SubTo Deal Advise Needed

[Mike Barone]

Hello BP, I was presented with a local creative financing deal and need some honest advise. This is a subTo deal a wholesaler locked down and is looking for an end buyer. This property is in the same city I live which makes it more attractive for me. Here are the details:

• Purchase Price 280K /ARV 310K
• Down payment of 20K (includes assignment fee 10K goes to seller 10K to wholesaler)
• Balance on loan about 171K
• PITI $1400 approx
• HOA $140
• Rent 2k renter already in place which is the current owner (He is wanting to lock in price now because he feels the market is going to go down)
• 2-year term with the option to extend to 5 years

Any advice is appreciated as I have never done this type of deal before.

[Mitch Messer]

Hi @Mike Barone and congratulations on getting your hands on a creative-financing deal!

I'm happy to comment on the terms, but before we go there let's establish the goals.

Assuming all the info you have is accurate, what would be the cash flow and the cash-on-cash return of the deal as it stands?

Why?

Because, Sub2 or not, if these two numbers don't serve your needs, then it's not a good deal. And, how you (re)structure the deal will depend on the specific financial goals you're trying to reach.

Don't get distracted by how creative it is. Make sure it's actually as profitable as you need it to be!