Last week we tried something new based on a reader request. We presented an actual case study and asked for your solutions.
The situation: seller in foreclosure in Tennessee, six payments behind, already made arrangements to move in with a friend, foreclosure notices starting next month.
We didn't get any suggestions from you. It's okay. We know you're busy doing your thing.
Here's what we offered her. A traditional cash flip wouldn't work because we'd make maybe $5,000 if everything went right, which it rarely does, and that's not worth getting out of bed for. So we got creative.
Option 1: We offered her $10,000 cash to sign the house over to us subject-to the existing mortgage. The reinstatement was just under $9,000 so she had $1000 left to move to the next chapter of her life. We left the loan intact and explained it in plain English without the technical jargon. Our projection was $20,000 to make it rent-ready, so $30,000 total investment for $10,000 annual net cash flow.
Option 2: Lease option with similar numbers but less control for us, so we only offered $5,000 as the option price.
The result: She took the subject-to deal. We held the property for one year, then did a cash-out refinance. That reduced our monthly net cash flow to $560, but we got all our cash back out. Not a home run, but solid base hit that now generates passive income indefinitely.
Now, this week's case. Tell us what you'd do.
The Situation: Seller inherited a house in Georgia. It needs updating because nothing's been touched in 20 years. The children don't live locally and just want it sold. They're not in financial distress, but they have zero interest in managing renovations from a distance. New roof needed, HVAC not working.
The Numbers:
Original purchase: $350,000 (20 years ago)
Remaining principal balance: $139,731
ARV: $750,000
Fair market rent: $4,500
Square footage: 3,200
What would you offer? How would you structure this deal?
We'd genuinely love to hear your thoughts on this one. And even if you don't have a suggested offer, we'd love to know whether you're enjoying this series. Hit reply and let us know what you're thinking.
Quick note: My marketing coach recently told me I'm not charging enough for my Private Advisory. She's probably right. But before I fix that, I'm opening up five Annual Memberships at 67% off — use code FLASH226 at checkout. First come, first served. Click here to sign up. -Roger
