Updated over 8 years ago on . Most recent reply
Deal structure advice
Good afternoon all,
I am working on a deal and I am not sure my client can be helped. Long story short, dad died in April, Mom is getting put in assisted living, unbeknownst to the kids the parents took out a reverse mortgage loan and owes $136K. They are looking to get $170K for the home which is the taxed appraised value.
The house itself is a 5 bed 4 bath 3048 sqft built in 1970 and has a pool. The home has an aluminum roof that has a lifetime warranty, 2 years ago new electrical was put in, 8 years ago plumbing, new HVAC system including new flex a year ago, new pool pump and timers. The house is outdated, ugly wall paper, laminate butcher block kitchen counters, appliances are old but they do work, and needs a coat of fresh paint.
The comps don't support $170K if you were to buy as a fix and flip. 2 homes sold this year same size for $240 and $250 but the pictures show they are completely remodeled. A few others that are selling in the mid $180's to lower $190's but they are updated with new floors and paint.
It would however make a good rental property. Rents in the area are going for .62 a sqft giving it a market value of just under $1900 a month. Property taxes are 2.7% on $170K.
So my question is does anybody have any creative ideas? I already floated past them me taking over the loan and giving them a balloon payment within the next couple of years to get them to the $170K but they need that money now for mom. My credit is on injured reserve at the moment so I couldn't take out a loan.
Should I just put it under contract and wholesale as a rental?
Thanks in advance for any advice.