Networth And Your Subto Homes
Here is the deal. My subto house is an asset. (I get that) It is worth say 160,000. The loan (which is still in the sellers name) is say 110,000. This gives me 50,000 on paper. How do I show this on my finacial statement. Or should I say is there a way to show this without tipping off the seller's bank? ( I chose not to use real numbers but I have 6 subto properties right now if that helps.) If you think about it, is the loan my liablity or the sellers? I mean as far as finacial statement go because ethicly it is my liablity. When you do a number of these it makes your net worth look good but what good is that if you can't use the leverage. Banks never loan you money when you need it only when you don't.
I want to show my networth to help me with bigger projects. Does anyone have any insight? Thanks
Hey James,
You say you have 6 houses you've purchased sub-to, yes?
Well, that means these houses, and the equity that comes along with them, is YOURS...regardless if the loans are still in your sellers' names or not.
Just simply show any proof of these houses appraisal/FMV, and get all the respective loan info.
You can bring all this in and let whomever do all the addin' and subtractin'..thus figuring your net worth/equity.
If you want to go a little further and appear more professional, then figure all the number$ up yourself on some sort of spread sheet and present this.
Remember to still have proof of where all your numbers came from.
Unless you're going to the bank(s) that still hold the mortgage(s) on your houses, then I don't see any potential "tipping off" happening.
Hope this helps.
Jason
[addsig]
Jason,
Thanks for the reply. Yes I bought 6 properties in 2004 all sub-to. Two of the properties are multi-family which I am keeping because they cashflow and I am selling the others on contracts. I also own 2 others that I bought before I learned how to think outside the box. I do have my networth on a spreed sheet which is based on up to date appraisals and loan amounts. My fear was if I go to a bank and show them this and they run my credit and none of the loans show up how do I explain this? I was also asked by one bank to show them the Hud-1 closing statements for the property is this common? Thanks for the reply.
J