Buy and Hold Deal Analysis Please Help!

[Kristen Ray]

Hello BP! 

We are excited to say we received news of a deal today! We used the BP calculator to review the numbers. However, we would love some expert advice.

This is a buy and hold deal in a good part of town. The seller is motivated to get rid of the property and move on with their lives. 

Details:

Townhome/rowhouse built in 1875

2 BR 1.5 bathrooms

unfinished basement 

Desirable neighborhood

Current owners owe $155,000 with a 2% interest rate

Current mortgage: $825 (not including taxes and insurance)

Resent sales in the area are $200K-$240K

Average rent in the area is $1,811

Management company fee: 9%

Property taxes (estimated): $4,000/year

Insurance (estimated): $100/month

House size: 764 square feet (average for homes in the area)

We are estimating 6% of the selling price in closing costs including the inspection, title etc

The seller wants to keep their current mortgage on the property and is asking for $20,000 down which includes the wholesaler cost and realtor cost. 

The seller does not want to tell the bank about the deal. The seller wants the buyer to take over payments and will sign over the deed. 

I have read articles about mortgage companies due on sale clause. I am not a fan of the method the seller wants to proceed with. My hope is to negotiate a sale price that is beneficial for all parties and get the mortgage under our LLC.

Thoughts, ideas, opinions, suggestions are all welcomed. Thanks in advance.