Got My Deal Brewing But Need Advice If This Will Work
Here is my situation. I have a lady who has been in her house for over 30 years and wants to keep it. She is in foreclosure and due for sale on the 12th of next month. She is signing an authorization to release tomorrow and I plan on contacting the bank tomorrow for short sale requirements which she should have no problem meeting.
I am going to purchase this subject to and then flip it to her grandson whom is pre qualified already and wont have a problem getting a loan since his credit is 700+ and he is employed for some years.
The origional loan was for 111K but with the fees and what not the balance is now 133K. The house will only appraise at about 120K and needs about 25K in repairs. I am planning on offering 65K for it.
My questions are this:
Will flipping this property back to her grandson be something that will come back and bite me in my hind parts later?He has a different last name from her and also lives there with her, thus the need for me to be the middle man.
Is my offer too low or too high?
If my offer is accepted what would be a fair price to sell it back to him at?These are people I have known for 20 years so I cant go for the gusto on this one.
Input anyone?
Thanks in advance,
Benny
[addsig]
Much depends upon the servicing criteria for that particular loan, and the
mortgage loan servicer's internal 'policy of the day'.
The concept is fine. You'll have trouble mechanically, so to speak. The mortgagee will expect the named Purchaser to both qualify for, and to purchase the property, so there should be no mention of a Sub2, or assignment in your Purchase and Sale Agreement.
If you intend on pursuing acquisitions via the short sale niche, but you have no intention of actually closing... then you should investigate the creation of an entity that will serve as named purchaser (LLC). The actual Purchaser would be included as a member in the LLC, and instead of assigning a contract to purchase real estate, the members would manipulate their interest in the assets of the LLC. The LLC would rely upon the additional member's prequalification status to purchase the property since the newly formed LLC would have no assets of it's own.
This becomes sticky when you try to combine two or more techniques... and requires a degree of skill, and luck. To pull it off, you really have to know your stuff inside and out. Otherwise, this could blow up in your face resulting in lost time, lost opportunity, and the (avoidable) loss of homeownership.
Hi Short,
Thanks for the response. The loan is through Countrywide. It also looks like I may have another investor who is ready to go. Would I be better off just doing an assignment of contract? How is Countrywide when dealing with short sales? I plan on calling them in a bit to request a short sale package and wanted to know opinions on what you would do in this scenario. When I do call them, is it possible for them to delay the sherrif sale if I need them to to close the deal? I dont see my investor having a problem getting the loan as her credit is roses. I just want to cover my hind parts so nobody loses out.
Ideas anyone?
Benny
[addsig]
Sorry I forgot to ask:
Since my investor is going to flip the property in about 30-45 days what would be the best loan for her to get if she needs it, a conventional or hard money?I know with some loans you get penalized if you dont hold at least a year.
Benny
[addsig]
i believe that many conforming loans will not have the title seasoning issues however you will probably have to get a good loan broker to find the lender that will do it. if your investor is going to put money into the property that will be even better because the lender that will finance the flip will be able to understand the increased price because of some improvement.
another question - if you do form an l.l.c. with your new buyer - how do you get paid? i have asked some attorneys and they say that you would just have to take cash from the new buyer. do you know if they can finance my profit?