Stockbridge, GA · Member since 2017 · 43 posts · 3 votes
Hello BP family,
I have a motivated seller who is a landlord. He is looking to sell his property asap because he cannot find good tenants and only has 2 months rent left toward the payment. He owes 115,000 on the property but it is only worth about 136,000. As a wholesaler how should I approach this deal? or should this be something I pass up due to the amount he owes vs how much its worth which doesn't give me or a cash buyer much spread!
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
9y
Several options, purchase subject to existing mortgage and keep the equity, execute a MLO (master lease option) and generate gross income above and beyond costs for cash flow with the option to purchase if the value increases, purchase cash. All if these options depend on the possibility of cash flow so keep that in mind. It is only a deal if you can make money.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
9y
Several options, purchase subject to existing mortgage and keep the equity, execute a MLO (master lease option) and generate gross income above and beyond costs for cash flow with the option to purchase if the value increases, purchase cash. All if these options depend on the possibility of cash flow so keep that in mind. It is only a deal if you can make money.
Investor · Mountaintop, PA · Member since 2013 · 110 posts · 57 votes
9y
Not much meat left on the bone. If you buy for what he owes, by the time you add on the cash you want out of the deal, you are at/near full retail price.
Stockbridge, GA · Member since 2017 · 43 posts · 3 votes
9y
@Will Barnard@James C. That's actually what I was leaning towards, finding a cash buyer that wants to buy and hold put it under contract for what he owes assigning the contract for a small fee and the end buyer would still have a few thousand in equity but wasnt sure if that would work.
Developer · Portland, OR · Member since 2014 · 732 posts · 490 votes
9y
Do what Will Barnard says and also try to negotiate it where your strike price on the option follows the declining principal balance of the seller's underlying mortgage. You get cash flow, debt pay down, and it will be easier to find money to take it down since your LTV gets incrementally better each month.