Should I Buy Subject To, Lease Purchase Or Land Contract?
I have a motivated seller that is willing to sell on terms. Here are the quick numbers:
- ARV = $600,000 to $625,000
- Repairs = $25,000
- Purchase Price: $500,000
- Mortgage Balance: $500,000
- PITI: $2,750/mo
- Annual HOA Fees: $2,350 + $1,500 initiation fee
- Market Rent: $2,700 to $3,000
Repair Details
- Update master bathrooms, update kitchen cabinets, re-sod front yard, other minor cosmetics
The owner has told me that he is willing to sell it on terms. The purchase price is the mortgage balance and he will let my payments basically be the same as the mortgage payments. Unfortunately he will be ~$10,000 behind in mortgage payments next month. He told me he doesn't care about his credit anymore and that in the worst case scenario, he would do a deed in lieu of foreclosure.
I would like to tie this property up as quickly as possible but want to do it the right way where I am protected and have as many exit options as possible. I thinking buy this under contract for deed, fixing it and then selling it. If I can't sell it, then sell on owner finance as he's willing to give me 24 months. The more I think about it though, buying it Subject To has merits as well as just doing a lease option.
The other thing I should note is that I am also concerned about expenses because I would be covering closing costs. If I have to close on the front end and back end that's probably going to be $40,000 in closing costs total which is why I'm considering doing a lease option instead and simply executing it that way.
Anyone have suggestions on the best way to make this work?
Most Popular Reply
In a divorce, husbands hide things, and vice versa.
I always get deals signed by anyone on the deed and the mortgage, ALWAYS.