Hi everybody!
How criative is your investing? Would like to want to test it?
So here it is:
Let’s say there’s a single family house (MV = 160,000). Suppose you got it under contract for $137,000.
The owner refinanced the house 2 years ago, so now they owe $130,000.
The seller, that just wants to get the mortgage payments off his back, will carry financing 100% (zero interest! !) so, it is a “subject to” deal.
You convinced him the you will rent/lease out the house for $1300, so you will sure have the money to cover his payments - $1000/month. (basic, huh?)
You can sell the property easily for $155,000, but you don’t want to pay off the mortgage (let’s say for the next six months), because there’s an “early pay fee” of $5K.
You also want to use the money - 155K! - to fund other deals you have in mind.
Also, you can call someone else - like another investor - if really necessary, to get the deal done.
How would you structure the deal, so:
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You can cash out the house, of course, paying no fees/taxes! (Or as less as possible!);
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The owner wouldn’t know about the sale, or how much your are selling it for. Then, instead of paying off the house to them ($137K), you can keep the small monthly payments(1K)? (And, then you can use the money in other deals).
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The lender - the holds the current mortgage against the house - will not know about the sale, for the next months - because of the early fee (5K).
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The owner can’t know that you are selling the house - and for how much - because, he will then want you to pay off the mortgage and he gets out of the deal.
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You can sell the house without letting your buyer and the home owner meeting each other - or knowing about the deal. The owner thinks you are rent/leasing it out - the buyer, thinks you are the owner - or at least that you legally represent him.
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After couple months, you get the money from other deals and pay it off. The lender get’s the money, you got your cash, the buyer got the house, and the owner doesn’t need to worry about the payments no more. Everybody lives happily ever after!
How would you do that, huh?
Put your brain to test, have fun, and hopefully this example can help other investors!
Do not back off… exercises like this can help you make thousands down the road!
See you later with the answer!
Peter.