Please help with this deal??

6 Replies

House is rented out for $250 a month currently.

They want me to pay 2K to assume the loan and continue to make payments of $147.

I asked about who's name would be on the title etc and they said something like. I would create a trust and then they would make me the trustee and i would assume the house that way???

Does this sound a bit fishy?

Also, maybe they just want out and I could offer to just pay like $500 bucks and take over the loan.

What steps should I take? Do you think I should consult a real estate lawyer to see if this deal is legit?

It is a crappy little house but if the guy is paying 250 and my payments are 150 then the numbers work out as positive in my book.

I'll take any advice. Maybe I should just offer to take over the full 13K or whatever they owe on it. I would have to get a HELOC on my other house or something in order to do that though.

Thanks in advance.

They want me to pay 2K to assume the loan and continue to make payments of $147.

The vast majority of loans are not assumable. It sounds to me like they are talking about taking over the property Subject To the existing financing. That can be done but you shoud be thoroughly familiar with all the details of this type of deal before you do one.

It is a crappy little house but if the guy is paying 250 and my payments are 150 then the numbers work out as positive in my book.

This is a money loser with rents of $250 and a mortgage payment of $150 due to the operating expenses you have completely ignored.

I would suggest passing on this deal and start studying!

Mike

I see what your saying.

So I shouldn't even look at this deal as a flip?
I thank you for putting it into my head to NOT impulse buy anything. Thats why I posted this, to prevent me from doing something stupid.

I'll keep looking.

What is the market value? ARV? How much is the loan they want you to "assume"? Repairs needed? What are market rents for similar units? ($250 is extremely low for a anything, especially a house)

Mike

According to Zillow.com the houses around their that sold recently have sold from anywhere from 7K - 26K

Would it be a good idea to drive around and look at the houses that sold for the 20K's and see how it compares to the one that i'm looking at. Would a realator know these values much better than zillow?

The amount the lady owes on the loan is about 11K.
Rent's are all low in that area.
Repairs needed - not sure how bad it is as I have yet to see the inside, but it looks like it is mostly cosmetic and the roof would need some repairs.

Now just because i'm talking about this deal does not mean i'm going to take it, so don't assume i'm just going to jump in on it.

Mike Oh, your advice means a lot to me. I appreciate you trying to help me out and slow me down on this one.

I feel good because at least i'm calling people up now and asking them about the house and actually getting to know the process a little better in doing so.

Thanks again.

You definitely want to see inside so that you can determine the repairs needed. What does the neighborhood look like? Are the other houses in decent shape or are they all boarded up? You definitely need to know what rents are in the neighborhood.

I have a 2 bedroom house that I paid $17,500 for and grosses $500 per month. Yours could be a good deal, you've just got to get the details.

Mike

There are a couple of reasons to not do this deal.

1. Any loan that small is going to be expensive. Doc fees and points have to make up for the fact that it's a very unprofitable loan for the lender if all he gets in interest!

2. Some tenants just aren't worth having. Rent's are all low in that area Generally "low rent" tenants are "high maintenance" tenants. A phone call, letter, attorney work and eviction all cost the same, whether for a $250/month or $1250/month tenant.

3. A broken window, replaced water heater or new stove all cost the same in a $25K house as in a $100K house. But with the lower rent ($250 versus $1250) it takes a lot longer to get your money back.

Unless you really want to learn "guerrilla landlording" and practice "do it yourself" repairs to polish your skills, I'd pass!

all cash