Other Options After A Sub2?
Hi everyone, long time reader, first time poster. :-D I am a newbie and have been reading a lot about sub2 deals. However, in most of these deals, the common thing that everyone seems to be doing is a lease to own for a third party. Is it possible to just sell the property after you obtain the deed instead of doing a lease to own for a few years?
Yes you have the deed your the owner. You can do anything you want with the property.
What about seasoning issues with the buyers lenders?
I had the same question about seasoning. Say I hold it for 3 months and sell it to another buyer, would there be a problem with seasoning? I've read that to avoid this problem, you usually have to hold a property for at least a year.
hi, i have been doing this for about 4 months now and i am doing a sub-to deal tomorrow actually. the guy owes 139k. The house is worth about 180-200k. all he wants is 1k up front and 2k on the back end. I will be putting this into a trust to avoid any issues as far as seasoning or Due on sale clause. so i believe the answer is, that you can avoid it by putting the property into a trust. I have another deal that i am closing on Nov. 1st that i was planning on taking sub-to but it turned out it had WAY to many lead paint problems so i am assigning the contract. i will make 22k off this an will never go on the deed. (not to mension it took me 3 months of headaches). i also came across a deal about 3 months ago that i am about to complete. i shorted a house from 150k down to 80k and the bank accepted it on the first try! lol. i have 2 more in the works too but i wont waste your time. I am a newbie and i didnt realize that all of this could be done (especially somebody as young as me..Im not a teen anymore!!!! lol) . my advice for all of you other newbies is to research all of the different ways to aquire real estate, not just "sub-to" or "short-sale". you need to know all of your options becasue every deal will be completely different. Thanks, Ryan
profithound,
Can you sell a house you BUY sub2, another way aside from using terms?
Sure you can, you own it.
In fact, I'll be frank.......nice to meet you.
I buy most of my houses sub2.
I sell quite a few as L/O's to create higher profit over time.
However, I also like to retail houses as well.
There are two main reasons.
1. I can get higher paydays right away.
2. I don't HAVE to buy EXTREMELY LOW to wholesale to another investor, because a 'deal' for an owner occupant retail buyer is WAY different than a 'deal' to an investor.
I'll give you an example:
I just signed a house worth $130k.
Seller owes $85k, and the house needs paint/carpet.......not real bad, but for full retail value, it should be done.
I'm selling this house via the MLS, listing it for BELOW value at $120k.
Why?
For a FAST sale of course.
We have a mortgage broker on my team who does have lenders that will not require seasoning, in addition they will allow small seller seconds, and other seller assistance to get the deal closed.
We are offering 100% financing on the house, and calls are already coming in.
I sell this house for the full $120k, and write the contract up to include a price high enough to assist the new buyers with closing etc.
When all is said and done, after covering a small amount in payments, taxes, insurance and some cleanup, I will make no less than $20k.
So, yes, you can sell right away and I do.......more often lately than before.
Here is another advantage to selling right away too.
I have a seller now who will deed me their house.
Decent numbers equity wise, but a HIGH rate on the loan.......13%.
YIKES!
Not something to leave in place long term, that is for sure.
I don't care one bit about the rate, because we are selling the house right away.
13% on a loan in someone elses name for 60 days or less......works for me.
Keep in mind, when you BUY sub2, you OWN the house and can then sell it, rent it, or do with it as you see fit...........its yours.
HTH,
Jim FL
Quote:
On 2004-10-15 23:47, profithound wrote:
Hi everyone, long time reader, first time poster. :-D I am a newbie and have been reading a lot about sub2 deals. However, in most of these deals, the common thing that everyone seems to be doing is a lease to own for a third party. Is it possible to just sell the property after you obtain the deed instead of doing a lease to own for a few years?
[addsig]
Damn Ryan, sounds like you're rockin' & rollin'! First of all, where did you learn all of the different techniques from. Secondly, tell me more about how you put the house in a trust to avoid seasoning issues. I'm curious to hear more about that because that sounds awesome! Lastly, you said you are assigning a contract and are making $22k on the deal. How exactly are you doing that? I'm very interested.
Thanks
dashow, thanks for listening. Like i said before, you have to read and research. i read these post for 2-3 months before i started trying to do any deals. to be completely honest with you. i learned MOST by getting out there and getting my feet wet. i joined a local REI group. well, its an hour away, but i drive once a month and meet TONS of contacts there. i learned some short-sale things from Jeff Kaller becasue he spoke at one of the meetings. here is a quick overview. I read this info, got excited, set up an LLC, talked to over 20 lawyers to find one decent one, got kicked out of 2 lawyers offices because they were so single minded and actually told me "you shouldnt get into real estate, its a bad time, if you really want to though become and agent." Thats when i told them to screw off, then i went to www.webuyhousessigns.com ordered 100 signs and stakes, set up a answering machine, put out the signs, got like 20 calls within 10 days, got really nervous, sounded like an idiot because i didnt really know what i was doing, got a couple of appointments, singed up 2 of them, got a lot of grief from the towns, they told me i was going to get arrested, fined, etc. i put more out and get more calls. people tell me they think im crazy when i offer them 1000 for their house, i say okay, they call me back 1-2 months later begging me to help them and bingo i got the deals. ........okay thats the "short overview"
now as far as the trust. you have to learn that on your own, read read read. just go to the forum search or article search and type in Land trust. if you still dont understand after reading then PM me...
you asked how i assigned the contract. I wrote up a contract on this one particular house for 70k and then i went out and found a buyer who was willing to pay 100k. i then got a "assignment of contract" and "assigned" them the contract for 22k. you may be saying to yourself " 100-70= 30k" yes thats correct. it was a lot more complicated than that with back taxes and finders fee's, etc. so it brought me down to 22k. that is basically it, in a nutshell. I am sorry if there are any spelling/grammer problems. i dont have time to go back and read all of it. thanks, Ryan
ryand how old are you? Do you do this fulltime or parttime?
sarafina, I just turned 20 and no i dont have a job. although i do own a rental prop. that i bought last year that pays all of my bills and even leaves me spending cash. so that gives me all the time i need to do what i have to do. jobs are lame anyway. why are we talking about them? you live in Berverly hills? what do you do for "work"?? and how old are you?thanks, Ryan[ Edited by ryand on Date 10/17/2004 ]
Hi Ryan and Jim, thanks for the great examples and different alternatives to a sub2. It's great to see you guys live up to the name of this website.
Ryan, it's such a good story to see a young guy succeed the way you have. Just wondering, do people give you any trouble with the age factor?
And Jim, it's nice to meet you too :-D
no i dont really have to much trouble becasue im young. ofcourse people say things to me like "you look pretty young to be doing this." i just stare them in the face and ignore them. they get the point then. just get out there and do it. things will start to happen.
Can you afford the $700 to $1,000 its going to cost you to live in this house?
The relative who is leaving their 1/3rd in the house, do they expect to be paid for that someday? How do you plan to pay them?
Assuming that the 1/3rd relative is your mother or father and is not planning to get their money out any time soon the easiest way for you to do this deal is this: Enter into a contract with the estate to purchase the property for $210,000. Have the relative that is not taking their cash out give you a "gift" letter for their third ($70,000). This will then count as a downpayment and since you are putting 1/3rd down you should qualify for a mortgage fairly easily.