Subject To Opportunity

[Shawn Connors]

Hey BP,

Here are the details on my current possible deal. I have been talking to a seller who needs to sell his house now. He currently has 4 mortgages (2 on the house I am dealing with). He owes 108k, 60k for HELOC and 48k on existing mortgage and wants to purchase another house with his wife via traditional financing. The house needs a lot of TLC, estimated repairs are 50k-60k and the ARV is roughly 200k so the numbers do not work for a flip. I have given him the option for a possible subject to deal, which my partner would take over his current mortgage payments ($825/month), fix the place up and put a tenant in at $1500/month. His problem is this; he would like to have his HELOC paid off because he has to start paying the principal back this year (he has been paying interest only for the past 10 years). Does it make sense to pay off his HELOC, fix the place up and start renting it out? What do you guys/gals see as a possible road block in this situation? Thanks in advance.