Help: I need to get this sub2 deal done.

General Real Estate Investing
1

I was fortunate to find another investor who owns a two family and is looking to unload it just for what’s owed on it. After finding out he wasn’t able to have any one assume his mortage he is now looking to do a sub2. However he wants the new owner to agree to re-fi in as little as two to three months.

After making a number of calls to lenders and brokers what I was able to find out is that not only would I not be able to refinance the $216K loan in the time frame the owner seeks but I would have to provide twelve months of cancelled checks proving I’ve been paying the mortgage. Not only that I would have to have a 20% equity position in the property at the time when I went to apply for my new loan.

Is there any way I can circumvent this seasoning issuse so I can get this deal done? Any opinions would be greatly appreciated.

And GLTA in your REI.

2

get the contract, flip it to someone who can pay cash. cash out seller.

3

I forgot to mention one important point here, because the propety cash flows very nicely I would like to keep it upon refinancing. Also there’s no equity in the deal, as the underlying loan is only 2 years old. So there’s no potential for a flip here.

Thanks again for your input.

4

Ok now I’m confused. There’s 20% equity, there’s no equity…which is it?

5

haha, nevermind, I misread the first post and answered my own question.

Ya, in this market you’re gonna need equity to refi or have a 740+ FICO, and if it’s a rental you’ll still need the equity position.

6

Sid, he isn’t doing you any favors.

If you bought it outright, it would take two months, and maybe 3 months to close escrow.

If you have to have it refinanced in 3 months, you will have to apply for the loan on the day you sign the sub to contract.

If this guy wants all his money in 3 months, all he is allowing you to do is to make his payments while you are in escrow.

7

This guy, like myself is a relatively new investor and there fore iqnorant about doing a subject to, especially one such as this.

Further more, in reference to my credit score, although which is steadily climbing at 629, it is no where near the aforementioned 740, I would need along with the 20% equity position required to refinance the property.

As previously stated, the property cash flows very well, at over $2085 per month. It is located in a up and coming area, with new construction all around it. The property itself is in excellent condition and has two good long-term renters.

Because there is no equity in this deal along with a minimal amount of positive cash-flow the owner, dispite his williness to sign over the property is unable to get rid of the property. I certainly wouldn’t blame any investors for not wanting to put down the required 20% in addition to closing cost($50K or more) for a new first mortgage.

Any suggestions on how I can make this a win/win so I can finally get this property into my portfolio, or should I just walk away?

Thanks to all who have offered their 2cents.