Assigning A Contract Does It Not Raise A Red Flag With Lenders?
I would like some input on how other investors are assigning contracts. My mortgage broker has told me that this raises a red flag with lenders and makes it obvious that the sales price has been inflated.
Thank You :-?
At the risk of sounding silly, what type of contract are you referring to? A land contract, or rent with option to buy? More details please...
dont know if it has anything to do with the sales price being inflated or not, guess it depends on the deal. when your wholesaling a deal the amount your making is disclosed to everyone. so when a lender sees that your making 20k on it they might say forget a bout it. but then again if it appraises i dont see why they have a problem with it. i guess its less of an issue if your making alot less. hopefully somone with a broker backround can explain more in depth.
There is not a problm wih assigning a contract the problem comes in when some novices attempt to
record the assignment which produces a cloud on the title and make it look as if the property has changed hands 3 to 4 times in one year. A big redflag to a lender. If you / they do not trust the seller get the signature notarized for apperance sake to the seller but do not record it you will b opening up a big can of worms.
Many lenders now want 12 month chain of title. Some want 24 months. Be careful as alot of the rules as changed.
In my opinion real estate as a whole is dictated more by region than an overall real estate market. There will certainly be markets that appreciate and markets that do not in the coming years. I also think that rising interest rates could slow down the in some case outrageous growth in prices. Real Estate will always have long-term value if bought properly. Gone may be the days of rapid appreciation, but that just opens the doors for other opportunites.
"buy low, sell high" is the saying.
just like buying stocks, when the market crashes its time to buy and hold, but right now when its hot you buy and sell.
im especially waiting for prices to drop in one certain state in particular (New York) so i can actually buy a property never mind get a good deal on one lol.
it is all relative, for example i know of an area where many houses can be bought for under $30,000.00. Many of them duplexes have not appreciated in many years, but the income is great on them in long run assuming you can keep them rented.
If a buble bust were to happen how much can you lose on a low end investment? Not much!!!!!
John