Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime
×
Take Your Forum Experience
to the Next Level
Create a free account and join over 3 million investors sharing
their journeys and helping each other succeed.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
Already a member?  Login here
General Real Estate Investing
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 1 year ago on . Most recent reply

User Stats

6
Posts
3
Votes
Joe Baier
3
Votes |
6
Posts

Subject To Deal. What am I missing here?

Joe Baier
Posted

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!

Most Popular Reply

User Stats

7,673
Posts
9,553
Votes
Bill B.#3 Personal Finance Contributor
  • Investor
  • Las Vegas, NV
9,553
Votes |
7,673
Posts
Bill B.#3 Personal Finance Contributor
  • Investor
  • Las Vegas, NV
Replied

Sounds like he’s not collecting all the rent he says he is otherwise they would still be making the payments. You know there has to be deferred maintenance. I might cherry pick the best property or try a lower price. Make sure you get estoppels for all rents/security deposits. 

Loading replies...