Using Seller Finance to buy a house with a reverse mortgage

[Doug Woodward]

We have an acquisition opportunity on an inherited home with a reverse mortgage, which is something we haven't dealt with before.

On a flip the numbers shake out as follows:

ARV - $300K

Repairs - $40K

Reverse Mortgage (according to seller's friend) ~$185K

The house is in N. Arlington (DFW).

Although the numbers are a little tight for the MAO calculation, our market can handle the tighter margin. However, we don't like the exit for a flip for a couple of reasons. The house sits very steep on a hill. DFW is relatively flat, so most homes have a somewhat level front and back yard here. The front yard is very steep and the backyard is almost entirely taken up by a pool, which is our 2nd reason for hesitancy. Not the best home for families with very young children or for those advancing in years, so we are concerned that we may have much longer DOM.

We have considered wholesaling it & still may -- not a whole lot of money there.

I considered seller financing it with a wrap.  Then this morning the Airbnb bug hit me again. The house is located 3.6 miles away from where the Cowboys and Rangers play and the XFL just announced they would begin playing in the ballpark that the Rangers are moving out of.  Six Flags is generally the same distance, 10 miles from DFW Airport and Arlington is basically the halfway point between Dallas and Ft. Worth. So, I thought about buying it through seller financing... but it has a reverse mortgage.  

The gentleman who took out the reverse mortgage has passed and he left the home to a non-family heir, because he has no children. There are no disputes, but the house is in probate and the attorney working the case for the heir is on a 25% contingency (25% of the net proceeds of the sale).

I really like the potential of an Airbnb deal, but our lives are not very complicated at the moment and I understand from some of the posts that Airbnb can be a whip.

So, my two questions are:

1) How does this reverse mortgage work? Is it possible to wrap one, or does it just need to be paid off (I am currently trying to research this myself too -- just in a bit of a hurry)?

2) Is anyone familiar with Airdna as an analytics tool for Aribnb and if so, what is your opinion of its value?

Thanks in advance,

DW