she'd reconsider. I booked an appointment with her, after rejecting her first offer, and would love to get a better grasp on what to offer her so that I can get her under contract. Please do not beat me up too badly if I am way off base here. I just do not want to be a one trick pony and I know these types of deals are done all the time! Any and all comments welcomed! Thanks for your time

When you do sub two or with repairs you need to get out of it fast

Unfortunately lease to own is not fast, so I would look at flipping the property

The problem you got with flipping is it's not part of the 70% of ARV minus repairs minus wholesalers fee

There's not enough equity in this deal right?

So I would show the seller all of her options:

Listed with an agent on the MLS and discount it severely, Pay about 10% for the cost to sell

Lease it out as is and wait for some appreciation

So what do you want to joint venture where you bring money to the table to fix it and resell it and pay her all the equity possible

To do a joint venture with a lower equity deal,

First you buy it subject to the existing financing and give her a note for her equity and fix it then resell it with an agent

Let's say you want to 10,000 on the joint venture

135 ARV

Owes 109

Sales cost 10% or 13,500

I don't know what the repairs are

Repairs plus sales cost plus costs to sell equals X

135 minus X

------

Compared to Wholesaling deal

.7 times ARV minus repairs minus wholesaling fee

Ashley, 

Don't do a lease option unless it's for fewer than 180 days - otherwise you'll risk getting in a lot of trouble in TX.    Give me a call, I may be interested if you don't retain it for yourself.

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