subject to deal, should i pay seller profits?

3 Replies

thanks for hear me out.. adding the seller recently lost their spouse.

these are the round numbers for the sake of the detail. they're selling a duplex for 70k, owe about 40k and will make about 30k in profit, the property is valued at 110k with no repairs needed and two tenants paying on time $1100 total per month.

should i pay them their profit of the 30k (or part of it) keep their current mortgage which they've had for about 20yrs with low payment and interest? or get a new 30 year vs their 10 yrs left on current..

Originally posted by @Jeffery Leroy :

thanks for hear me out.. adding the seller recently lost their spouse.

these are the round numbers for the sake of the detail. they're selling a duplex for 70k, owe about 40k and will make about 30k in profit, the property is valued at 110k with no repairs needed and two tenants paying on time $1100 total per month.

should i pay them their profit of the 30k (or part of it) keep their current mortgage which they've had for about 20yrs with low payment and interest? or get a new 30 year vs their 10 yrs left on current..

Depends: If you have the money sitting around and the interest rate is a lot lower than you can get now and they are willing to do a Subject To or Wrap, - they save the expenses of a real estate agent, you save the cost of new money and it's a lot easier for both of you. Will giving them $30k prevent you from doing the next deal?

Otherwise, you are likely looking at 20% down financing with a bank, so about $20k down plus closing costs, unless you can buy with a lot less down. You have to run the numbers to see where the "make sense" split is.

 

@Jeffery Leroy

The difference between the sale price, and the amount owed is not necessarily PROFIT, it is the sellers equity. Profit would be dependent on how much they paid for the property, and how much they spent on capital improvements.

You should check to see if the existing mortgage note is assumable, almost all are NOT. If you assume the note when it’s not assumable the lender can call the note due at any time; in which case the time allotted for you to refinance will depend on the foreclosure laws of the state the property is located in, and or whatever you can negotiate with the lender. Of course the lender may never find out, or may not care.

With interest rates as low as they are right now, I can’t think of a good reason NOT to get a new loan, assuming this is a possibility for you.

@Don Konipol @Mike M. would great appreciate your advice on this new update and correct numbers which makes a HUGE difference now that i was presented with paperwork.

the duplex property is selling for 76k and renting for $1100, he owes on the mortgage 59k his profits from the sale will be 17k. the property appraised for $130000 with little work.  he has agreed to take the profits and sign deed "subject to" i will refinance the property and pay off the current mortgage immediately after and remove his name on the new mortgage.. he isn't in a position to refinance him sell he says. Can there be a hiccup? thxs much..

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