I saw another thread where another creative technique when wholesaling a sub 2 deal would be to wholesale it to a end buyer for a fee instead of a traditional investor. how would you present this type of deal to a end buyer? in other words, how would you explain that the financing is in another partie’s name and that there are things that have to be done properly in order not to trigger a dos clause, etc.
I do this all the time… Its a typical concurrent transaction… You’ll just need to make certain that the buyer is noticed that the transaction is subject to the seller obtaining title. In fact California Association of Realtors Legal advises a seller without title disclose as a clause in the purchase agreement that they have an unrecorded deed interest in the property and the transaction is contingent upon the recording of that deed.
I think u misunderstood me. I’m talking about wholesaling a subject to property to a buyer who intends to make it their primary residence. So, let’s say u find a family that u want to assign your deal to them so that they can live in the house. You would have to tell them that they will get a quit claim deed from u, but the financing is in another parties name, etc. How would u make that appealing to them? A investor has no problem doing this, but how would u convince a typical Joe blow off the streets?
I would never Sub2 directly to the end user… Two reasons
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On a pure Sub2 resell youre basically flipping the house and releasing your liability assuming property documentation and disclosures. However when you do this you can no longer control the payments on behalf of the borrower and reflection of the payments on their credit report. Releasing yourself seems a little wrong although if disclosed not illegal.
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Youre missing the whole concept of Sub2 reselling. If you stay within a vehicle on the property you continue to earn income. Be it a Contract for Deed, AITD, Seller second or option.
If you do decide to sell as a sub2 and need to explain IE convince it to the buyer then you have the wrong buyer. The traditional buyer needs your help which is why you can inflate the door cost and interest rate.
Heck there are four ways to make money if you stay on the deal…
1)Down payment- 10-15 % of price
2)Interest rate - 1.5% more then youre paying which makes the wrap great.
3)Pay down difference - a 30 year loan in its 7th year is paying off faster then a new 30 year loan
4) Payoff difference
If youre still stuck on wholesaling the Sub2 then the objection handlers are the same ones you used on the seller…
There are 17, at least that the number I came up with when writing my Sub2 course.
Good Luck
Michael
You do a decent job at referring to your course Michael. I wasn’t aware that we can self promote within the posts :rolleyes
moorman, there’s nothing wrong with ‘wholesaling’ a Sub2 deal to an end buyer. Especially if you’re just starting out. If possible, I would try to wrap it and put a high interest rate on it w/ a short term but if a large(r) lump sum is more attractive to you the so be it.
I make it easy. Just like a L/O co-op I tell the seller that their property wont work for me but if I find another end buyer, I’ll simply collect the fee and put the two together. The seller knows its going to an end buyer(retail) and the end buyer knows they’re taking ownership and are responsible for the payments.
I do one thing that maybe most other guys don’t. I require the end buyer to deed the property back no question if they miss a total of 2 payments and lose all equity/interest in the property. I also require they work with a mortgage broker in getting them traditional financing. I tell the buyer the seller expects them to get their own loan and using the existing financing is only temporary.
Good motivid,good. What u posted was excellent. All parties have full disclosure, u sell and move on if u choose. The reason I asked about end buyers is because it would be expands your byers list to buyers who may not be in a position to flip or have acess to funds etc.
thanks. I appreciate that.
Motiv8td,
"I do one thing that maybe most other guys don’t. I require the end buyer to deed the property back no question if they miss a total of 2 payments and lose all equity/interest in the property. I also require they work with a mortgage broker in getting them traditional financing. I tell the buyer the seller expects them to get their own loan and using the existing financing is only temporary. "
Motiv8td- would you mind explaining a bit more how you set up the deed back to seller if the buyer misses payments? Is it a pre-signed agreement left in escrow? I’ve been trying to understand how one can protect a seller when assigning a sub2 to an end buyer and this seems to address it. Thanks.
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