Does anyone have any information on buying subject to a existing mortgage and then selling with wrap around financing on even a lease purchase option. To be more specific what are some key things to be aware of that might make a deal like this go sour. Any thing will help, I would just like to find out if anyone has any first hand experience.
What will you do if after you buy sub2, the lender calls the note due for the due on sale clause? Not likely, but you have to have a plan.
very old and tried scheme.. fraught with danger.. you have too many people that could default.
VERY risky for the original seller.. but then again many middle men that do this could give a rip about their sellers as long as they made some money.. ( not pointing fingers at you of course) but this scheme unfortuantly is full of crooks.. that rip payments and totally screw people..
@Wayne Brooks from my understanding as long as the note is preforming they don't care if ownership has been transferred. also I was looking into having the owner transfer it into a land trust of their own(legally allowed without the lender being able to call due on sale clause) and then simply changing beneficiaries. sounds like a more secure route doesn't it?
@Jay Hinrichs I absolutely agree I think there are a lot of shady people out there that do bad business. fortunately enough I'm not one of those and this is a family friend that has no other option. the property I'm currently going after has a private lender that is alright with the sub to. my concern is the back end on the selling side. any advice?
@Mark Webb land trust is an alienation of title.. does not protect you.
but if its a seller carry deal... why not just do an assumption and you take a second for your fee.. seems that would be cleaner.. keeps you from being a middle man
well I'm asking for other possible properties I may want to go with a sub to on as well
so thanks for pointing out the lack of land trust protection.
this deal specifically isn't a seller carry because they owe how much its worth and the note holder is a local investor that doesn't want to foreclose. my intention was to wrap the financing with a slightly higher interest rate (currently 5%) maybe offer 6% to collect the difference and a small fee maybe $3,000 over the current amount owned. would people consider this seem unreasonable or a act of bad business for solving my sellers, her private lender, and a possible buyer who can't get traditional financing? I remember hearing on one of the podcast a someone doing around 100 of these deal the exact same way. I'm trying to do right by everyone in the deal and please keep in mind the lender for this exact property wants nothing more than a performing note
from my point of View zero equity sub too is all risk and very little reward.. I don't care if someone did a pod cast about it... if they go bad and they do you simply have not generated enough revenue to protect yourself...
better to list and sell and make your commission and lender might have to take a little short.. or move on you can't solve everyones problems. and some people are beyond salvage.. only the desperate work on these deals like this.. is my thought process or inexperienced.. bluntly speaking.