Subject To Deal. What am I missing here?

[Joe Baier]

Hi All,

Longtime lurker first time poster. I’m considering accepting the terms of a Subject To deal and want to know if I’m missing anything. I’ve done several deals in the past but have never done a subject to. I'd like to get everyone's thoughts on the deal but also on subject to generally and make sure I'm not missing anything. This deal was the result of heavy negotiating with the seller and the wholesalers. 

Here are the basic contours of the deal. $33k entry fee for three duplexes. The breakdown is $23k in arears, $10k in assignment fees to the wholesalers who brought me the deal. I also agreed to cover closing costs meaning I'll be $40k all in. It is 6 units in total, 5 of which are rented all well below market. The rate I'm assuming is bad (9.25%). My goal would be to buy, rehab, get up to market rents, refinance at a better rate.

Three duplexes in Virginia:

Property 1 (2 units - 2 bed 1 bath each)

- Appraised Value: $245k

- Mortgage Payoff - $183k

- PITI: $1709.57

- Interest Rate: 9.25%

- Total Current Rent: $600 (one unit is vacant)

- Market Rent Based on HUD: $2986

Property 2: (2 units - 2 bed 1 bath each)

- Appraised Value: $270k

- Mortgage Payoff - $202k

- PITI: $1845.29

- Interest Rate: 9.25%

- Total Current Rent: $1450 

- Market Rent Based on HUD: $2986

Property 3: (2 units - First is 3 bed 1 bath, second is2 bed 1 bath)

- Appraised Value: $263k

- Mortgage Payoff - $190k

- PITI: $1809.04

- Interest Rate: 9.25%

- Total Current Rent: $1500

- Market Rent Based on HUD: $3572

Other Factors:

Total Current PITI is $5363.90

Total Rent is $3550

Tenants are all month to month with 1 unit vacant

Equity After Deal: $197k (may be more as appraisals were done 1 year ago)

Rehab costs to get market rent: $20k per unit or $120k

Let me know your thoughts!