SUB2 AND HO INS WILL VIOLATE THE DOSC?

Ok, I’ve done a couple sub2’s and wholesaled them fairly quickly in the past month. I now am looking to hold onto one however. My question is this: If i take title Sub2 and hold the prop for an extended period of time, won’t the homeowners insurance “tip off” the bank as to the change in ownership therefore violating the DOSC. Please let me know what you think as I’m not sure how to hold this Sub2 offer ???. thanks all!

That may happen, but if it does, I’ve been told you have 30 days to secure another mortgage which you probably should do anyway if you plan on holding the property for any length of time.

A lender guy I met said that he has done subject to’s many, many times and has never had a problem with DOS. He is flipping fast though. The problem with holding onto the property is if it ever catches on fire - you’re sunk and the previous owner and bank are the beneficiaries of the insurance. It might be hard to find the previous owner at that point.

I wonder if the mort. co. isn’t happy the darned house isn’t in foreclosure or that they have to now at it to their REO list - and someone is continuing the mortgage. There’s also one guy out there I know that tells the mort. co. that he is putting the insurance in his name and he’s never had a problem. I wish he’d come on and explain the scenario.

Thanks cherdwelth,

            I definetly can obtain my own financing for the property, but I'm thinking about carrying sub2 for a couple months and going for a refi around when the winter hits. I'm wonding if I can actually notify the bank that i'll carry the INS to "help" the HO keep the cost for the house down (he's in foreclosure and I would be bringing his loan current). Check out the number and let me know what you think:

ARV 35k
current balance-23k
3/3 Double
est repairs-5k
cost to reinstate- approx 1500

seem worth it to buy and hold ?

If it is “buy and hold”, a key number would be the rents…it makes sense if it makes $$$

Keith

True, i apologize for that lack of info.

The house size is approx 2200-2400 sq ft so the market rents could push 300-500 for the 3 bedroom and 200-400 for the 2 bedroom. taxes are approx 1400. There would definetly be some decent cash flow. BUT (there’s always something…) it would probably be considered a “bad” neighborhood.

It would be my first “buy and hold”. Make sense? Or am i just over anxious?

I don’t think there has been a house in my area for $35,000 in 20+ years! Wow. Like KDHASTEDT said, if it makes money, its make sense. ( like he said ) :-X

Buffalo’s market is pretty crazy, the house value’s here seem like we’re still living in the 1940’s. 40k here will get you a 2000+ sq ft victorian style house in the city. I still get amazed when i hear everyone on the boards mention 300k+ houses because i’m not used to seeing it.

IMO, a bad neighborhood is one that I would not send my wife into alone to work on the property for the day…if this is the case, we won’t invest there. There are too many good neighborhoods in the world in which to invest.

Would you be afraid to send your ‘significant other’ there to work alone? If so, you should reassess the plan. There are folks here that invest in bad neighborhoods and do well in them financially…

Keith

Never had it explained that way. I guess I’ll go ahead with it then being that I don’t see it as a problem. Thanks to both of you!

What that tells me about Buffalo is that it is not a real in-demand place to live. So renting it will probably be an excellent idea.

I agree with the “bad neighborhood” test. You also have to think of your re-habbing items like fixtures, cabs, etc. getting ripped off in any particular neighborhood. That could be costly. :wink:

Lots of things to factor in when deciding to do a deal.

Cool slogan, Keith. It makes sense if it makes dollars. Gotta remember that one.