Is it ok to pay 90% if the numbers still work?

Question

I know, the quick answer is probably "NO" but, what if the numbers still work?  Here is a SFR I am looking at:

PP: $112k

ARV: $125k

Repairs: $5k

Conventional loan purchase with 20% down, wrap into owner finance at $130k, 20% down at 9.5% for 30 yrs.  Plan is to ask for a 1 month, $1000 option to find an end buyer.  Cash flow over $400/month...

Christopher Phillips · Answer

@Scott Robinson

You’re correct that if you hold title it will be more of a lease option.

I’ve seen it both ways.

Problem you’ll have with a sandwich deal and you later transfer title upon sale, your mortgage lender will likely call the note due upon sale. They won’t have any underlying asset behind their mortgage:

If you’re paying cash, you can certainly transfer title upon sale and do seller finaincing...

Scott Robinson · Answer

@Christopher Phillips

Thanks for responding.  The $5k in repairs will come off the purchase the prices as well.

This would be my first owner finance deal, I am not positive I understand what you mean by holding title.  Would that be keeping title in my name instead of transferring to the end buyer?  I hadn't thought about it to be honest, I was under the impression that I had to transfer it because if I held it would be more of a lease option.  I have no interest in maintaining the property at all its 1949 frame home that is in good shape but I want to avoid as much liability for it as possible.