All Forum Posts by: Steve L.

Welcome to BP!  I spent a lot of time in the City of Rialto.

Yea, just some simple math.

Project Rent / 2% Rule - Repairs = MAO

2,160 / .02 - 40,000 = 68,000

2,160 / .015 - 40,000 = 104,000

James, a wrap is possible in this situation.  

I am assuming the position of the "first purchaser" you describe is what you want to take? 

Like everyone else that has suggested this, I would not really pursue this because for a low upside you take on a lot of risk and effort.  

Now you seem very persistent on this deal, if I was forced to be involved, I would take a flat fee upfront from the Buyer for making the introduction instead of wrapping it and collecting a small monthly spread.  That way the previous owner and the Buyer don't call you with all disputes, they can talk to each other.  

You need to make sure you have a full paperwork package from the Seller.  Limited Power of Attorney, Property Management Agreement, etc. etc.  You need to disclose this loan will still be on the Sellers credit.

Your Buyer needs to know that technically the loan can be called due and in that scenario it would be the Buyers issue to remedy.  

You also need to be ready in 2 or 3 years when the Seller's current pain is over, for them to call you and demand that you get the loan out of their name.  How quickly people forget about their pain! 

Good luck.

I have bought handfull of sub2 deals in San Bernardino/Riverside counties.  I have never sold them on a wrap and agree with the  logic of the others in this thread.

Getting a sub2 deal to the finish line propely is a lot of work in California.  Why don't you just explain more of the specifics on here and you can get a more specific response.

What would you do with the money?  If you don't have a good plan, keep it.  If you do have a good plan to earn better returns sell it.  

Buy heavy cash flowing rentals, 2+ year of landlord experience, and 6+ month cash reserves for the monthly payments.

Most banks use formulas to account for expenses (I think 30%).  

This is very expensive.  Especially if the property is commercial.  You need to contact someone to remove it and they need to get approval and inspections through many agencies.  

Stacey, I think you are approaching it correctly.  Just using the wrong lingo.

It sounds like you live in the house, the landlord will sell it to you at a price that may work.

My opinion:

1. Discuss some numbers with the existing owner and see what range he would sell to you for.

2. Bring it to an existing investor as an investment opportunity with you as a profit share partner.  

a. they are 100% on title

b. you get a JV agreement and/or performance based deed of trust. This would be a % of back-end profit based on: the profit and your ability for your husband to stay on budget

People are rebuilding houses in Costa Mesa like crazy.  Just have someone do a title search of other investors.

If you approach it looking for a loan at 10% you won't find anyone here very excited unless they are in the friends/family category.  

Break-even with, what I would assume minimal yearly effort.  What is your incentive to get rid of it?  I am guessing 15% equity after sales fee isn't a sizable amount of money.  

Maybe call your lender and see if they would flip you to a fixed rate mortgage?  I doubt it, but one can try.  

Why don't you pull a list of all the projects you would have liked to lend on and see who did the financing and contact the lender?