Rental Property Investor · Atlanta, GA · Member since 2015 · 26 posts · 12 votes
A seller that's a good friend of mine desires to sell her home for what's owed. She has agreed to sell me the house Sub to for what's owed. The house is 10 years old and in good condition, and I plan on Wholetailing it to a buyer using a VA Loan (military town). Being that VA Loans require 90 days of seasoning, I will have to hold tile for 3 months before selling. The seller's ex husband currently occupies the house but can't afford the mortgage and would like to move ASAP.
My Strategy Is to:
Purchase Subject to, get on title to start the 90 day seasoning
Rent the house to the current occupant on a month to month lease less than the current mortgage payment (incentive to stay, be corporative with Sub to, and subsidize holding cost during the mandatory seasoning)
Begin marketing the house immediately
Sell to a VA Loan buyer immediately after required seasoning
Both sellers are on title but wife has exclusive discretion for sell of house. Does anyone recommend a better way of executing the deal? Are there flaws with this strategy that you recognize?
First thoughts: sub2 is fine, for seasoning purposes. I'd have a plan to refinance, if your plan to sell at a profitable price doesn't come through.
If you don't have enough profit (120% of your purchase price), the 90 days' seasoning is immaterial, as far as I can tell.
I wouldn't sell only to another VA buyer. It is very limiting in terms of who might want to buy. VA is very rigorous in terms of condition of property, which is limiting. There aren't as many veteran buyers as there are general buyers. Are you eliminating private lenders? Cash buyers? FHA? Conventional? We want the widest set of buyers possible.
To convey title, both parties would have to go to closing and sign title to new buyer (you). Have them meet at the title company at different times. You are using a title company to close? Or your lawyer?
You don't mention figures, so no one can tell if the numbers make sense.
What is the tenant's current rent? --Already below the mortgage? If it is higher, there is no need to drop the rent. It is immaterial to the tenant whether you are buying sub2 or through any other means; they have no need to know. They want to know if the rent remains the same as the rent has been and whether they have to move soon.
You have a lot of moving parts here. Do I understand it correctly?