I was just wondering with sub2 being at this point in the realestate world the all most best way to go
After you get the deed / and have if it was in foreclouser brought the loan current
Can you get the property re-fi ed in to a new loan in your name ?
With one of the low intrest rates and if there is any equity cash it out in the deal ?
Any thoughts on this any
HEY
I can not belive no one has any thoughts on this
I see not many have looked at it as yet but still
I would think it could be done but would like to know for sure from some of the more knowing sub2 investors on this
If the property is in your name there would be no reason you couldn’t refi it. You would probably have to wait for a period of time for most lenders though. Ask your lender what his policy is and go from there.
Good luck,
donrock
Typical Refi waiting period has been a year, if you want to do it without putting 20% down. If you have the cash to put into it, you can refi it at any time.
After the seasoning period you can do a “cash out” or “rate and term” refi without putting anything into it, other than some $ for appraisal, title and closing.
My question to you would be, do you really want to go from a position where you do not have your credit on the line to a position where you do?
That deal would have to be a slam dunk with a significant upside before I would make that move.
Especially since I am thinking you will be signing for the property with a personal guarantee and not solely in an LLC or other entity.
Why do I think this? Because you are interested in getting better terms (or cash out) on a loan that was likely taken over from an individual who had it on their personal credit.
The only way to better that rate would be to take the property into your own name personally, as there is a premium for holding it in an LLC.
When you put the loan in your name you are guaranteeing, with everything you own, that you will pay back that note.
A better option would be to find a tenant buyer who can refi in a year or so and put it in their name. With the constipated economy the way it is I honestly don’t think that rates will be spiking up anytime soon.
You could also get a partner who is willing to sign on the bottom line for part of the profit and put it into some other entity that you have control of. Just don’t guarantee the note.
Or a partner that may just give you the cash you want for part ownership of the deal. You can leave the financing in place and quit claim deed it to an LLC where you are both owners.
This is just my opinion, but the whole “not on my credit” factor is one of the best things about “subject to” investing and I would hate to see you throw that away by refinancing into your own name.
OKAY
Thank you one and all for the information on this
James so you are saying it would be better to after a year to just sell the property to a corp /llc i own and or just a buyer new home owner and cash out the if any equity that way ?
What if i sold the home on a owner finance with say 10 % or more down
Then sold the note to a note buyer
I know the note buyer will more then likely make a cut of up to 50 % of the face value correct ?
But what if it was priced at the full value of the property and the down was to be my full profit ?
Is this sound like a may be workable thing ?
The main point I was trying to make is that Not having your name on a mortgage or note is a great position to be in and you may want to reconsider trading in a loan that they can’t come after you on for one where they can.
If you wanted to get a new loan on a property that you have taken “subject to” and not have to come up with a down payment, you wil have to wait for the seasoning period to be over. In my experience this has been a year, but the mortgage market is changing rapidly, and I am not sure if this has been affected.
What if i sold the home on a owner finance with say 10 % or more down
You can do this. Keep the mortgage in the sellers name and don’t refi, wait for the new buyer to get their loan and cash the seller out.
[i]Then sold the note to a note buyer
I know the note buyer will more then likely make a cut of up to 50 % of the face value correct ?[/i]
In order to sell the note, you would have to have it. In a “Subject to” deal, the note/mortgage stays in the sellers name (against their credit), but the owner of the note as an asset is the bank. You cannot sell what you do not own, unless you were to pay off the old mortgage and originate a new note. (become the bank)
If you go to the bank and get a mortgage in your name, and pay off the old one, the bank you got the new mortgage through would own that note and you cannot sell it.
But what if it was priced at the full value of the property and the down was to be my full profit ?
I am not sure what was meant by this, but it sounds like there is no equity if I am interpreting this statement correctly.
My other thought is that anytime you cut in someone else on the deal, like selling the note, the profit pie gets sliced thinner.
If you assigned your interest in the property, which may be a viable exit. can you see how you would rather have the mortgage in someone else’s name?
If it were in the previous sellers name, you can take your assignment fee and be on your way.
If the mortgage was refinanced into your own name, You will have to continually make sure the payments are being made
Does this make sense or am I confusing the issue?