Wholesaling a Wraparound?? Need Help!

[Elliot Erickson]

Hello all,

I have a great wraparound candidate on the hook. They want out of the house really badly but have basically no equity. The house is in good condition and could be rented out right away.

My question is can and how do I tie up the property with a wrap around in mind, then go market? Do I just use a regular purchase agreement and deal with the wrap around documents at close?

Thanks!

Elliot

[Wayne Brooks]

Probably best to back out, as you don't understand wraps.

If the seller has a 1st for $105 and a 2nd for $15k, with an ARV of $120k, there is no equity.

A wrap is when the Seller(or a reseller) has equity above a mortgage, and carries back part of that equity as a mortgage.

Example:

Sale price. $100k

Mtg $ 50 k at 5%

Selling terms: 20k down, 80k at 6%. The existing 50k mtg is "wrapped" into the 80k mtg. A wrap is essentially a sub 2 with an additional mtg amount on top.

Title co.s don't service/collect mortgages, and the Servicer doesn't collect the spread.