Deal Analysis and Social Analysis

[Jarrod D Day]

Hello all,

I'm a new investor and, after starting direct mail and text blast campaign, I've found a motivated  seller.  The story is, she is nearing retirement and wants to get rid of her property.  I texted her actually of another property I found while driving for dollars, but she wasn't willing to sell.  

The numbers: house is near the best elementary and high school in the city. She has a mortgage and not much equity, about 20%, current appraisal at $57K. With about $12-15K rehab we can get an ARV of about $70K. Because of low equity, we negotiated 'subject to' financing with seller to take over the monthly payments of close to $250. After rehab, we can easily get $800 for rent (we have 2 other houses and we've proven this, despite the pandemic, as we are getting this amount). My plan is to refinance in 6-12 months. We have a lender at a local bank and keep them in the loop and unless the economy goes to crap we can still get LTV 75% on the refinance. I think this is a good deal.

The social:  she has a tenant,  a family member, who she has allowed to stay in the property without paying rent for a year (the reason why she wants to sell it and not the other one, I figure).  The seller tells me that she has already spoken to this family member to let her know she is selling the property.  There is no lease agreement in place.  The seller says the family member will move once we sign contract.  Add to this, the seller and my wife REALLY didn't hit it off and there were some issues but I smoothed it out later over the phone and calmed things down but now my wife thinks the seller is crazy.

How would you guys handle this family member occupying the property?  Nothing is in stone, and we are verifying mortgages and getting her the contract to sign (authorization for release of info, etc.) but even without the moratorium on evictions, I don't trust the tenant knows about the seller selling the property so I'm going to go knock on her door and talk with her.  Would you guys wait to even sign the contract until talking with the family member in the property now?  I told her that if this is a hardship on her family member then the deal is off which I'm including in the contract and having my attorney look it over as well.