Come shoot holes in my strategy!
I want to run a strategy by everybody.
I want to buy properties subject to, for example, take over a mortgage of 95k @5% with payments of $536.82.
for a house that's worth 100k-105k. Then, I will sell for 105k with seller financing @7.5% for 95k and a 10k down payment. Receive payments for $660.76 minus 536.82 equals $123.94 monthly cash flow.
I figure roughly 5k in closing costs, and I want to have a cash reserve for the mortgage payments, I figure 4 months is $2,147.29.
Aside 123.94 in cash flow, I would also profit $3,352.71 (10k - 5k - 2147.29) from the down payment.
I will have a clause with the seller saying that we will close when I have found a buyer. That way I don't have to make their payments without getting the money from somewhere first. It should be easy to sell with seller financing given then current mortgage market. 100-200 a month in monthly cash flow, no landlording, no tenants, no headaches.
Obviously I will screen the buyers, but if the worst happens and they default, I would be in the same place as I was before. Little risk other than the time finding the deal.
Are there any glaring holes or flaws in this staring me in the face? Thanks.
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