Florida Wrap Around on Underwater property

[Marc Bracy]

What's up guys, got a question for those who are far smarter and wiser than I am.  I have a lead that is technically upside down, but cash flow wise is in good shape - Here's the quick breakdown and my idea of how to make this work:

They owe 85k property is worth 75k.  It's a very good area for rents so all in all the property would be cash flow positive around 250 per month.  Their credit is in very good standing so the seller intends to purchase another larger home for their growing family.  

Would a wrap around mortgage on a sub2 deal be worthwhile?  The property needs VERY little to bring it up for market rents.  I was also thinking it could be a decent lease option as well.  

Purchase Sub2, real estate attorney draws up wrap around mortgage to satisfy sellers debt to income ratio(I would assume they would need a little seasoning time so maybe they need to rent for a year or so), then I could do a lease option to relieve myself of maintenance costs and have an exit strategy or rent it until my LLC/Trust can refinance and just hold it.

Am I missing something? 

[Jay Hinrichs]

receipe for disaster for the seller... you do the lease option.. that tenant mucks up the house and you walk away... seller is in a world of hurt..

Now this is a seller that values their credit.. I can't see the seller in this situation IF they ran it by council giving you the green light.. they should just keep it as a rental and call it a day.

I did a LOT of sub too in Oregon and Washington prior the equity stripping laws coming into effect and I bailed out a lot of newer investors who thought zero or neg equity wraps were a good thing.

I only buy these with significant equity so they can be liquidated if needed with everyone getting whole and or we are in a position to stroke a check to payoff underlying if need be.

I like it for short term flips... My dad started a company in the mid 80's called CA Wrap  LOL.. he did hundreds of them.. that's when the AITD was first created.