Short Sale or Wrap Around/ Subject To

7 Replies

Hi Everyone,

I have a really exciting opportunity with a motivated seller in a really great neighborhood to buy his home.

Heres the low down he’s got a:

35 K Mortgage @ 5.25% for 15 years

15 K Heloc

The comps are all over the place but w/ a 15 -20k rehab my conservative guestimate for what its worth might be 75k.

From what I can see my options are:

Short Sale: Which can take up to 6 months and from what I was told by someone who experience w/ Short Sales is not expect the greatest deal,  I maybe could get it for possibly 42k.

Or Wrap around or Subject To : Id only need 15 -20k of my money into it. And I can see if he could qualify to maybe get a lower or longer mortgage rate.

Ive got no experience w/ Wrap Arounds but for me to have as little of my money in it as possible seems like the sure winner.

I’d love to get any suggestions and thoughts.

Thanks,

johanna

He owes 35+15 HELOC

That's 50

Put 20 in on rehab thats 70

ARV is 75

65% of a ARV is the wholesaling model less costs

This is not a wholesaling deal.

I wouldn't touch this 

even doing a joint venture with the seller where I use my money to fix it, sell the property, and take a JV fee of 10,000

It costs 10 percent or 7 k to sell at least

@jscott

@Johanna R.

I would like to know why you feel this is an opportunity?  The way it is explained it has no redeeming characteristics. .  So could you please explain your thinking.  I am not trying to be rude or put you down and I am truly interested in what your thought process was in asking the question.

@Martinscherer 

Sure, my thinking is If I do a wrap around :

I can rent it for $800.00/month - NOI & $715.00 ( Debt payment, Taxes, Iinsurance, 10% Maintenance+ 10% Vacancy)

I might be only getting $85.00 in cash-flow a month but in 15 years I'll have a property in a B+ neighborhood for having put 15-20K down.

@Brian Gibbons Thanks for your reply but I wasn't thinking of wholesaling it does what Im proposing make sense now?

Are you willing to pay maintenance and vacancy and eviction-foreclosure costs?

$85 a month x 12 mo = $1020 a year for use of $15K - $20K capital?

I would take that $15K and lend it out at 10 - 12% to rehabbers, use it for 3 months, be a private lender, make $1500 every 3 months, and 

-no maintenance, 

no taxes, 

-no asset protection costs, 

-no law suits from tenants, 

-no property management costs, 

-etc.

Better yet, I would start a Self Directed Roth IRA.

See https://www.trustetc.com/resources/education/case-...

Own loan notes. not property with tenants and toilets.

@Dmitriy Fomichenko

 is great at Self Directed IRAs, both Traditional and Roth.

Basics are here..

https://www.trustetc.com/resources/education/artic...

Best of luck!

@Brian Gibbons Thanks! I've never given thought to being a private lender and the Self Directed IRA is something Ive been interested in.

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