Revised Idea
i will find a seller
purchase the deed subject to for @ 5k to qualify
set up a promissory note for a loan for the rest of the value
instead of using a promisory note, i will have an attorney draft a personal guaranty...just like when buying a business...and the seller would have no reason to register this note
after the deal is done...i would refinance as much as i could out of the house
what does everyone think of this scenario?
Thanks for the replies!
sumtersc
Look, any plan that requires that you find a seller who doesn't know that his house is better collateral than your signature is a bad idea. You are getting closer than your first idea which required you to find a seller who had paid off the house and would sell it to you on a note without recording the note but I still gotta say you're target customer here is more or less an idiot. While there are idiots out there taking advantage of them is a bad thing.
Bottom line-- nobody is going to let you use the same collateral for two different loans.
Maybe if you told us what you needed the $125,000 for, someone could offer a better way to get it.
For instance, do you need it all tomorrow, or can you build it over the course of a few properly structured deals, over the course of a few months or a year?
I don't think anyone here who is successful will tell you that what's discussed here are get rich quick schemes. Doesn't mean it can't happen, though. I just think you need to be realistic.
sumtersc,
In referring to your previous post on this subject, when you said I teach students to be creative, there is a line that must be drawn in the sand to what is creative and what is certianly going to be a problem.
Think about this, you wanted to give the seller a balloon note due in five years, how in the world are you going to get the money to pay the seller back?
When you sign for the new loan on the lenders documents you are attesting that what you are saying is true and I am sure in those documents you are going to sign that you have told the truth about your interests and anyone elses in this property.
It may be true the seller only has a loan signed by you, but the basis of this loan can be directly tied to the property, I would not want to explain that I took advantage of anyone that maybe let's say put their faith in me only to find out later what I did.
You are heading down a road the feds are looking at with "flipping schemes", you will over encumber a property by twice as much as it is worth albeit the seller did not encumber the property with a note. If you think that sooner or later this will not be looked at by someone and when they see what was done, there will be, not going to be, will be a real problem.
What you propose is not creative it is a problem that you really do not want to get involved with.
John $Cash$ Locke
[addsig]
i could simply register the deed, refinance the house and then create a loan with the seller (the loan would not reference the house..only a personal guaranty)
i want @ 130k
i have purchased 2 houses subject to
i do not have enough time to do sub2 deals...i work 70+ hrs per week
i want the cash to buy a business
Funny, Subject to seems like one of the least time consuming methods of investment to me. I'm about done with landlording and all of the associated headaches.
If you can generate that much cash (quickly) doing real estate, why would you want to invest that cash in any other business?
Just my 2 cents.
[addsig]
Anyone care to respond?
First off, Give people more time before you come back because no one has responded to your question. Some of us have jobs still, and may not have 24-7 access to this site, or other things to do. We are after all, here to help you without compensation for that help. You're not getting billed by the hour.
I'd say that you've pretty much got the basics down, but there is still some confusion.
If this type of investing intrugues you, now might be a good time to invest in a good "Sub2" Course. They are much more complete than picking up bits and pieces a little at a time, and in no particular order, like you would here in the forums.
Please don't get me wrong, These forums are among the best I've found, and eventually you can get the information you need. Putting it all together, in a useful manner however will require a bit more.
You only have to invest a relatively small into your education , and you will have the material to reference whenever you need to. We will be here to answer specific questions you may have, or to help you clarify something you're not quite sure of.
It may take several costly mistakes before you are able to figgure out how to do it right, without the education.
"Buy the Books"
Jeff
Jeff,
:-D 1st - Thanks
:-? 2nd - It's funny that you mention the fact that most of us have regular jobs and don't sit on the boards 24-7. I didn't expect a rapid reply, but since the post was started Saturday afternoon and not responed to until sometime yesterday afternoon, it would seem that we spend most of time on the boards during our regular job hours, and not during the weekend - when I thought I would get a quick response.
:evil: 3rd - I agree that TCI is a good place to build a FOUNDATION for future learning and investing and, that's what I'm here to do; build a foundation. ( You wouldn't teach a child to read by just throwing a book in front of them without first introducing them to the alphabet and teaching them how the letters do their own things, but also how they work together.) The information I'm gathering here and from the first book I purchased on Sunday, (REI from A to Z) are the primer for what I hope to be a properous REI career.
:-o Lastly - I'm in no rush, if I were I think I would have done things in the exact reverse order, run out and bought just anyones SubTo course, hurry to buy and sell a property, then when things crashed and burned - come back to ask questions. Thanks for your enthusiasm though.
Sorry about the first line of my response, I saw the time, but did not look at the date.
Good luck,
Jeff