Pre-Foreclosure Subject To--Bad Idea?

[Melanie M.]

Hello BP Nation, I am a rehabber/buy-and-hold investor. A possible wholesale deal has fallen into my lap, and I would really like some help from the talented and insightful BP populace. I am a fish out of water in this arena.

Property is a condo in a hot area of Los Angeles with a loan balance of $230K. ARV is $450K. Market rent is $3200-$3600. HOA/taxes/insurance are $1000/month.

The condo is in foreclosure with Ocwen. Reinstatement is ~$25K. Seller wants/needs $30K walking-away money.

Rehab is minimal--paint and cleaning--$5K max.

Finally, seller's loan is 2%--payment is $750/month. Goes up to 3% in 3 years, and 4% in 7 years.

Do I dare take this property on as a rental by reinstating the loan and doing a subject-to? (One fear is Ocwen. They have treated this seller very very badly. I'm very afraid of them.)

Is there enough spread to wholesale it? 

I'd appreciate any insights BP Nation has. 

[Wayne Brooks]

All in, you've still got $160k of spread, IF the ARV is really $450k. The seller is foolish to not just do a straight sale on the market. If you can reinstate, it looks like a good flip....reinstate, pay the seller, rehab, and resell. One thought, this is obviously a loan modification structure the seller has, and does that loan get more scrutiny than most loans.....I don't know, but perhaps.