QUESTION:

Here is a prospective deal I'm working through -


Asking price - $164k she's asking way above market. Comps are difficult to come across, because it is only a 2BR home in a mostly 3BR area, 3BR's comp out at 135-150k. Other than that it is typical of the area.


Mortgage balance - $64k

P&I - $765.39

Annual taxes - $2200

Repairs - paint & carpet n


The seller is open to taking payments for her equity, however, the rental rate for this type of house would be no more than $850-900. Judging by the leads we've got for this type of home, we could probably squeeze no more than $3000 as a down payment for this house.


The real reason I am interested in this deal is that the lady does not need any money to move - she is headed to Arizona come November 1st whether or not the house sells. I think this could be a good leverage point for me.


Should I offer to take subject-to, paying her the balance of her equity when I refinance the house? My issue is that the annual taxes would cause me to go cash flow negative.


ANSWER:

Never ever go negative on cash flow. Plus she is asking about 30k more than it is worth.


Go through the Cost to Sell worksheet. My rough numbers shows that her CTS is, based on a 140,000 value, $119,000.


Now if she waits for her equity I would pay her closer to retail, given I don't have an interest or any payments to her.


Then can you make the numbers work on the monthly end. Based on what you are telling me the answer is no. So then this is one that is not very attractive.