In a Subject 2 deal, can you wrap an owner financed note around an underlying note and sell the note?
Example: Buy at $55,000 (original mortgage)
Sell to new buyer at 75,000
Wrap new finaning around old (25k spread) and sell the note to a note buyer for a discount? Am I complicating it? Any help would be appreciated.
Max
Howdy Max:
I am a novice at note buying but I believe Sub2 wraps are not very popular in the note buying and selling business. I wish someone else that is more experienced would give the forum their thoughts.
Thanks
From my understanding you can but I would check with Michael Morrongiello he is the expert in note buying and selling.
Go to www.realestateinvesting.com and post that question there.
I am interested in notes also and from what Michael had advised you should be able to do that.
I agree with Ted that subject to is a different animal but CASH is the expert on that topic.
You can negotiate wtih your seller and either you or another buyer would create a seller financed note and you probably will need a company who would structure the deal who is well versed in note deals. You would actually advised the seller it is a temporary seller financed note and the note broker would bring in one of his institutional investors to invest in your newly created note.
The deal depends upon the credit worthiness of the buyer the property value and the interest rate plus other factors in determining the note value.
When either you or your buyer closes on the deal you will close and the note broker usually will wire the monies to the closing table for a minumum discount for cash so the seller should get FMV or close to it but be advised the note broker is the one who is structuring your deal so the seller will get the most for his note at closing.
In most cases the note broker will do free quotes but you will need to have all the information to get started and close quickly.
YOu can broker a fee for assisting in the transaction or if you are the buyer you negotiate a good terms for the home.
Once the institutional note buyer take possesion of the note/deed you make your payments to him.
Nice thing is there is no R/E agents, commissions and best of all fast closings.
If you wrap it the seller should have all the monies to pay off the exisiting financing at closing.
Iam looking on doing these deals for sellers who for some reason can not keep their equity and the loan in place.
Good luck