Viable subject to deal??
Hello BP,
I have a question about a property that I think could make a good subject to deal, but because I'm new to all this I'm not sure so I'm seeking some guidance here from the more experienced investors.
History: We initially found this duplex earlier in the year. We got our financing in order and had our realtor contact the seller's agent. We scheduled a showing and quickly got the home under contract after some negotiating. During inspection we found out the home needed some big ticket items replaced: both AC units, both furnaces, some electrical work, and mold was present in the bathrooms. Cosmetic work also needed to be done to both units. Seller is unable to repair/replace anything. We got bids for all the major system updates and for paint, carpet, etc, and we estimated 15K to get the home in good condition, which we were ready to do. Unfortunately, our lender would not extend us financing on this home due to its condition. We scrambled trying to find financing, and ultimately had to let the property go.
The property has since been taken off the market. We know the seller is motivated and needs to get rid of this property. It has been vacant for some time now. Our plan was to purchase, rehab, and rent out. I don't know what the terms of his loan are, but I do know the asking price we agreed on was 77K. I don't think there is much equity here. We could rent both sides for at least 700/ month. I'm thinking about having our agent approach the seller again to see if he would be interested in selling the property subject to. I've been reading a lot about this strategy. It seems that most people hold onto the property for a very short time because of the due on sale clause.
How can a subject to work if we wanted to keep it and rent it out?
How would a cash out refinance work under these circumstances, if at all?
Would I need to hire a third party servicing company to make monthly payments on the existing loan or would I pay directly to the lender? How would I do that?
Thanks for reading, and thanks in advance for your help.