New London CT · Member since 2016 · 57 posts · 8 votes
I have a motivated seller that owes 140k on a multi-fam. Defiantly has differed maintenance coming due within 2-5 years.
This is a good cash flowing deal with some equity but do not have enough cash to go traditional.
I would like to do some kind of BRRRR.
I offered to her a lease with an option to buy. She seemed ok with me paying the PITI directly myself and give her a few dollars every month but didn't like that she would be overall responsible for any capex that would come up.
Is there a way we can both get what we want without too much risk? She wants to be relieved of property management and put some money in her pocket. And I want a cash flowing property with some equity (using no money down).
If there was enough equity would I be able to get my name on the deed and almost immediately do a refinance into a traditional mortgage?
Congrats on finding a creative deal. If you refinance traditionally you will most likely need to wait 6 months for seasoning. Sounds like you are doing a master lease with an option to buy. Sort of a subject to deal by keeping the existing financing in place. Why not put together a subject to deal with an option to buy it in 2 years or less. The deed transfers on that type of deal. There is always the possibility the loan gets called because ownership has changed. It’s less than a 1% chance but just be aware.
New London CT · Member since 2016 · 57 posts · 8 votes
6y
@Kenneth Garrett
Every thing I have read about subject to sounds like the seller wont get anything cashwise until the sale/refi if at all. Is it possible to also put a few dollars in the sellers pocket every month?
I believe that almost any plan you set up is legal as long as you both agree upon it. I would ask a lawyer to double check. @Edward Schenkel is a real estate lawyer. He may be able to chime in.
I would say that it would be possible for setup an agreement with the seller saying that she will sell you the property with 0% down and a monthly payment of $400 which gets applied to the purchase price of $140k. Obviously, there will be more to the contract than that, but it sounds legal to me.
Investor · Tacoma, WA · Member since 2020 · 20 posts · 8 votes
6y
@Richard Arden
If you were acquiring the property Sub2, you would need to determine whether the numbers work. My first thoughts were:
• Monthly cost of existing mortgage
• If renting out, how much can you get per month?
• How long would you pay that additional monthly cash flow to the seller? If using it as a way to disperse a down payment over number of months, that I could see.
The great thing is that you are only limited by your imagination when considering deal structure. Just make sure the numbers work on both sides. Get an inspection so you know what kind of impacts to Capex can be expected and work it into the deal. It's great that the conversation has started. I'm sure you'll come to terms.
Rental Property Investor · Killeen, TX · Member since 2020 · 13 posts · 3 votes
6y
@Richard Arden
It depends on how the deal is structured but you could always give them some walk away money up front, or let’s say they owe 50k on the loan but are asking 75k you can create a second lien to pay the seller that 25k over a specific time which is giving them money in the pocket each month.