If the seller still owes on a property, do they need to pay off that loan before owner financing?
The current deal I'm looking at is 3 duplexes. They need about 70k worth of repairs to bring them up to value. The owner is willing to do owner financing, but still owes a few hundred grand on the property. Is there a way for the to owner finance this deal without paying off his loan?
Yes, this can be accomplished with a wrap note. This note will 'wrap' around the existing loan and leave the existing note in place. Be sure to work with a good RE attorney to put this transaction together for you.
Also work with a loan servicer that is experienced with handling wrap notes. Allied Servicing is one that I would recommend for this transaction.
@Fred Moskowitz Thank you! I'll have to look into that.
Also check on the state - some states do not allow seller financing with existing loan on the property (or “wraps”). It’s rare but there are a few so as mentioned in other posts have a really good attorney who knows real estate to put the deal together
@Chris Seveney Thank you!