Wrap This!

Interesting Problem. While advertising for my buyers list an applicant tells me the house hes renting has been short sell’d at 56K, he got pre approved for the loan, has his down payment and the bank refused to sell it to him bcuz he was buying at arms length. Hes asking if I can buy it and and sell it back to him. The house is at about the FMV at 56K But hes willing to pay 76K for it. He may not be able to qualify for 76K Loan, but we can wrap the 20K add 8% and have some cash flow. The buyer has a good job with Fed EX. Rando

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if the deal is an easy $20k with no risk,why is he talking to you, does he have relatives,something doesn’t smell right,

I dont know if any of his family members cud qualify for a loan. Hes not jumping at my offer but I think he may take it. I may get a partner or do a double closing with a hard loan. I need some advice here. Since the bank wont sell to him, Is this legal and ethical?

I cud use some advive, the buyer got an FHA loan only has the 3% down, he said there is a 90 day period that u cant sell a short sale property. Hes asking who will pay the closing costs. I told him he will need 5K down. He is asking questions so I think he may want to do the deal. I may need a partner, a private lender or hard loan. It may be a difficult sell cuz of the 90 day wait period. What can I do?

As a general rule, I don’t do personally guaranteed debt to buy single family homes. Unless the upside was so tremendous that it was a no-brainer, a situation which I have yet to come across. This deal does not appear to fit that criteria either.

See the problem is once you sign that note every asset you own plus your credit is at risk in the event of a default. What if he somehow can’t (or decides he won’t) buy the house back from you? You’re stuck with it. If you’re gonna take that risk you should demand a literal windfall profit in exchange for it.

Only way I’d take him up on this is if he can offer me some type of additional collateral that far exceeds the value of this house (plus a heavy fee payable to me). I’m talking $100k worth of asset collateral or more, that I hold until he buys the house back, at which point his collateral is returned to him.

By the way, the $20k wrapped note will probably be worth the paper it’s printed on. Looking at the math that’s a 100% CLTV 2nd mortgage…no leverage (equity) above your position. If he stops paying then what? You’ll be foreclosing on a house with no equity.

Yea, even thugh the price has been lowered by the short sale its still at or above FMV, he has 3% down and theres just no equity. I thought of selling the note, but who wants a second place note based on a deal with no equity? I told the buyer he would need to bring more downpayment to the deal and he hasnt replied back. I’ll look for a deal with some equity do do a wrap on.