Owner finance -deal or no deal

[Mike Gomez]

Hello BP fam, I'm in need of some guidance. This is my first time looking into a owner finance and I'm trying to figure out if it's a smart move and what else it would entail to ensure a good deal...

A neighbor across my parents is willing to owner finance his home to me to turn into a rental property. He is currently owner financing it himself and owes $70K. The home is appraised at $275, but does need some cosmetics. Does have a new A/C and roof. He also disclosed that he's behind on his taxes and would need a down payment in order to pay off the back taxes.. I would be purchasing for $240K, with 15K down at closing, and additional $5k annually for first 2 years so I would finance $215K over 30 yrs at 6%. My Payments are $1289 not including taxes or insurance.

deal or no deal guys? Thanks again

If so, do I ask for title in hand? He said the original owner still has it. And how do i know the payments are indeed going to my loan how do i keep track of this without having to take someone's word. I'm worried that if i try to pay it off quicker, we wont really know what's going to principal etc... sorry i know it's a lot ha but i have so many questions and he's wanting to make a move. Thank you thank you

[Nathan Gesner]

Quote from @Mike Gomez:

First, it's hard to tell you if it's a good deal because you don't share the numbers. What is the payment with taxes and insurance? What will the property rent for? I recommend you learn how to analyze the deal to determine whether it's a solid investment, regardless of financing.

Second, I wouldn't touch this deal because he still carries a mortgage and he sounds financially irresponsible. There's risk of foreclosure if he fails to pay his mortgage to the original owner. You pay him, he pockets the cash and doesn't pay his mortgage, the original owner forecloses, and you lose everything even though you've made every payment.