Is this a good subject to deal?

[Darren James]

I have a subject to deal in Dallas County where I'll pay the back payments on the loan to take over for the current mortgage owners. Here are the numbers:

SFR 4BD/3 BA 2570 Sq ft.

Existing Mortgage Balance: 228K @ 1400/mo (PITI)

Repairs: 15k

ARV: 250K

Acquisition Cost (Back Payments): 20K + 5K wholesale fee +2k (title insurance, deed recording, etc)

Potential Rent: 2000/mo

Cash flow: 7200/yr or 600/Mo.

Instead of renting it, the other option would be Contract for Deed where I would request 5-10% down with a sales price of 250k. That way I would acquire the deal and get most of the acquisition price back immediately. Several buyers have responded to the posting. I haven't signed yet. 

Anyone's opinion would be helpful.

Thanks! 

[Randy Rodenhouse]

@Darren James

Just a word of warning on selling on land contract (as called contract for Deed) in Texas. Residential lease-options exceeding six months and contracts for deed were both dealt a near-death blow by changes to the Property Code made in 2005. As a result, only a few types of residential owner financing remain practicable. I would suggest consulting an attorney before you proceed.