I would really like to get some opinions on a mulit-family house I’m asking my mother to quitclaim to me. She inherited this 3-unit home that a relative, deceased last year, had as an investment property. She (and I) live in the Washington DC area. The property is in East Cleveland Ohio.
The house was paid off, however our relative secured a loan last year, with this house as security. Since his death there has been so much going on to settle the estate, that the bank placed the house in pre-foreclosure for non-payment. Last month I paid $2,100 to place a hold on the foreclosure. By the end of September, if I pay another $2,100, the foreclosure will be removed.
The property is cash-flowing with 3 tenants and a property manager who seems to be really good. The home is in good shape in a neighborhood with nice homes. However, there are also a few abandoned homes in that area with waist-high grass and some looking quite worn and beaten.
So, I believe it is worth it for me to take this property for the cash flow. I am not sure if there will be a significant increase in value because East Cleveland is in a state of flux. I have been actively looking for flips in my own area. But, I am wondering if I should try to offer this bank cash (less than owed) to release the property lien. Or, should I hold on to my $20K to make other investments, and continue monthly payments to this bank. Remember – this isn’t a mortgage and it is not in my name.
Below are the stats. I welcome your opinions. Thanks in advance!
- Value of property is hard to asses, but my best guess is $40,000
- Bank loan (not in my name) balance is about $25,000
- Monthly bank payments are $554
- Gross monthly rental income is $1,480
- Net monthly cash flow after paying bank and water/sewer/insurance/misc is $500
