Buying A House Sub2 And The Risk Of Foreclosure
I have the opportunity to buy a house sub2. It needs a LOT of work, and thus far I haven't had any success in wholesaling it (testing out my buyers list).
The sale date is in 5 weeks. If I take title to it, but can't sell it, what would happen?
I'm assuming that the seller would have a foreclosure on their credit report (not good), so there's no benefit in me taking title to it? I can afford to make up the back payments, but not sure I want to if the deal will have minimal profit. THoughts?
If you have any doubts about your ability to sell, rent or lease the property, depending on your preference, then you DON"T take the title, period.
Investing is not risk-free. You shouldn't promise to help people out of their problem and then come back later and say, "oops, I don't want this afterall. Let me know how it turns out."
If you take the property subject to, then you are the owner of the property and responsible for it and everything that goes with it, including that mortgage. So again, if you have any doubts about the deal, don't do it.
BTW, in a subject to deal, while you are not formailly liable for the mortgage to the lender, you are liable to the seller. You agreed to make their payments, so if you bail, they'll get a foreclosure on their credit, and you could have a major lawsuit on your back.
Roger
That's pretty much what I figured. The bank wouldn't accept the short sale, so I don't really have a deal here.
They wouldn't accept the short sale???
I think that you may be either confusing methods or trying to combine two that don't work together.
Taking title "subject to" the existing mortgage means that the loan stays in the sellers' names until you cash them out.
Short selling a property means offering less than the lien currently on the property, usually because the value of the property has diminished because of needed repairs. In a short sell, you actually have to buy the place with new funds/financing. You can't take the property Subject to.
Roger
I think that you misunderstood me:
I tried to do a short sale. The bank wouldn't accept it.
Then I was going to buy the house sub2, but the numbers were such that I won't be able to make any money on it.