Sub-to And ARMS What To Do?
My wife and I were on our daily walk and we started talking about the next deal and our recent phone calls. We have notice a marked increase in the number of sellers who need to sell because of the countiuned increase in their paymments.
We want to help but cannot handle a rate that increases every 6 months. I do know that this is happen everywhere but what I want to know is how are the rest of you handling this. Are you doing Sub-to deals on ARMS. If so how? What is the tipping point?Am I missing something? Thanks
James
CHS,
You are right it is not hard to find the buyers. Refing into your own name is fine but it is not all that creative. I am wondering are we looking at shifting to short sales with partners who have deep pockets? I love sub-to and it has made me money. What I am worried about is that we are missing deals.
I know that if it can be done and done creatively this board will have the answer. How about it guys willing to share?
bump
Anyone else?
Ok Wiz,
Short Sales maynot be the way to go. We still have the same problem. Large number of people needing to sell now have these ARMs. So my questions still stands what do you do? How do we make it a win/win.
I totally agree- I consider potential appreciation a bonus, and never include it in my financial calculations when I am considering a property.
The exception is "forced" appreciation- the kind you create by improving a property.
Cash flow is the way to go!
Chris
You may want to have your lease amounts "float" with your ARM adjustment.
Da Wiz
If you selling on a contract for deed, make it an ajustable rate Contract for deed.
Not to sound negative but... if the starting payment is to high how could I get someone in who already is having a hard time getting a loan. If you are in a slow market then you are at a disadvantage as well.
I want to figure out a way to get these place with out having to worry about how to cover these high payments. I may be wishing for to much.
Any ideas......
Wiz,
How many deals do you do? You say you never have negative cash flow but how many deals do you shoot for?
How much do you end up holding? I know you said %5. Do you steer them to lenders you know or have worked with? This sounds very good but a little more info would be great.
bump
Thanks that is what I am looking for. I think this is one way to free up a property. It is my understanding that the loan must be for what is owed on the original note. Have you ever hit this problem and then do you just pass on the deal?
J
Thanks Beach,
These post always spark my mind. I start tolook at the solution and not the problem. One good answer sparks many more ways to do things.
Anyone else?
Just got my computer fixed and have been catching up. I am going to add this question to my post.
How do you find mortgage brokers willing to take on these sub-par buyers. Do you just call and let them know whats up?
Thanks for the help
There is absolutely nothing wrong with telling your "buyer" when you go into a deal that their rate is based on an ARM, and will be fluctuating. Trust me, there are enought tenant buyers out there that this will not be a problem.
It is getting harder and harder each day to make deals, but there are still plenty of deals to be had.
Keep up the good work!
Also- I am interested in all of this legislation on creative investing. Where can I find good articles?
Very true but if the payment is to high to start with or becomes to high than you set yourself up to fail. What I have been seeing and it might be in my area only is that these properties have equity but the current owner has gotten themself in over their head. So you want the property and you know you can get 20,000+ but the payment is too high to contract or lease option. What would you do?
What has been talked about here is helping your tenent buyer finace it right away and take second. Now most people buying this property are unable to get a loan and that is the problem. So my question stands what can you do to get this property and not lose money.
I love these types of problem and everyone here has insight that may help. Thanks again
Thanks Wiz. I am looking for all ideas. The more that get thrown out the better. I know you like trust and are very skilled at using them. I also want to hear from others on what the like as well. Take the best and leave the rest is not a bad idea right?
Thanks again
absinc,
Welcome and congrats for deciding to become involved in a great field -- real estate. My response is to your question #2 in which you (rightfully so) expressed some concerns about what-ifs.
There are two ways to do a "subject to" -- the traditional way as espoused by John, and within a land trust, which although a bit more complex, may provide protection for the concerns you raised. Best of luck to you.
Da Wiz
da non-lawyer
Quote:... there seems to be the underlying risk that your buyer may stop paying at anytime, thus leaving you "morally" and "ethically" responsible for the mortgage payments. absinc,
You are also "contractually" responsible. Stop paying the underlying mortgage payment and your SubTo seller can take you to court for breach of contract.
Ichabod,
This is about doing a subject to. There is the traditional way that leaves you exposed to the DOSC, liens, foreclosures, etc., or there is a subject to using a land trust that eliminates those concerns. Benny was concerned about his tenant not paying. The trust protects in that situation. If you noticed, he thanked me for my answer. You, my friend, are not my keeper.
Da Wiz
a non-lawyer and proud of it
I would say the DOSC is nothing to worry over. Have an exit strategy should you need it, but John has done over 500 sub2 transactioins and not one DOS. How do liens or foreclosures go into play? If you have the Deed, the bank typically has no motivation to foreclose if the payments are current. And any liens/judgments the Seller gets cannot attach to the property if you get the Deed.
[addsig]
Where can I find good articles on all of this new litigation concerning "creative investing"?
Go to Google and type in: creative investing.
Da Wiz
[addsig]
Since this thread is way off the original intended question, I am locking it.
John (LV)
TCI Moderator
Thank you Wiz.
Rise in interest rates would likely increase enforcement of due-on-sale clauses
The Wellenkamp and de la Cuesta cases, both of which involved lenders aggressively enforcing their due-on-sale clauses, occurred in the early ’80s. At that time, mortgage interest rates were at record highs---about 18% at the peak. In contrast, the interest rates on the Wellenkamp and de la Cuesta mortgages were much lower. The lenders have a fiduciary duty to put that money back out at current rates.
Charlotteinvestor,
Your posts seem like something I read years ago published by John. T. Reed.
Lets clear some things up here. I never did mention a name. This thread just had some good arguements and i wanted to clear some things up that is it.
I am in no way promoting anyone or any product. This was strictly for educational purposes only.
Its just that one guy realized the wording and related it back to what ever the guys name is.
When you say publish da wiz, you make it seem like i am connected. Well let me tell you one thing. I am not.
Your last reply before this reply was relevant and seems credible.
Bravo. Da Wiz has done it again.
charlotte,
I in no way said or even thought that you were associated with John T. Reed. When you post on a public forum you are, in essence, publishing the material you post. It was in that context only that I used that phrase after I recognized it, and if that offended you, I apologize.
Da Wiz
_________________
"All truth passes through three stages.
First, it is ridiculed, second it is violently opposed, and third, it is accepted as self-evident."
[ Edited by mtnwizard on Date 07/02/2006 ]
Hi charlotteinvestor, sorry to ask but what is POA?
Power Of Attorney
You can sell it just as quick as you can find a Buyer who has a lender that requires little seasoning. Some require none if the Buyer has good credit (like Citibank). Most require 90 days (like Wells Fargo, for instance), and some want as much as 12 months.
[addsig]
POA = Power Of Attorney
Quote:
On 2006-07-04 07:00, Aaliyah wrote:
Hi charlotteinvestor, sorry to ask but what is POA?
LeaseOptionKing, Forget to say Thanks for explaining to me POA.
mcole, thanks for ur explanition for POA.