How can this Deal Make Sense

[Erik Gladish]

Hello Smart Money!

I have a seller who has an off market property and she would consider owner finance and a creative strategy.  
She bought thr property 3/9/22 for $999,000
Has a $590,000 Mortgage

The property has a seperate entrance for a 1 bed/ 1/bath + Make Shift little kitchen to the left- she says she gets $2500
The entrance to the right is a 2/2 but can be 3/2 and she gets $3,500 for it.
She has a 2 car garage with an additional attached space that could be converted to an ADU- $80k ish

On the open market she wants $1.2

How can a Subject to or seller finance deal be arrainged to be win/ win for all? What should my offer/ terms be? 

[Dan M.]

Well, it would have to make money. Is the loan available for subject to without triggering due on sale clause? Otherwise you need 590k to clear out the loan and take on the financing.

After that hurdle, assume you subject to, a critical component is what is the interest rate on the old mortgage, and what is the payment? 

If the mortgage is assumable or not. lets just say you buy it for IDK 1.15 at x percent. Play around with a mortgage calculator. I like the one on bankrate.com.  Maybe the numbers only work if you buy it for 1.1 or 1.08 at x percent. You have to take the difference of that 590 assumable mortgage payment and whatever it is you buy it for at whatever percent your taking financing. For simple math lets say you give 1.2 at 6 percent. You subtract the 590 from the 1.2 and that's how much you finance. Then determine the rate. Add both of the payments together ( the assumable loan and the new payment your financing from the lady at whatever interest rate) Does it cash flow?

 The property must cash flow or you at least live in one unit to make it worth the while. If you do live in that unit, how much would you save on rent? Is that less or more than what your paying now? 

Until you know all the numbers you cant possibly throw out an offer. No one can and if they say they can it would be foolish at best.