Suggested transaction type: Wrap or Sub2?

Question

A colleague of mine has a deal he is trying to structure but has no idea which or how to structure it. Scenario:

Property worth $170k

Existing mortgage $130k

Repairs about $2000 to update

Foreclosure "in lieu of"

Buyer willing to commit between $100k-$110k

Is this deal even worth it for him to do and if so, is this a candidate for a wrap transaction or "subject to" or is that the same thing and how does he structure such a deal?

He didn't say how much the mortgage payments are but everything is current.

I kind of want to know myself for future reference, so if anyone can help shine some light on this topic it would be greatly appreciated!

Brett K. · Answer

There needs to be some clarification to answer your basic question "is this deal even worth it for him to do".

Is the $170k the current 'as is' value, the after repair value (ARV), or some other value (quick sale, likely retail value, etc.)?  And, is that a conservative # or enthusiastic?

Just $2k in repairs indicates it's in pretty good condition but it what is the property suitable for and what are your investment goals?  Is the property in an area where you can make a good return doing a flip or is this an income play?

'Foreclosure in lieu of' I'm not familiar with.  Do you mean 'deed in lieu of'?

The $100k to $110k; is that cash or a loan amount.

Answer those questions and I know you'll get some great advice.  Don't take this as nit-picking, I'm just trying to get the ball rolling here.  Good night Albert.  I'll check this post tomorrow..... and I bet you'll already have some great advice posted.  Later.

Albert Paul · Answer

Ok, yes it is "deed in lieu". The ARV is $ 170k. The house is in great condition. The area is great and the property has potential to be a fix and flip or buy and hold. The number is conservative and I believe the $100k-$110k is cash.

Hope this clears up my question a bit any advice is helpful, thanks again!

Albert Paul · Answer

Hey Brett, I know your not picking and I appreciate your straightforwardness, hopefully my colleague has the answers to clarify the question so that we can get some helpful info. Again I appreciate it @Brett K!