"Subject To" deal and forum insight- 4Plex

[Almateen Yazid]

Have a question concerning a deal structure and vale of a fourplex I am looking at. I have done 3 sub2's in the past but I not to sure how to structure this one in terms of asking price. Again, it's a 4Plex and the city assessment is $203,000. Think it is useless for this deal. Cost approach is a different subject matter and...I think the owners are factoring rehab into their asking price? You tell me?

I ran across a 4plex deal. It needs a TON OF WORK! Years of neglect. Slumlords!! Lots of deferred maintenance. The previous owners sucked to life force out of it and didn't reinvest anything back into the property but... It has potential in a transformed location. They have tried to sell it multiple times to no avail. Here is the rundown:

4 unit Multifamily that sits on a huge lot. Can possible sub divide lot.

over 5,000 sqft all brick

rehab estimate- exterior 40,000... interior 20,000 per unit x 4= 80,000Total Rehab $120,000

Seller Asking PRICE $175,000

Present mortgage $125,000 @ 7.2% 30 year term (was originally $152,000 in 2004)

No second liens

2 units are occupied (don't see how with all the deferred maintenance) and supposedly collecting rents $600 each

They originally offered a "land contract" at $175,000

City assessment- based on land and structure $203,000

All units are metered separately- electricity, gas, water, trash etc...

The good news....

pro forma base upon what I know about that area. These are the going rents:

4bedroom- $1,100

4bedroom $1,100

3bedroom $900

2bedroom$800

Projected Total gross rents $3,900 x 12= $46,800

MY PROPOSED DEAL STRUCTURE...

I need to deed! On thing I can depend upon is me to take care of business and secure my investment. I Don't trust and believe they would handle business properly from what I see. Again, I have done 3 of these deals before and repositioned successfully!

SUBJECT TO existing mortgage of $125,000

CASH TO SELLER $10,000

WILL REFI BEFORE TWO YEARS ONCE PROPERTY IS STABILIZED (I deal with local community banks and will do a commercial in my LLC to cash out at 70% LTV to recoup back some of my initial investment?)

What would you say about this deal. How would you structure, and what should be my offer price?

Thanks!