I'm wondering if you can buy sub 2 and then turn around and sell conventionally within a few months. And, isn't there a problem with seasoning the title?
Absolutely, you can sell it anyway you wish. The way to get by seasoning is to either:
- document how you raised the value of the property (if you did any work)
- get comps that show your sale price is the true value. An appraisal can show that.
- Take your buyer through your own mortgage lender/broker that doesn't care about seasoning.
Many Sub2 deals get cashed out quickly, and conventionally. If you are happy getting paid now, congrats and go get another one.
Thanks Peter! A few more questions.....if the selling price is substancially greater than what I paid for it and I haven't done a lot of work, is that going to be a problem? Also....who can I look to for help in writing up a sub 2 purchase contract? I'd like to ring his doorbell with contract in hand. I've talked to him and know that it's down to the wire for him. The sheriff's sale is 8/5.
If I had a deal that I was gong to do like that I would probably educate myself and get samples of the contracts etc. by buying Lock's Book on the subject. there is also a website included in the cours that has some forms etc. and if you get into a bind he will mentor your through the process.. Well worth the minimal amount of money involved to be well informed
GOing into a deal and asking the masses for a step by step is probably fraught with peril
[addsig]
and a few more questions......If the bank gets paid all the arrears, does this guarentee that the foreclosure process comes to an end? What if he decides that he's foreclosing anyway becuase of the DOS clause being broken? There's about 50k in equity, so they are guarenteed to get the loan amount at the sheriff's sale. My attorney is also a broker, so I'm thinking that maybe if I get her to write it up, I can minimize the risks of being so green. What do you think? [ Edited by maggyldy on Date 06/29/2004 ]
You need to get a Power of Atty so you can talk to the mortgage company and see about stopping the foreclosure process, either by paying the arrears or adding them to the end of the mortgage. Unless the sale is next week, they probably will. Remember, they get penalized by the feds when they foreclose, so they want the mortgage paid up. Just say you are trying to help the seller get straight, don't say you're an investor at this point.
John Locke's book has sample forms, but you should have your atty modify a P&S agreement for your state. IL has some strict rules and there are transfer taxes to consider. But the book is a must for sub2 investors.
As for seasoning when there is a big increase, you'll want to try to manage the mortgage process, meaning you'll want to get good comps that show it is worth your price, and have a mortgage broker available for buyers to work with. And, be honest about getting it discounted due to the seller's distress. I doubt you'll have too much difficulty.
Thanks Peter!!! I'm going to approach the seller with my deal and try to get him on board. He still doesn't have a job, so I can't see them letting him file chapter 13. But, I don't know much about that. So far, no one else has approached him. I'm wondering what's wrong with the other investors in this area. This is a hot area, the houses are going quick, and this house is in near perfect shape. This poor guy has clearly put his heart into it, which is probably why he is holding on for so long.
Absolutely, you can sell it anyway you wish. The way to get by seasoning is to either:
- document how you raised the value of the property (if you did any work)
- get comps that show your sale price is the true value. An appraisal can show that.
- Take your buyer through your own mortgage lender/broker that doesn't care about seasoning.
Many Sub2 deals get cashed out quickly, and conventionally. If you are happy getting paid now, congrats and go get another one.
Peter
Thanks Peter! A few more questions.....if the selling price is substancially greater than what I paid for it and I haven't done a lot of work, is that going to be a problem? Also....who can I look to for help in writing up a sub 2 purchase contract? I'd like to ring his doorbell with contract in hand. I've talked to him and know that it's down to the wire for him. The sheriff's sale is 8/5.
If I had a deal that I was gong to do like that I would probably educate myself and get samples of the contracts etc. by buying Lock's Book on the subject. there is also a website included in the cours that has some forms etc. and if you get into a bind he will mentor your through the process.. Well worth the minimal amount of money involved to be well informed
GOing into a deal and asking the masses for a step by step is probably fraught with peril
[addsig]
and a few more questions......If the bank gets paid all the arrears, does this guarentee that the foreclosure process comes to an end? What if he decides that he's foreclosing anyway becuase of the DOS clause being broken? There's about 50k in equity, so they are guarenteed to get the loan amount at the sheriff's sale. My attorney is also a broker, so I'm thinking that maybe if I get her to write it up, I can minimize the risks of being so green. What do you think? [ Edited by maggyldy on Date 06/29/2004 ]
You need to get a Power of Atty so you can talk to the mortgage company and see about stopping the foreclosure process, either by paying the arrears or adding them to the end of the mortgage. Unless the sale is next week, they probably will. Remember, they get penalized by the feds when they foreclose, so they want the mortgage paid up. Just say you are trying to help the seller get straight, don't say you're an investor at this point.
John Locke's book has sample forms, but you should have your atty modify a P&S agreement for your state. IL has some strict rules and there are transfer taxes to consider. But the book is a must for sub2 investors.
As for seasoning when there is a big increase, you'll want to try to manage the mortgage process, meaning you'll want to get good comps that show it is worth your price, and have a mortgage broker available for buyers to work with. And, be honest about getting it discounted due to the seller's distress. I doubt you'll have too much difficulty.
Peter
Thanks Peter!!! I'm going to approach the seller with my deal and try to get him on board. He still doesn't have a job, so I can't see them letting him file chapter 13. But, I don't know much about that. So far, no one else has approached him. I'm wondering what's wrong with the other investors in this area. This is a hot area, the houses are going quick, and this house is in near perfect shape. This poor guy has clearly put his heart into it, which is probably why he is holding on for so long.