How Can I Profit Off of This Deal

3 Replies

These are the facts that I have about the property. How would you structure this deal in order to make it a win-win for the seller and for myself?

bought property in March 2017 - put 20% down

150,000 down

mortgage 375,000 interest rate 8.25% 2/1 ARM

seller misstated financials - thought they were actuals but were performas

when got into the property was expect 7800 in rent but wasn't the case

2 tenants had gave notice - both were TRA (temporary relief assistance) day of closing

Guaranteed for 6 months instead of a year

  • Had 6 TRA tenants
  • each were paying 1550 per month

flooded entire basement - Repairs Complete

1175 (2 rentals) newly renovated

Original list price was 1350 but dropped down to 1175 (stayed on market for 69 days) - 2 rentals

3 other individuals were phasing out of TRA - 1 stayed (1175) -

no evictions from November - January

lost $15,000 from 2 evictions

brand new roof 2017

Mortgage payment: 4200 per month mortgage and PMI taxes and insurance included

Nationstar - amortized commercial property for 30 years - 30 year mark fully paid off

29 years left on mortgage -after 2nd year variable interest rate

(max cap is 10 1% max for year 2/1 ARM)

( 3 Months Behind on Mortgage)

all 6 are there 1 is moving out on the 30th Apartment 3L

only 1 left on TRA (court last Tuesday) - was going to be evicted lives for 3 months - gave TRA voucher for 3 months

Needs to pay $18,000 backpay for mortgage company

February 1st $4,200

Needs about $25,000 and some reserve to handle certain things

Building pays for itself - Total is $7100 - mortgage $4200 - cashflow $2900

has a partner and he lives over seas - he wants his money back

bought at 500,000 March 2017

Appraisal: 600,000

0.70 = $420,000 Cash out Refi Max

Balance is $373,000 on mortgage 

$1600 to renovate the unit - Used Security Deposits for Renovations

  • no reserves in the bank
  • Needs full $18,000 —back 3 months in Mortgage—
  • Once February is collected will be $1,000 short

Tenants - all separate utilities

Pay only $100 for lights in hallway - all baseboard heating - bring own AC unit for windows

Renovated 4 of the 6 units

NEEDS:

  • $142,000 needed to pay off investor - wants 12% return (until he is off the loan) per year he is on the loan
  • he already received $8,000 OWES him $10,000 $142,000 + $10,000 = TOTAL: $152,000
  • Back pay on Mortgage $18,000
  • TOTAL $170,000
  • $2900 cashflow monthly
  • Owner wants $900 cashflow monthly out of $2900

Any suggestions would be appreciated on how to structure this deal in order to benefit the seller, as well as myself.

Lease options? Wholesale? Thoughts?

Hey @Roger Da Silva , I want to share my two cents, but I'm having trouble following what is what, I don't know what numbers are actuals and which are previous numbers? Sorry, it's just a little confusing. 

Have you tried using the BP Calculator to see if this deal works? If not, I highly suggest doing that to see if you can profit off it.

 @Nate Burgher Thanks for taking the time to respond. So basically the seller wants $170,000 for the building for a lease option. The cashflow total is $2900 per month and the seller wants to keep $900 of that every month. I would be taking over the property and paying the mortgage directly. Therefore paying her the $170,000 would give me a lease option and $2,000 a month cashflow. Thoughts?  Is there any other way I can make profit on this deal or structure it differently? It is currently for sale for $600,000.

How long would the lease option be for? What would the buyout be at the end of the lease option? How much is the PITI (Principle, Interest, Taxes & Insurance) each month? Are you in charge of CapEx and Maintenance / Repairs, or does that fall on the owner / seller?

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