Sub2 Question
Hi all,
When trying to "pitch" a sub-2 to a seller, to make him understand that it is his/her best option, can we use the following statement?
"For the next 12-24 months (or longer, till the new buyer refinances), the new buyer is making timely payments, so guess whose credit score is being improved for free?"
In other words, since the mortgage is in the seller's name won't the timely payments improve his credit AND using a LSC the new buyer's credit will also be improving, right? This sounds like sleight of hand (if it is true) because by making a single payment on one loan we are improving the credit scores of two parties !!
Please clarify,
Thanks, "B".
both scores improve. Most buyers are going to refi to improve there rate they can normally do that with 12 payments
How is the credit record of your buyer is going to improve? Are you authorized to report to credit bureaus? As far as the seller's record improving, as long as timely payments are made, then yes, it will improve. Now explain to me how the buyer's record will improve. I am missing something here.
Hi letsgomario,
Because we use a licensed bonded Loan Servicing Company to collect the buyer's payments and then distribute to the underlying mortgage company, there is a payment record kept.
All that buyer needs to do when he refinances is have that payment record turned over to the lender; so the lender will have proof of the buyer's history and take that into consideration when granting the new loan.
In speaking to many lender's, they consider the record of the house payments very important in determining whether to grant the loan or not.
Best of luck
John (LV)
Hi
So I guess you need to be able to make the payments financially when you do a sub 2 or it doesn't work? Renters or leasees aren't always reliable if you need to make the payments on time in order to get the new loan. In sight please????
destinyhomes,
Since we RESELL our Sub to properties, the new loan goes to your BUYER when they refinance the property.
We normally do not buy and hold with a renter in the property.
When we set up the account at the Loan Servicing Company, just put two months of payments into a trust account at the LSC from your buyer's downpayment. This way any lates can be easily covered.
Best of luck
John (LV)
JOhn (LV),
So, when I make a purchase subject to I am purchasing the property at a discount rate and the seller is moving out and my new buyer is moving in. Could not my buyer come with their own financing up front? Or allow the no qualifying attract more buyers? Help me out. How can I can my profit out sooner than 12 months?
GetRafa,
You can do whatever you want, as you have the house and control the financing. If you want to find a qualified buyer to cash you out that’s OK. If you want to carry the financing that’s OK too, and the length of time is up to you.
I’m just telling you how I do it; in addition you shouldn't have to deal with any seasoning issues.
If you do one deal per month at $6,000 to $10,000 down per deal plus the monthly income plus the back-end profit when the buyer refinances; how much profit do you need and how much quicker do you need it.
Remember, real estate investing is not get-rich-quick, but structured long-term building. If you do one house per month for five years…you do the math.
Best of luck
John (LV)