So I have been wholesaling in the Nashville / Middle TN area for about 4 months now, and everything is going well. I have done traditional cash sales and one "subject to" deal. However, I am getting more interested in seller financed deals and things are still murky to me on how to wholesale them, especially when there is already a mortgage in place. Is it as simple as negotiating a seller financed situation that makes sense (EX. Seller agrees to $600 a month for 20 years, but I know market rent is 1200), and then assigning all of my rights in the contract to another investor?
What happens when there is already a current mortgage on the property? Would it be the same process except the seller still has to pay the mortgage every month after we pay them?
The issue you are going to run into is that the seller will have to verify the financials of the buyer. Since they are giving them a loan.
You can't quite assign your rights to a loan. It would be like you applying for a loan with an 800 credit score and then assigning your rights to the loan by instead having someone with a say 500 credit score assume the loan.
In the case there is a mortgage, the seller would have to take a second position lien. The bank (primary lien holder) MIGHT not be okay with doing this. It depends on the bank, of course.
@Will Clark As a buyer of a number of seller financed properties, I would never touch a deal like this. The property has to be free and clear and I get title, and the seller has a lien. Otherwise as mentioned above, the bank with the existing mortgage could call it, and both the seller and I would be in a terrible spot if we couldn't pay off that existing bank mortgage in full. My 2 cents.