Investor · St Louis, MO · Member since 2017 · 250 posts · 181 votes
Hi BP,
I came across a seller who owes $34,000 on a property worth around $20,000. He is in an upside down position, but the property can rent for $800, so even at $34,000 the deal makes sense. How should I structure this deal? They said they are open to giving me the property for no money down.
Option 1) Subject to: How does this exactly work? Do I contact the bank and tell them that I am going to start making the payments? Is the deed transferred to me immediately or once the debt is paid off? If I miss a payment who is liable.. Me or the seller?
Option 2) Seller Financing (Maybe a 5 year balloon): Would this be a better option? What would be the pros and cons of doing this rather than a subject to? Can I even do this even though the seller does not own the property free and clear? Would deed be transferred immediately or once the seller receives his $34,000?
Buffalo, NY · Member since 2014 · 371 posts · 146 votes
8y
I'll try not to sound to negative, but it is going to come off that way... I'm not sure why you'd want to assume a $34k mort. on a $20k property unless the seller is planning on paying the mortgage down by $14k before you take title. You're basically saying you want to give this guy $14k to get into this deal. To put it another way, you are overpaying by 70%... why? I would not do this deal at all.