Sub-to And Line Of Credit
Hello all long time no chat.
I need some help. It has been a very busy summer for me. I have done a lot of deals. Most I have sold using contract for deed but I have 2 properties I that I am going to keep. A duplex and a triplex. Both cashflow very nice. I bought them from the same owner. Owner was going threw nasty split with his wife property was ordered sold. Gave him $1000 to be split with wife and took them sub-to. The triplex was appraised at 170,000 for the court duplex was $150,000. The loan is for $113,000 for triplex and $123,000 for duplex.
Anyway my question is this can I take a line of credit on the triplex while the loan is still in the name of the old owner? I don't want to refi because he has a great loan rate. I would however like to tap the equity for use in some more sub-to. Any ideas or input would be helpful.
J
A knowledgeable lender (usually private) can loan against beneficiary interest in a land trust. So you might consider putting the property into a land trust (in the borrower's name), then taking an assignment of beneficiary interest in the trust, versus taking the deed. This process also avoids a due-on-sale violation with the lender of record re. your subject to).
By this means you can secure the loan with a collateral assignment of your beneficiary interest in the trust, rather than collateralizing with the property itself.
The only catch is that you need to find and be dealing with a private lender who clearly understands the integrity of the land trust. I do know that Washington Mutual will lend on land trusts, but they’re probably looking more for first mortgages…but they may be worth checking out.
Bill
A knowledgeable lender (usually private) can loan against beneficiary interest in a land trust. So you might consider putting the property into a land trust (in the borrower's name), then taking an assignment of beneficiary interest in the trust, versus taking the deed. This process also avoids a due-on-sale violation with the lender of record re. your subject to).
By this means you can secure the loan with a collateral assignment of your beneficiary interest in the trust, rather than collateralizing with the property itself.
The only catch is that you need to find and be dealing with a private lender who clearly understands the integrity of the land trust. I do know that Washington Mutual will lend on land trusts, but they’re probably looking more for first mortgages…but they may be worth checking out.
Bill