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
@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
If you wanted help to see if this is a good deal, we will need more information like the monthly taxes, insurance, maintenance, vacancy, etc. BP has several calculators that you can use for this.
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
Hi Mark!, this is going to be a possible first deal. I just got escrow account of 91.19( dont have exact tax and ins mount). $331 is the total monthly mortgage pmt including escrow.
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.