Hypothetical Subject To Deal

[Robert Carpenter]

My seller has an FSBO house with an ARV of $530,000.

He wants $520,000. He owes $290,000 with a payment of $2,400 PITI.

He   wants a Down Payment of $75,000 and a two year balloon.

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My offer: $490,000 Sub2 with a DP of $50,000.

I'll give him a carry back mortgage for his equity of $150,000 with no interest and no payment. And I'll give him a three year balloon. 

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I'll turn around and put the house on the market with seller financing for $ 550,000.

I'll collect a DP of $90,000 with a monthly payment of payment of 2,900 PITI and balance of $ 460,000 in a wraparound mortgage with a three year balloon.

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Is this a good deal ? 

[Nathan Brooks]

Unless you have deep pockets and are seeing massive appreciate on this house, I would pass.  To me anyway, the downside far outweighs the bad.  You are already in a range where people with $50k to put down ... probably don't need seller financing.  And, you are already dealing with a seller who cant sell the house at his asking price, you are trying to get another $30k more than that.

So, lets say the house really isn't worth $550k... its worth, say $520k ... you wait and wait for a buyer, you eventually have to pay on the mortgage ... and then you end up having to unload with a realtor.  You sell for $520k asking price ... and that's $30k plus realtor fees, and then the nickel dime all the stuff the buyers want. Closing costs.  New hot water heater.

For me, I would need to be buying in the low 4's before I would ever even consider.