If you can find someone to owner finance via a mortgage note, and you are able to get the house at lets say 15k below appraised value; then you do a wrap putting a new buyer in that you’ve owner financed to selling the note to a private note buyer…you get out of deal making 5-8k in a months time having done virtually nothing more then connect the dots.
If its reasonable, what are the qualifications that a private note buyer will look at? ie… condition of house, end buyer qualifications in terms of credit etc…
Nice idea, but I don’t think you’ll find a private note buyer who would take the deal structured that way because of the underlying first position mortgage. If the home buyer bails out, the note buyer would be left with nothing.
thanks for the input. actually I dont believe the homebuyer would be able to bail. I would have already had them sign a mortgage note and had it recorded before approaching the note buyer. If they do bail the note buyer obviously gets the house. My ? is what are the qualifying guidelines that a note buyer will look at? I dont see them buying a note at 90+% LTV on a mortgagor who has low 500 or even 400 credit scores. Those guidelines/programs dont exist in the conventional mortgage world to my knowledge. You might be able to get a 520 score 90% but I doubt it. The programs used to be there but since the mortgage industry has bottomed out in last 3 months, most lenders have tightend up their guidelines significantly.
and again the original owner finance note would be released via the wrap so that shouldnt pose a problem…
Just wanting to see if any of you other folks out there have structured deals this way?
Wraps are very viable. I agree with reiauctions that you would be hard pressed to find a note buyer when your deal is done. If you could, they will want to discount your note a substantially and eat your equity/profit.
If you could spare the time, I suggest structuring your note to balloon in two or three years giving your buyer time to get his financial house in order for his own conventional mortgage.
Just straight option the thing. You NEVER own it so there is NO note involved. Pay the current owner $500 (or whatever you negotiate) for a 60 day option at the $15K below MV price. Then bring in your buyer assign the option to them and at the closing you leave with a check for the $15K that the property was underpriced by.