I have some questions on exactly how does sub2 work, I have a property under contract for 125k and a buyer for 130k but wants to do an owner finance deal. What type of contract do we use to assign and I have a regular simple purchase agreement with the seller would I need a different document? and also would we just get paid from the down payment if she is paying monthly?
also the seller owes 90k on her mortgage
I'm afraid you're up a creek here. I assume you don't have a license or want to introduce the owner and your buyer.
You can't convey title interests you don't own, your purchase is subject to paying off the underlying mortgage releasing that borrower.
Your payment obligation can not be assumed by the buyer without that seller's consent, you can't "wrap" a "wrap" without seller/owner's consent.
You can rent the place or sell with new financing or cash, but not seller financing.
You can't just plug in different methods of financing and sell title rights, does fraud ring a bell ?
Now, for the solution. Buy it Sub-to with your buyer, then your buyer buys out your interest. The forms for this don't exist, I'm sure, as you also have Dodd-Frank to contend with, so you need an attorney.
This isn't worth the risk for the profit you have here, find a cash buyer.
Don't get creative until you learn the basics of RE and financing :)
is there any way to make it work? The buyer and seller have already met also and are aware that I'm wholesaling the house.
Then I suggest assign your contract to the real buyer, with the seller giving consent to finance to them. The seller needs to consent to the transaction if there is to be any financing, that must be between the real buyer and the owner.
You can lease it, you can sell an option to buy, but you can't convey title until the sub-2 transaction is paid off. That could be when the buyer takes the option.
But, you also have a due on sale matter, your sub-2 can cause the note to be called due. If you can't pay off that mortgage, not only are you in default to the seller, but now you gave an option on a property you can't perform, so they can have a piece of you too.
Like I suggested, find a cash buyer! Good luck :)
I agree with Bill on this one. This deal sounds scary and the type of things that people get pissed about. What is the property worth as it sits right now? If your buyer is a true buyer and this deal was a great deal I would think he would just buy it cash/or get other means of financing. I can only suspect that this is a very thin deal.
Or if it is a great deal then you should have no problem getting it off your books.
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