Sub2 Help!!! (Philadelphia)

[Elijah Little]

Hello BP community, my name is Elijah. I'm a newbie investor and I'm still fishing for my first deal. I have a deal with a lot of Sub2 potential, but I'm not sure how I should structure the deal or what contracts to use. The seller's motivated and just wants to get rid of the property with a little bit of $$ for her equity. She's not pressed for cash as she too is an investor, she's primarily concerned with alleviating the burden more than receiving any $$ at this point. Initially I wanted to do a wrap, but the property is cash flowing with a tenant occupant, making it more valuable in my opinion. My question is; is there anyway strategic ways I can acquire this property Sub2 having no money to cash her out for her equity? I really would like to keep this property for myself rather than wholesale it or evict the tenant to do a wrap.

Here's the #'s: Mortgage $470.00, Balance $55k payments are current, Rent $700.00, Market Value after 2016 $84k

P.S. Any advice or direction with this matter is greatly appreciated.

Thank you for your patience,

Elijah Little

[Steve Vaughan]

Hi @Elijah Little. 'Investing' without any money to invest is always tough.  Are you talking about cashing her out of $30k of equity?  A wrap has nothing to do with whether the property is occupied by a tenant or not.  It 'wraps' around the existing financing and is most likely your best route.  Maybe she would take work in exchange for some of the 'down payment'?

Is the underlying financing by a bank lender? A land contract? I wouldn't take over a Land contract.  Check who actually owns the place.  Land contracts are still titled to the original seller/lender.  You don't own anything until it's paid off.  Bank loans have the added risk of the due on sale clause, of course. Figure out what the underlying loan is. Do your due diligence on title work.  Order a lien and encumbrance report from a title co if serious.

If she is an investor, maybe she can help you with contracts and docs.  Maybe someone else from PA will chime in.  In the meantime, check recorded docs online in the county the property is in.  See how contracts and docs are drafted to get an idea.