All Forum Posts by: Wade G.

@Kerry Baird so are transaction costs on a sub to deal significantly cheaper than doing a conventional loan closing?  

@Percy N.  That's my understanding.  I get the deed but the loan stays in their name.  Not sure how possible insurance claims or other small details are handled.  I guess you have to find a title company that knows how to do such transactions.

@Percy N. That sounds like what I want do but I have never done a subject to purchase so I'm kind of trying to learn by doing and researching.  My plan tomorrow is to discuss it with an attorney.  Would you mind going into further detail about how it can be done?

We have negotiated a 7k down payment.  My goal is to sell it fast.  Repairs will be made and the house will be listed while she lives there and the loan is still in her name.  So my holding costs will be very minimal.  I will keep it listed through the month of may.  If it does not sell for the price I need I will purchase it in June and hold as a rental.  All this and all that it entails is what I need to have detailed in a contract. 

Rents in the area are $1300 - $1500 range.  So cashflow would be $300 -$400 minus repairs and vacancy.  Not a steal of a deal but not too bad.  Also, not that I depend upon it but appreciation has been very good to landlords the past couple of years in Houston.  We will see if that continues this summer.

In addition to what has already been mentioned there is one other reason not to pay off a rental and that is asset protection. If you are sued and your 100k rental is paid for it will look very attractive to the attorney. If your rental is leveraged at 70% LTV it will not look as attractive and you would only stand to lose 30k versus 100k. In my opinion there is nothing wrong with debt on real estate as long as you keep adequate reserves for the hard times. I'm in Texas and if I wanted to pay off a piece of real estate it would be my primary residence since it is my homestead.

Is there a seasoning issue if I purchase a house sub 2?  I'm thinking about buying one and turning around and selling quickly.  If all went well selling it within three to six months.  If all went bad then holding for a rental.  Also, I have never done a sub 2 deal but researched it quite a bit on this site.

@Charlie Fitzgerald, So writing an agreement with the terms is all that is needed?  Seems easy, I suppose it would be best to have an attorney write the final agreement or would that even be necessary? 

It is a shame this strategy would not work.  My dad's neighbor is selling her house.  If I could have purchased it and rented it to my sister through the section 8 program it would have been an ideal set up since my dad would be next door and could help attend to her needs since she is disabled and soon to be wheelchair bound.

I have a seller that wants 20k out of her house. That is all she wants, she does not want to list on MLS, or deal with realtors or people viewing her house while she lives there. Her loan amount is 89k and the house could sell for 140k if some minimal upgrades are made. Is there a way for me to give her the 20k now and let her move out while keeping her loan intact? Then I make the upgrades and in about 2 weeks list it on the MLS and hopefully sell it within three months. Then upon sale she gets her loan amount paid off and I get the amount earned from the sale over the loan amount.

Well, I have found out this strategy of trying to help a family member won't work. After speaking to the local housing authority and HUD I was informed that participants of the program must sign up on a waiting list. Currently the waiting list is backed up for years and its on a first come first serve basis. So my disabled sister would be years behind and I could not rent to her anyway since others are already in line.