have an opportunity on a 3/2.5 condo in a solid growing area. It is currently rented and owner wants out of it due to hassle with tenant. It's worth $130k and current notes are $125k. 1st loan is an ARM loan at $100k. 2nd loan is a balloon with 25k principal. Total payments are $1100 and rents in area are $1000 to $1200. Condo fees are $75/ mth.
The owner wants out of this badly and selling it outright has not been an option due to the market the past few years. Now as market has improved the seller is willing to break even or take a small loss to get out of it. Tenant hasn't paid rent or pays only a portion of total rent.
The positive are the seller is motivated. And this is a developing area with big upside. I'm just unsure how to structure this or even if it's worth it. Had thought about assuming the 1st loan but unsure what to do with 2nd.
Any ideas? Walk away?
unless he's going to take a significant loss or you are going to refinance for much better terms, this deal won't cash glow, period.
With the current financing plus the monthly condo board payment, you only have $25/mo positive. Subtract from that, vacancy reserves, maintenance reserves and insurance...you're upside-down by about $300/mo, that's assuming the monthly payment is fully loaded and includes tax. Otherwise, tack that on to your monthly expenses.
That's all bad news on the financial side and you are inheriting a bad tenant.
I agree with @Hattie Dizmond on this one. Even though the seller is motivated, doesn't sound like the rents will support the deal. Especially with a bad tenant in place. You aren't even at 1% on this deal, plus its a condo, and those can be a severe pain.
Best of luck.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing