Local Investor Needs help with a potential Subject to Deal

9 Replies

I had a lead contact me this morning and she is interested in selling her property but the problem is she has two liens and an outstanding loan balance of about 58,000 dollars. The property is currently vacant and not in rent ready condition let alone market condition, it's going to need about 10k in repairs. I really want to help the seller out, she is elderly and she doesn't have the money to pay off the liens or the money to do the repairs. So here is my break down..

The seller wants 5k to walk away

Lien 1 10k

Lien 2 2k

Repairs are about 10k

Loan Balance 58k

The property Rents for $1100

Mortgage Payments $442

Arv 95 - 100k

I was thinking that I could work out a subject to deal but the only way that I see this working out is if I can get the leans dropped or negotiated down and get the seller to walk away from it for nothing. Any thoughts from any investors in BP land?

generally a waste of time.. but you can always ask.. lots of work with probably more money owed than what you think. and poor lady is probably more stubborn than you think.. and she will probably call 10 I buy homes for cash people and work the best deal she can.

no equity sub too is a terrible play in my mind.. why do it..

@Jay If she can work out a payment plan with her lien holders and if the HOA would allow subletting then I can see a lease option working out.

Your profile says you are from CT, and this is the Raleigh RE Forum. So if this is a 'remote' activity, you should really think twice about this IMO unless you have experience rehabbing from afar. I have no idea where this property is (based on price and there is an HOA, I'd guess a low end... condo? Townhouse?) but make sure your comps (to get ARV) are correct and a solid PCR (Property Condition Report) or equivalent. $58K + $2K + $10K in loans and liens (HOA liens? Taxes?) and $10K rehab puts you at $80K. Not much left after sales commission and taxes. Assuming everything goes right.

Note that the property "Rents for $1100" statement is, I assume, hypothetical since you state the property is vacant and not rent ready. 

If you do a lease option in NC, make sure you understand the regulations associated with such a program. 

@Terry Woolard --it's admirable that you want to try to find a way to help the seller in need. I'm with Chris and Jay--based on what you shared, I'd walk away. I am curious about the location of the property since you posted in this forum. Likely, if the lady is in Raleigh and reached out to someone in CT, she has already exhausted potential suitors in Raleigh...

@Adam Schneider I’m living in Cary now I just moved here from CT. The property is Raleigh.

@Chris Martin The property is a condo and I believe the 10k and 2k are HOA liens. The 1100 is how much she was renting the property for before and 1050 is the average rents In the area according to rentometer

@Terry Woolard -- got it! Why don't you just buy the property for $70K, put in the $10K in repairs, and rent it for $1100?

I'm not interested in holding on to it my self, I'm still relatively new. I would be interested in passing this off to another investor if they would be interested in that.

Originally posted by @Terry Woolard :

I'm not interested in holding on to it my self, I'm still relatively new. I would be interested in passing this off to another investor if they would be interested in that.

The complication is that another investor would probably not want to pay you much. The low end condos tend not to appreciate much historically. And reselling after rehab (e.g. a flip) would really depend on if you had FNMA financing available for your end buyer. Make sure your acquisition targets are conforming to Fannie Mae underwriting standards. If not, you may find it hard to sell to 'retail' (meaning owner occupant) buyers. 

IF (big if) your numbers are right, and the HOA fees aren't outrageous, there may be a buy/hold investor type who could throw you a few bucks (a few thousand) for setting up the deal. The best path forward (IMO) is to sit down with @Adam Schneider and find some common ground. I would put myself in this equation if the deal had more significant numbers (rents, margin percent, equity) but since I'm not buying in the Raleigh area anymore it doesn't make sense for me anyway....

@Terry Woolard -- it looks like a very tight deal with the wind blowing straight against you...but it's worth a phone call if you want to walk through it. You can PM me if you like.

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