The life and times of an Arizona Investor

This will be my personal journal to document my failures and successes during my real estate experiences in Arizona. All stories, thoughts, and successes will be documented..

Sunday, March 20, 2005

Offer #5 Seller willing to do Subto

I successfully negotiated a subto deal today, however, I won't do it because its too risky. If you don't know what a subto deal is, look for my thread on buying strategy of the month (Feb).


The numbers:

ARV: 125-130k
Owes: 103k
Arrears (HOA & late payments): 4k
Repairs needed: 2k

The seller has pain. His adjustable rate mortgage suddenly went up and now he's over $300 a month in negative cash flow. He's missed two payments.

I could take over subto, and since his payments are high, I would fixup and sell immediately. However, the problem is if using a realtor, the holding costs and commissions would not make this a deal. Oh well!

Negotiating with him was interesting. At first, he was saying , " I am not interested in deeded this property over to you." By the end of the conversation, he was willing to do it. Its amazing the power of establishing repoir and being patient. His pain was the payments and I had a plan to solve it. Too bad he didn't have an extra 10 k in equity!

Good investing!
|| Bginvestor, 6:55 PM

2 Comments:

Can you sell this deal to someone else? What if you sell without a Realtor? You've already done the hard work of getting the seller to agree to a subject-to deal. Why drop this now?
Blogger Shaun, at 7:13 AM  
By the way, I'm not sure this is all that risky, given your numbers.

With the mortgage, fees, and repairs, the total debt is 109K. 6% commission on $125K is another 7.5K, for a total of $116,500. You've got $9.5K cushion in there, or $14.5K if you sell for the higher price. What's the monthly mortgage payment? How soon can he move out? What's the average time to sell in the neighborhood? You could probably make at least $5,000 on this, easy.

Be sure to check for delinquint property taxes.
Blogger Shaun, at 7:21 AM  

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