All Forum Posts by: Ken M.

The house was in good condition.  Renovation cost is roughly $30K.

Thanks for sharing, the POA to access the original docs is a great idea, and I'm totally stealing it for the future. also curious if its best practices when assuming a loan to forgo the escrow and just pay the taxes and ins out of pocket when needed....but perhaps that triggers something else? just spit ballin here.

FYI I've seen subto contracts which provide for ~$50,000 in liquidated damages against a seller that reports the sale to the lender and that results in the loan being called. How do you think that provision would fly in a deal that goes sideways and ends up in court?

Hello everyone, I’m looking to get into real estate investing. I live in Tampa Florida. I am a husband and a father to 3 children. I work 40 hours a week usually from 4pm -12am. I’m 37 and I’m wanting to do real estate full time eventually(if it takes 5-10 years, that’s fine). 

So my question is, if you were in my shoes, where would you start if you had $150 cash with good credit?

I love the idea of flipping houses and I love finding good deals. I’ve been bouncing back and forth between markets like Chattanooga with higher appreciation, and markets like Birmingham with more cash flow. Im truly open to any suggestions and any markets (I chose those because of proximity to Florida).

Thank you in advance for any advice. 

Looking for advice:
We just closed on our first sub-to deal as end buyers (woo hoo!). We are responsible for the mortgage as of January 1 - but it's come to our attention that they stopped paying it back In October 2024. So they are two months behind. 

In this case, who is responsible for the catch-up? We already paid them a pretty sizeable entry fee ($30k) to cover some of their equity and debt in another project.

I did a loan assumption that is currently a GIANT pain in the ***. I’m here to share my story for whatever that’s worth.

Over a year ago I did a wrap around mortgage on a place here in Phoenix at 3.5% over 27 years. Everything was smooth until it wasn’t. 6 months into it the tenant called and the toilet had failed in an upstairs bathroom. The house was flooded to the tune of $70,000 in repairs. 

No big deal, I worked with insurance and contractors to get the repairs done. Six months later my insurance dropped me and here is where it gets sticky. I got a new insurance policy at a higher rate. I let the original borrower know they needed to update the lender on the new insurance policy. 

The higher insurance premium required a higher escrow payment which the original borrower didn’t let me know.  A few months go by and unbeknownst to me the escrow account had now drawn negative which triggers the lender to no longer apply what’s considered a “partial” payment to them, given that I’m now paying less that what’s due given the escrow increase required but not relayed to me even though I expected it at some point.

Last month I’m on Zillow looking at the value of my properties. One of my properties says it’s going to auction in March because it’s being foreclosed on. My heart rate goes through the roof as I have about $90k in equity in that house. I reach out to the original borrower and ask them what’s going on. They weren’t paying attention to it, and why would they, it’s not their house anymore. 

They send over 3 months of notices from the bank. $10,000 has been collected by the lender and is in an “unapplied” status due to the short payments. They are foreclosing and are not open to discuss it. I call them, they won’t speak to me about the loan at all BECAUSE ITS NOT IN MY NAME. 

I have to sell it, but guess who has to request the payoff amount from the lender….thats right, the ORIGINAL borrower. So I am at the mercy of that person for basically EVERYTHING.

I am still waiting on that payoff amount 9 days later and am up against a clock where they have scheduled the home for sale at auction come March.

Take it all for what it's worth, I've learned plenty of lessons and made my share of mistakes. One thing is for sure, if I ever wrap another mortgage I am getting a POA to access the docs on the original loan so that I am never again at the mercy of that borrower to relay information. If it wasn't the insurance it would have been the property taxes. FFS

THE END. 

Let me know what you would have done differently?!

First, let's be very clear here.

The mortgage your speaking of is a private agreement between the seller and the lender. The "due on sale" clause (DoSC) obligates the seller to notify the lender if the property is sold.

Failing to do so would place the seller in violation of this agreement, giving the lender the right to accelerate the loan.

But no laws are being broken here.

So, subto is neither legal nor illegal.

Second, it only works because most lenders are more interested in receiving payments than in invoking the DoSC clause and foreclosing on the property.

But, it can work, provided seller and buyer are both on board and the proper process is followed.