Your right…I forgot. The house was built in 1966 so it is pretty old. The roof was replaced about 1.5 years ago and everything else seems in pretty good condition other than what I mentioned in my above post.
The current house I am looking at is over on the east side of town…and for repairs I was guessing around 10k total. A friend of mine told me it would be about $3,500 to resurface the pool, and maybe $6,500 to recarpet the house and fix the windows and repaint the trim.
I was originally thinking I could take it sub2 and L/O it out with a mortgage broker friend of mine helping my T/B along in getting financed. I was getting pretty excited about the deal until he told me both mortgages were at 13%…you’re right ouch.
Email me! I’ll buy you dinner and pick your brain on getting started in REI! hehe
Hello everyone, this is my first potential deal and I was wondering if you think it is too skinny to actually work out.
A guy called on one of my ads and said that he needs to sell his house as soon as possible, and here is the information on the deal:
FMV - 150k
1st mortgage - 108,700
payment PI - $1280.50/month
2nd mortgage - 9,600
payment PI - $167.87/month
$5,000 owed in back property taxes
Needs recarpeting, and the pool needs to be resurfaced, 2 doors and a window need to be replaced. Also the home’s trim needs to be repainted.
The interest on the 2 mortgages are both 13%…the guy is willing to give me the property sub2 but I think I might get royally screwed if I took it sub2 plus having to do the repairs plus taking over the payments at a really high interest rate.
This is the first house I’ve ever even looked at…so I might be looking at it wrong. I figured I could post a question here and someone might be able to help me. This is an awesome forum…thanks for your help.
Re: Is this deal too skinny? - Posted by JFinke KC
Posted by JFinke KC on February 05, 2002 at 17:01:28:
Have you talked to your mortgage broker friend about refinancing the property after you take it sub2? I don’t know how your credit is,but if you could take it sub2 and immediately refinance at 80% LTV which would be $120k and significantly lower your payments, if you could get 90% LTV that would be $135k and could pay off the back taxes and some repairs. Payments for $120k at 7% on a 30 yr note would be $798.36; $135k payment would be $898.16 both quite a bit lower than the $1448.37 currently being paid.
What do rents go for in this area? If you cannot refinance, will the area support a $1500+/month rent for a lease/option? If you can refinance what can you get for rent?
If you can refinance and your comps of $150k are correct, you could sell on a lease/option for $155-158K with a $1000-1200 per month payment and maybe $5000 down as option consideration.
If you refi for $135k and sell at $155k with $1200/month payments here are you profits:
$5000 up front
$300/ month cashflow
$15000 upon sale
Keep in mind that this is a SPECULATIVE EXAMPLE. I do not know what the market will bear in your area or how your credit is. If your credit sucks and you cannot refi maybe your mortgage broker friend with partner with you for a share of the equity.