Mortgage on Property, please help with calculation!

8 Replies

Hi everyone! I need help with the lead I have. Owner has mortgage and still owe $40,000 and asking for $48K. It’s a remodeled house 3/1. ARV $53K. I don’t think numbers makes sense. It’s a rental property with monthly rent of $550, there’s a tenant currently. Owner is a motivated seller. Please help with calculation. I would greatly appreciate it. Thank you and happy investing! Janice

Hi Jay, the monthly payment for mortgage is $311.31 , I dont have more information about it. Regarding numbers, since end buyer will pay off the mortgage that owner owes $40K plus what he's asking $48k, where ARV is about $53 only. I don't have acces yet to BP calculator. It looks like end buyer pays more than what property value is.

@Janice Delantes if the mortgage is $311 and the rent is $550, it's a no go for me. Theres no way to squeeze taxes, insurance, and reserves into the remaining $240 and make it worth while. Rent would have to be $750 or better for it to be worth digging into

@Janice Delantes

There are a couple angles here.

The monthly rent is currently $550 - but what is that the market rent? What kind of lease is the person on? What are the taxes?

Are you trying to do a no-money down deal and/or is this your first possible deal?

Howdy @Janice Delantes

Let me try to answer your initial question about the Asking price $48K versus the ARV $53K. The end buyer is actually paying lower than current value (ARV) if that number is correct. The seller would basically receive $8K in cash from the sell. $48K - $40K existing loan = $8K. You need to determine the possible loan terms you would get and the P&I for a new mortgage. As an example: $48,000 - $9,600 (20% Down payment) = $38,400 loan amount @ 5%APR/30 years = $406 P&I payment. As @Jason D. suggested you would need a higher rent rate to accommodate the increased mortgage payment.  Have you researched the market rental rates for the area?  Is $550 within those rates?  Is there room to increase?  If not this is a no go to me.