Question: The owner of a 3/1 house had to move and can’t pay her mortgage payment plus her new lease. The house was vandalized and the toliets, water heater, sinks, condenser were stolen. She is supposed to get an insurance check to replace those items and said she would give me some of the $ for new(used) appliances. The PITI is $428/mo(will be more with no homestead and rental ins)and should rent for $750. I would have no problem renting it, could buy it subject to and or lease option, probably wrap the deal into a seller financing deal or take a fee and sell the deal to another investor. Her loan is 10 years in on a 30 year loan @8 %. Do y’all have any advice on what would I should do?
Rich Lennon: For me personally there is not enough cash flow. Not sure what your market produces in those terms, but I would want about $900 rent before I would purchase. Personally I would move to another investor and take a quick pay day. Just my humble opinion. 🙂
Cindy Crane: Rich, that’s what I’ve been leaning towards. Thanks.
Peter Gorsuch: Nice discussion, and Walter Wofford might say that house is “trading sardines”.
Jason Bhattacharya: What is the current level of equity (assuming it had not been vandalized)?
Cindy Crane: There’s lots of trading sardines down here Peter! Jason, probably no equity or very little. Houses are moving retail in that area and I think she told me the balance is $36K. And it would retail for less than that. However, a seller finance deal might work.
Jason Bhattacharya: I would agree– the only way I could see that deal working — is if she gave you the money to fix the items (I’m not a fan of used toilets though!) =) The items were fixed– and you rented with owner financing– or you did a straight rental– and had a cash of $300/mo and in 20 or so years– you have a house for no money out of pocket.. =)
Cindy Crane: That’s why I like talking/working through potential deals with y’all. I think I might pick up that quick payday on this one. Thanks.
Jason Bhattacharya: That’s how ya do it… personally, I wouldn’t take the quick payday– I’d add it to my portfolio.. and possibly try to do the deal in my IRA (Not sure how the UBIT would apply though (that is a MAJOR dinger!)