I have a potential deal that I am trying to put under contract. The ARV is $64,500. The home needs about $25,000 in work. The owner is asking $40,000. They are willing to do seller financing with 10% down, carrying a note for 36k at 10% interest for 10 years for a monthly payment of $475.74. I would like advice on how to proceed. Does the seller financing benefit me if I am trying to wholesale the deal?
Seller financing makes it more attractive, but this doesn't sound like a good deal. If you purchase a property for $40,000, then pay $25,000 to repair it, you've sunk $65,000 into it. There's nothing left. You're $500 in the hole if you immediately turned around and sold it, and that's not even considering your holding costs while doing the rehab.
I understand you're wholesaling it, but that's what your buyer is going to see. There's attractive financing, but who wants to finance a loss?
The market rent on it is $800. Do you think I should consider it as a BRRRR?
@Stephen Sokolow Its definitely a deal that I would wholesale to a buy and hold investor. Is the $474/month PITI or just P&I? That makes a big difference on cashflow. Also how much would the repairs be to get it rent ready? Im assuming its less than the 25k needed if you were flipping it? Those numbers make sense for a buy and hold or a seller finance. You could always buy it with the seller financing, do the repairs and seller finance it to an owner occupant. I would negotiate with the seller to see if you could get a lower interest rate in exchange for a little more money down.