Sub2 with a Tenant in place.

[Heath Thomas Jr]

Looking at a deal for a house in Northern VA (4 bed 2.5 Bath) that has roughly 365k owed between the initial mortgage (250k remaining) and secondary lien for (115k). Seller says mortgage payments are around 1200/month and the house currently rents out for $1400. So when we include R.E. Taxes, insurance, minor repairs, there's negative cash flow.

The house is worth 375K at its best case scenario ARV. However rental comps are around $2000-2300/month. Why is the seller is renting it so low? I believe he had a 5 year lease and didn't raise the rates. He also recently had one of his mortgage payments increase from$300-$800 over a short period of time.

My question is, If I bought this house Sub-to would I be able to A.) increase the rental rate for this current tenant B.) be able to increase the rate next year when their option to renew for 5 more years becomes available C.) have to find a new tenant to raise rates.

I'm expecting the seller to send me the current lease soon so that may answer my questions but I wanted to se what the BP community thought about this deal as a whole!

Thanks Guys.