Many Other Deals, But This Is My First Sub2...help!
I was never really interested in sub-2 because for the last few years, we have been experiencing about 20% appreciation per year and it is most definitely a sellers market. Go figure....I now have a nice couple going through a divorce and they are in default. (A new default filed within the last 3 weeks, so I have time before it goes to sale). Their home is worth about $225k and they owe about $174k including all late fees and penalty interest. They have agreed to sell their equity for $9k and for me to take over their payments. I will pay them each $2k at closing and another $2500 when I re-sell the property. Catching them up will cost me about $5000. I know this is a good deal, because I am planning to do a quick flip and sell it for $215k. I am sure it will sell very fast in this market. Trouble is, I am struggling with what forms and other requirements there are. I can now see I need to order Locke's course, but in the meantime I need help!
1) I am a licensed real estate agent with access to all the pertinent forms, but after everything is signed, do I need title insurance?
2) Should I just keep their existing homeowners policy since I will only be owning the property for a few months?
3) Should I change the mailing address with the mortgage company so the statements will go to my PO box? Won't this trigger suspicion the home has been sold?
4) Because they are in default, won't this make the mortgage company watch this property even more carefully? (I am nervous about the DOS clause...)
5) Any other words of advice or caution?
Thanks for the help! :-o
[addsig]
you will need a title search {yourself or your choice} before you close on the prop. you are not required a search but its for your own protection.....km
you can keep there ins. policy in force and take one for your own protection so as not cause a dos. you can form a trust but for a few month its simpler to keep their ins. in force and take out another.......km
change of adddress is not needed. if you catch up the payments thats all they are concerned with. just explain in detail to the seller what you are doing. have it in writing......km
If your planning on flipping the prop anyway why even worry about DOS.
The due on sale clause basically means they will start foreclosure proceedings if they find out title changed and for some reason have a problem with that. Since this home is already in foreclosure, the DOS clause is a moot point.
Thanks for all the replies. After reading all of them, my only concern is insurance. Their policy is paid annually and is up in mid-December. I know I won't have escrow closed on the re-sell by that time. Should I have them renew their policy on a month-to-month? Or should I switch the insurance to my carrier's company for the (hopefully) short term I will need it. Fortunately, my insurance agent is a good friend of mine and that might prove helpful. If I keep their policy, should I just have them name me as an additional loss payee?
[addsig]
If you are planning a quick flip, I wouldn't be worried about this.
Quote:
On 2004-11-27 11:58, Shirley wrote:
Thanks for all the replies. After reading all of them, my only concern is insurance. Their policy is paid annually and is up in mid-December. I know I won't have escrow closed on the re-sell by that time. Should I have them renew their policy on a month-to-month? Or should I switch the insurance to my carrier's company for the (hopefully) short term I will need it. Fortunately, my insurance agent is a good friend of mine and that might prove helpful. If I keep their policy, should I just have them name me as an additional loss payee?
Yes, I am planning a quick flip, but I do not want to have the home uninsured. Come December when the other policy lapses, I am not sure what to do at that point. I expect escrow to close on the new owner sometime in February....I'm unsure what to do between December and February.
[addsig]
If you are set on having insurance, then you would have them change it to a landlords type policy.
Quote:
On 2004-11-27 14:20, Shirley wrote:
Yes, I am planning a quick flip, but I do not want to have the home uninsured. Come December when the other policy lapses, I am not sure what to do at that point. I expect escrow to close on the new owner sometime in February....I'm unsure what to do between December and February.
From your post, it sounds as if insurance is optional (?) What happens if the home burns down? I would be the owner of record, but the mortgage is still under the previous owner's name. What would happen with a partial or total loss? Would I just lose out on my profit?
[addsig]
Shirley, :-?
Regarding question # 5!
Immediately, if not sooner, purchase John Locke's Courses(multiple), and don't buy another house until you talk to the "MAN". Your questions scare me, especially since you are a Licensed Agent.
Always, and I mean always, purchase Landlord Insurance, on any Tenant Occupied Property, unless you want problems 'down-the-road'.
John Locke has forgotton more than most of us will learn about Real Estate. Is this a plug, or what?.
Good investing to you in the New Year.
David