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Updated about 6 years ago,
Owner Has Mortgage, Wants A Chunk Of Cash. Low Money Down Opt?
Alright folks. Have been on BP a few days but have listened to 150+ BP podcasts :) Still trying to dig through many of the forums, but I'm coming down to the wire on this opportunity so I'm asking for some advice!
Background: I just bought my primary residence (future rental, closing 12/17), and now I'm in a position to begin investing. My father-in-law owns 20+ SFH in Richmond, VA, all free and clear except 2. Most of his homes are in need of repair, but will be excellent rentals. The BRRRR method will be awesome to utilize when the time comes on the majority of his homes.
He has one home he wants to sell immediately, however it is one of the 2 that he has a mortgage on. He has buyers lined up, but knows I'm interested and would rather keep it in the family and we have a good relationship. He's doing well financially, but I believe he is selling this home to get a chunk of cash- his wife is pushing for a new car!
This home would be a fair purchase at $120K, doesn't need many repairs, and would rent for $1200 with a low vacancy rate. I own a property management business, so I have that covered. His current remaining mortgage is $65,000. I want to do this ethically and don't want to have to worry about any banks finding something out (regarding due on sale clause). Additionally, I don't want to wear him out on this deal with so many others potentially in the pipeline.
Any ideas on how to structure this deal with low money down while taking care of his mortgage and getting him the chunk of cash he wants?
**I also welcome any ideas on how we can structure a BETTER deal if he sells me multiple homes now instead of just that one home. Maybe, by buying more than one, we can cover the mortgage easier, get him the cash he wants, and I could somehow continue with a low money down situation. The other homes likely will need a lot of work and can be purchased well below ARV if that makes a difference with lending strategy.
Appreciate your insight!