"Subject To" How does this change the 70% ARV - Repair Analysis

[Lenna Groudan]

Hi - I have gotten fairly comfortable with the basic Investor MAO formula of 70% of ARV-repairs.

However, I know there is another model of acquiring investment grade properties which is to take over the sellers mortgage.  This has a few advantages including much less cash out-of-pocket, no need to secure financing, etc..

My question is: if the seller is willing to let you take over their loan, what are the analytics to generate the total offer you make them? Do you need to give them some cash? Do they need to come up with cash? How much? There are dependencies, I think, on the equity in the home which relates to LTV (before and after repairs).

There are a lot more moving parts in the analysis. Any best practices, formulas or worksheets to help calculate MAO's in these kinds of scenarios?

Thanks in advance for any advice!