I'm curious if anyone here has actually had any luck in pulling off this scenario.
Small community bank is selling an apartment complex - in this case its 14 units.
Instead of a traditional sale, they simply assign the property to an investor (Me) for say 5% down payment and at a good rate. Closing in 1-2 weeks.
Every bank I approach always tells me "We want it off our books" which to means does not make any sense. It would seem a win win for both parties.
1. REOs have no loan to assume, if the bank has it, the loan was terminated and that amount is booked to REO as to value.
2. Regulators will scream if a bank finances a past problem property without a heck of a good reason to do so.
Be it a SFD or especially a multi or commercial property, there is a reason the borrower went belly up, that often has issues with trails leading back to the property. An under performing multi will take better managers in there than what was there, the property may have a tainted reputation, there can be deferred maintenance, if it's empty there is a lease up period where a new buyer needs more capital, and on and on and on......that bank doesn't want to see that property again if they really don't have to, really have to.
But, if they are hung with a property, if they can find a strong borrower, that has experience they may give it another try, but they will be explaining that one in the next examination.
When the say they want it off the books, they mean they want the liability off the books, they want REO assets off their books because they can't be in the ownership of real estate business and they want cash deposited instead of wasting RE. It may be more common with a SFD where the property is more irrelevant.
It's also a matter of the bank's written loan policy, the board may say we don't finance REOs. That would be to their portfolio, they may well originate and send a SFD loan into the secondary. :)
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