Buy & Hold vs Subject To - How Do They Compare - Actual Deal

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I was asked by a couple of people to compare doing a Buy & Hold Rental using conventional financing and buying Subject To with selling to a Tenant Buyer and what that would look like.

This is an actual deal I recently did. I bought a 4 Bed 2 Bath 2000' property in a decent neighborhood in Mesa AZ that was built about 1985.

In this Spreadsheet I am comparing:

OPTION: 1 Conventional Financing for "Buy & Hold" for a Rental  vs

OPTION: 2 using "Subject To" and Reselling to a Tenant Buyer

OPTION: 1 As a Rental, the Kitchen and Bathrooms needed updating requiring about $5,000 of work in order to be ready to be a Rental. From the Renter I would get first month’s, last month’s and deposit. I would have to have a loan from a bank with 20% down or about $45,000 to qualify.

OPTION: 2 Selling it to a Tenant Buyer requires no rehabbing on my part. The Tenant Buyer will do (or not) the rehab to their liking. From the Tenant Buyer I get an Option Payment of $25,000 and a rent payment when they take possession. There is no deposit. Here I simply take over the existing loan and payment & need about $15,000 “Cash on Hand” to cover expenses & reserves etc. I can sell the property for more because he doesn’t have to qualify at a bank and will pay a slight premium.

Let’s see how the numbers work.