Subject To Deal - What Do You Think?
I just got off the phone with a very motivated divorcee trying to get rid of her home. She agreed to give me the property subject to her VA mortgage(Will this be an issue, being that it is a VA loan). Here are the details:
Mortgage balance: $102,000 15 year loan
Comps: 120K -140K
Monthly Payment: $1032/month
Nothing is owed or in arrears
No repairs (According to her)
I negotiated for her to make the next two payments (so that I can find a buyer in the interim).
Is this a good deal? What should be my next move?
Thanks,
Nate
"Fail Fast"
If she is getting divorced, he must sign all paperwork also. First thing, go look at the property. If it looks like it is in good condition, get the property under contract!! Then start looking for someone to buy the property.
With subject to properties typically the lender does not know anything.
Quote:
I negotiated for her to make the next two payments (so that I can find a buyer in the interim).
Is this a good deal? What should be my next move?
You forgot a step. Get the Deed. She can still make the two payments.
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This should help:
http://www.thecreativeinvestor.com/residential/modules.php?name=Articles&file=article&articleid=472
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This may help you as well:
http://www.thecreativeinvestor.com/residential/modules.php?name=Articles&file=article&articleid=438
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If you continue to hold the deed, (which I assume) you need to rewrite the policy to a landlord-type contract and the buyer needs renters insurance. Name the mortgage company(ies) appropriately and nothing will cause a DOS clause to be invoked.
[addsig]
If "you" own it, "you" need to insure it. An additional insured endorsement only protects you for liability. The first named insured holds ALL rights/benefits to the policy. A loss payee endorsement gives you protection for the property itself.
This may help:
http://www.thecreativeinvestor.com/residential/modules.php?name=Articles&file=article&mode=nested&articleid=438#3298
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If you have to file an insurance claim, you are quickly going to realize that you do not carry the proper insurance and the company will not pay your claim. You need an non-owner occupied (rental dwelling, DP-e, hazard, landlord, etc) policy.
Brenda
It is not that complicate YOU OWN THE PROPERTY - YOU OWN THE PROPERTY - YOU OWN THE PROERTY.
The people living in the property have a contract that says after they fulfill the terms of contract then you will give them the deed/title. So currently, they do not have the deed/title. So they are not the owners. You have the deed/title, which makes you the owner.
Brenda is right on...if you (or your legal entity) hold the deed, then you own it and therefore have the insurable interest...
Forgot, since you are the owner and you are not living in the property, you must get a rental dwelling insurance policy. If you do not have a rental dwelling policy then you might as well stop paying the premium because they are not going to pay your claim anyway.
You can have as part of your agreement that your buyers (I think they are called vendees in a CD) pay for the policy, but it must be a rental dwelling policy that list you as owner of the dwelling.
Brenda