Power Of Attorney for Sub2

Hi All

I’ve just picked a great deal but, have questions in regards to seller financing and assuming a loan or subject to

1533 sq ft. 3 bedroom 2 bath single family home, seller financing $110,000 at 6% ( $550.00 a month) for ten years amortized over thirty years with $50,000 down and a small first loan ( equity loan) of approximately $25,000

Area sq ft cost for homes in the 1,200 to 1,500 sq ft $248 to $298 a sq ft. I drove by and even asked to see inside my Comparables…

I place the value at $396,450

Total Purchase price $185,000, repairs $40,000 - $50,000 ( major structural damage, I’m a building contractor and have down this before so I know my numbers are right) increased value $396,000 - $225,000 = $171,000

Question #1

The Daughter of the owner has been given power of attorney to handle the transaction. Who should I be making the check out to for $550.00 the monthly payment ? The Owner or the Daughter that has been given power of attorney? I was told the Title company will make sure I’m paying the right person.

Question #2

Being that I’m assuming the first loan of $25,000 will the beneficiary/Lender call the loan due because they might see that the payment is coming from someone else other than the owner?

Thanks so much for your all

Howdy Footinxs:

I would make checks out to owners. If she has poa she should be able to cash or deposit into their account. You could even do on line payments or direct deposit to their account.

Question # 2 has a flaw. If you are assuming the loan it will be put into your name as you have applied to the bank and they have allowed you to assume or take over the loan with or without releasing the current borrowers liability. I therefore you meat that you are just assuming the payments and not the loan and are in fact buying it sub2, There is always a chance the bank will saw something about the payments coming from a new payor. You should be OK if you are fixing and selling and will not keep the loan very long any way. There are several ways to let the bank know you will be paying the loan: Get letter from sellers that you are their management company and will be handling payment and all other details on the loan is just one way I have done it. John Cash Locke has a great book and teaches all the ins and outs on sub2 and has great ideas about your very question. He is a member on this site too and may have some answers for you too.

A question for you is how will you fund the down stroke and rehab costs. Sounds like a great deal. I am not used to thos high dollars per foot. You must be in a really nice area or just high priced dirt.

Thanks Ted for your reply

I’m sorry, yes I will be leaving the owners name on the first loan of 25,000 and just be sending the bank a check every month. I do like your idea about the management company. Thanks

Yes the sq ft cost might seem high, but here in Gold Country California is just a fact of life. The down payment is coming from the proceeds of a 1031 exchange and the rehab is from savings or I might even do an equity line.


I’ll check out John Cash Locke book

I am not too hot on risking messing up when there is that much money on the table. Are you capable of paying off the 25K if you have too? A title company here would exclude the DOS of the underlying loan but when you are putting larger sums of cash you do what title insurance.

I would suggest you find a coach/mentor out there that can walk you through the deal for an hourly fee. Books and courses are find to learn generalities but you need boots on the ground in your area.