Mortgage Companies Buys RTO Paper
Are there any mortgage companies that will actually buy a home where I have installed a tenant buyer and let them work with the t/b until they can get a mortgage? For example:
Buy a house for $ 50k
Sell it for ARV $100 to a tenant/buyer then resell to mortgage company for say $ 90k???
I have seen that done w/ private note buyers/broker, but not a mortgage company.
LeaseOptionKing - what do your ads say?
And some people have bad credit without it being their fault.
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And some people have bad credit without it actually being their fault (good people who have a run of bad luck).
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LeaseOptionKing - What are some good examples of ads?
NO QUALIFYING! No
Credit Check! 3/2 North
$1100/mo 555-555-5555
Place it in the For Sale section only. Leave out any reference to a down payment. You will have to weed out over 90 percent of the calls from people who have no money (you will get lots of callers), and ask each of them, "How much do you have to put down towards your beautiful new home?" Place the monthly amount in the ad to help prequalify.
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Quote:it will not be treated as a purchase money mortgage. It will be treated as if the T/B has made 12 payments on a mortgage (a refinance).
I have heard people do that but how, when the T/B is not on the title?
Are your T/Bs doing it?
Check with a local mortgage broker. Most of them are geographical (smaller) lenders.
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"A deal is only as good as the quality of your Contracts." --Me[ Edited by LeaseOptionKing on Date 05/29/2008 ]
We separate them for our purposes. The lenders just want 12 consecutive on-time rent payments (proved by canceled checks), a Lease, and an Option.
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The appreciation is one of the ways you are paid for taking the risks associated with this. You are looking for Sellers whose primary concern is debt relief, and the urgency of that immediate need overtakes any desire for future appreciation. If they insist, you can go with a Joint Venture instead--where you and the Seller split the future appreciation--but you still get the monthly cash-flow (anything above debt service) for managing the property (i.e. collecting the rent check). The Seller gets the depreciation. And, of course, you both split the nonrefundable Option Consideration as well.
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3% down? Man that is like GOLD around here. We are lucky to get 1st and security....
About 75 percent of my deals this year have been where the I collect half the consideration and just move on. The Sellers get debt relief from their mortgage payments with someone who treats the property well...and also a premium price, premium rent, half the up-front consideration, and the depreciation write-off. Those Sellers are not as concerned about cashing out.
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I have lease optioned several houses this year. In a very difficult renters market (Niagara Falls, NY) I typically get $2K to $3K in consideration. I get a premium in rents and the T/B pays all maintanence. It has been a god send for my rental business.
In LA I optioned a house for $530K (above market) at $2600/mo rent (mkt rent is $2200) and a $7500 deposit.
In Texas (L/O are illegal) We do L/O w/ a $3k refundable deposit high market rent (Usaually $300/mo premium) and T/B pays all closing costs on re-fi and all mantanence.
I love this technique and now is a perfect storm for the L/O.
Who do you use to refi a L/O in Texas?
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Cressey,
Please explain the reasons for the perfect storm good for L/O?
I really need to understand, I try other techniques however, it hits and misses.
Raise the price by 5 percent. Find a Buyer (not renter) who will pay the full rent by telling the Buyers you need a rent amount comaparable to what a mortgage payment will be for them 12 months from today, so they can prove to the lender that they can afford a mortgage on that house. Collect half the down payment (2.5 percent) and walk away with no liability. The Seller has a great Buyer (plus 2.5 percent up-front cash), but if the Buyer fails to pay, the Seller will still be on the hook, not you.
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Thanks LeaseOptionKing!
Could you refer me to the type of forms I should be looking for to do something like you mentioned?
Just an assignment or ???
An Assignment will work.
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Well,
Real Estate listings usually have 50% of the option fee goes to the brokerage. I was always willing to pay at least 20% for a qualified.
do you have a handful of professionals that you can use, like banker, cpa, and atty?
They will send the check to whatever name and address appears on the lease.
You just need to be careful that you aren’t doing it in such a way that requires a real estate license.[ Edited by mcole on Date 01/03/2007 ]
A highly dangerous practice.
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Could you please elaborate.
Another way to look at it is like this: There are signs in the Wal-Mart parking lot that state you are parking at your own risk and that Wal-Mart is not responsible for shopping cart damages to vehicles parked on their lot. That can be viewed as a release of liabilty, and you are agreeing to it by parking there. The average Joe Schmo would drive away thinking they could do nothing. But Wal-Mart settles several such cases out of court each week (from the smarter shoppers) that none of us ever hear about. They just pay off the claims. Still, it is a very effective "bluff" nonetheless. The CA release is such a bluff. Usually it will work, but attorneys see right through it.
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