Selling Property Owned Subject To On Wrap-How To Structure?

Question

Hi. I own a property near Birmingham. I bought it subject to. I owe about $289K and it's worth about $310-320K. I want to sell it on a wrap but not sure how to structure the deal or if there would be buyers for this. The total payment is about $2200 with PITI. Interest rate is 6.25% Nice house, nice neighborhood. Trying to figure out what I can/should expect to charge for 1)Purchase price; 2) Down payment and; 3) the spread per month if any on what I pay per month. Thank you in advance.

Brian Spitz · Answer

We have a great house in houston that is an ideal wrap. ARV is REALLY $260k. Principal mortgage balance is $159,531. Rate is 4%. Payment is $1780. Rents $1950. Not going to kill it on the rental income, but if you sell it subject to, there is a lot of equity. Especially if you have an owner finance buyer. I am proving something to my dispo team here. Do you think we will easily sell this house? No back payments due, but there is a HUD loan for $7k from a previous forbearance. Any ideas on who might want this? Comps available. 77088 in Houston -- good house on a good street.

Rick Pozos · Answer

Hey @Brian Willie your buyer is going to be someone who might not be able to get a mortgage right now. Maybe some credit challenges. Maybe a contractor whose income varies. You should go through an RMLO if it is a homeowner who will live there.

You are doing a wrap loan. Bump up the price to market price or maybe a few % above if the house looks good and is in good shape. Since the buyer is not able to get bank financing, you are charging a few % points higher.

So your $289k house might sell for 320k at 9.9% for 30 years. I would ask for 5% to 10% down payment. You make the difference from your payment and theirs. Set the terms right and the profit will follow.

John Clark · Answer

Lemme get this straight: you want to sell a subject to as part of a subject to.

unless your buyer is doing a targeted satisfaction of the primary loan, I don’t see this working at all.

John Clark · Answer

Lemme get this straight: you want to sell a subject to as part of a subject to.

unless your buyer is doing a targeted satisfaction of the primary loan, I don’t see this working at all.