Just interested to hear experiences of buying sub2 when either 1.) the bank called the note due and what was your exit, did you get out of the note being called? Or 2.) when you were buying sub2 you actually did notify the bank of the change (as the DOS clause usually asks for the notification of change) and what was the result doing that?
Thank you in advance for the sharing your experiences.
I've purchased several properties Sub-2 and never had the threat of the DOS. As long as you make timely payments and have proper insurance on record with the bank it's highly unlikely they will exercise DOS - IMO (not legal advice).
@Chris Bounds Thanks for sharing your experiences. Did you ever notify the bank of the change on any of the deals? ( I don't expect to do this or find many who have, just interested to see what the bank's reaction is to sub2 when they are notified).
@Jared Emerick I never specifically told them I was purchasing it. I did obtain a POA and Authorization to Release Info from the Seller and had those docs on file with the bank so they could talk to me about the account. Some others have told me that they do specifically notify the bank though.
To be safe when doing Sub2, make sure you have a couple of backup financing options such as a private lender or a hard money lender.
@Chris Bounds So with the POA and Auth to Release- as I have prepared already- it's not like the Bank can't read between the lines on whats going on. Do you set up your sub2s through your own trust or have the seller set up a trust? Why or Why not?
Would you mind tagging those friends, if they're on BP, to share their experiences?
And as always my goal on any purchase of a deal (only 2 so far), having equity in the deal on the purchase price allows for me to get a solid plan B & C in place.
@Jared Emerick I do not think the bank reps that I spoke with had any questions or concerns as to who I was after they verified the POA and Release doc. I set them up in my LLC.
A solid B & C plan is necessary. Equity helps of course. As a side note, conventional refinancing in less than 1 year after the deed transfer may be difficult due to seasoning requirements regardless of equity. That was my experience a while back at least.
I do not know anyone on BP that buys Sub2. I was referring to people I've met at local REI meetings.
I am not a Sub2 expert. I've only done them a couple of times. Some of the first properties I purchased were Sub2. Since banks did not like broke college kids, Sub2 was one of the better strategies for me to use.