Subject to in Philly

[Stu Basham]

Hi there,

I live in the Jersey City area but have been thinking about buying a cheap house in the Philly metro area as a BRRRR strategy project. I just talked to a friend at church who has a house in the Philly area (Croskey St between N 22nd and N 23rd st. He bought it right before the crash in 2008 for 28k and put 20k+ in rehabbing it. He had the same tenant in there from 2008 until 2015. He said it's been vacant since that time and he's just paying the mortgage every month without getting anything for it. He says he'd just prefer to dump it to an investor but he owes too much. He believes his mortgage is 45k and he just wants to break even on it. It's a 3br / 1 bath row house in decent shape. He's done some other repairs over the years but he said it's in a rough neighborhood.

He says he got $700 per month in rent for several years until the tenant stopped paying and actually worked it out with my friend and moved out. I suggested maybe considering a subject to transaction where I just take over the payments for him which would probably be 300-500 per month.

Comps I've looked at are anywhere from 25k-60k in as-is condition and renovated places go for 80-100k it looks like but I could be off. I just did a quick scan. Is this something I should look into or run away from? I wasn't planning on buying for a little while but if this is something to go after I would definitely do it considering it would be pretty low money down if anything.

Thanks!