Subject -To Calculations

[Thomas Lee Malpass]

I need some help calculating a potential Subject-to deal. Here is the info I have so far... Sellers Loan Amount $500,000 They are currently asking $799,000 as the purchase price. 

The property is a multifamily Quadplex currently fully rented at $4200 total with some leases ending soon and rents increasing to $4800 if fully leased out. 

I am still doing due diligence on the PiTi loan payment, but the property was bought in 2020, so I assume they have a decent interest rate.  My question is what else do I need to know to calculate this deal? And if I get it under contract how could i make this deal work out? THank you so much for whoever helps me on this. 

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Quote from @Thomas Lee Malpass:

I need some help calculating a potential Subject-to deal. Here is the info I have so far... Sellers Loan Amount $500,000 They are currently asking $799,000 as the purchase price. 

The property is a multifamily Quadplex currently fully rented at $4200 total with some leases ending soon and rents increasing to $4800 if fully leased out. 

I am still doing due diligence on the PiTi loan payment, but the property was bought in 2020, so I assume they have a decent interest rate.  My question is what else do I need to know to calculate this deal? And if I get it under contract how could i make this deal work out? THank you so much for whoever helps me on this. 

I'm not quite clear on what you mean. A Subject To means you are taking over the existing debt. That's all. Pretty simple. But, you say they want $799,000 which is $299,000 over the existing debt. So, are they doing a carryback of $299,000 ? If so, at what rate and terms? Are they dropping the price to $500,000? That would be great, but it isn't likely. Are they allowing a Wrap? Do they need the full $299,000 at closing? Are they doing seller finance? I'm just not sure, based on what you've said so far, what you are proposing to them and what they are willing to accept.

Also, since it's a multi, you want to have the roof, heating, cooling, plumbing, electrical and sewer all inspected along with each bathroom and kitchen and the foundation.

And you want to get a trailing 12 rent roll and a copy of all lease and rental agreements and have language to deal with renter's deposits, among a few things to do.