Subj To Strategy Question???

General Real Estate Investing
1

Here’s what I’m thinking in a scenario where the property has a 1st and 2nd mort:

Strategy #1:
Short the 2nd and bring the 1st current using ALL OF MY OWN MONEY.

Strategy #2:
Short the 2nd and pay off both loans with a HML.

I know that each case is different, I just wanted to get your thoughts on how to best utilize your cash.

[b]In Strategy #1, I would have more time to refi. I could potentially refi and get the money that I put into the deal back out, in order to do another deal. By the way, the goal is to acquire long term rentals (SFH and TH’s).

In Strategy #2, The HML will cost me for the use of the short term $. I would then need to refi, which would cost me again.[/b]

Assume that all of the numbers are solid and that I have plenty of equity to maneuver around with. Now give me your thoughts.

I’m assuming Strat #1 would be ideal because I could just RECYCLE my cash while building equity and cash flow. It also seems to be cheaper than using Strat #2. I’m also guessing that once I have a certain # of loans in my name, I would have to find another strategy. :smile

What do ya think?

2

Hard to decipher scenarios without numbers & figures.
For example, just because there is a 1st and 2nd mortgage doesn’t
mean there is any justification to short the 2nd…just because it’s a 2nd.
Prime example of shortings 2nds (or attempting to) is when there is zero to little equity with the combined mortgages.
Thus the reason to make some room.

If there’s enough equity, with both a 1st & 2nd being on the house, there’s
no reason to short the 2nd…that is unless you’re just wanting to squeeze out more $$ – not worth it.

Solution?
Just take both mortgages sub2.
Assuming there is enough equity, as you state in your post.

Remember…
no reason to “force” a solution or technique, just to use that one
particular method of buying.

How would your 2 Strategies be used whenever a seller calls you
about a fixer with only 1 mortgage…or perhaps none at all?

Hope this helps.
Take care.