“subject to” deal, yay or nay - Posted by Troy
Posted by Troy on May 11, 1999 at 22:36:03:
Anybody w/ experience taking property subject to existing financing, please help. I got a call from a guy who has fallen behind on his VA mortgage pymts and just wants debt relief. I have spoken to him about the DOS clause and showed him the disclosure (CYA) form he will have to sign in order to do the deal and he’s ready to deal. Couple of problems, he’s 3 pymts behind at $750 per mo. and will be 4 come June 1. He says he can make up one payment on the first of June, but the bank will not accept just one pymt, they want at least two. Here are the rest of the numbers:
balance of Va loan: $58500
The house will rent for $750, maybe $800 on a l/o.
I had wanted to take the prop “subject to” and l/o to a new buyer. You can see there is minimal cash flow here, the guy is getting ate up w/ high taxes - $1500/yr in property taxes which is out of line for my area, taxes should be more like $1200. And his insurance is $1133/yr. which should be more like $450 to insure just the structure. And his VA loan is @ 9.375%. Those are the three factors for the high payments, the interest rate can’t be helped, the taxes are next to hopeless. (They could be protested, but that will take time and likely do little good), so what about the insurance? And, would you even do the deal given the arrears and low cash flow?
I may be able to raise the price slightly for a L/O, but I doubt I can get more on the monthly. Any suggestions appreciated.
Troy aka Aquanaut