If I Take A Property Sub-to And Use My LLC Is It Really That Difficult?(m)
I know banks don't want to deal with new companys but what type of insurance can a company provide as proof that its "worthy". The reason I ask is, there is a property across the street from one of my rental properties that is for sale by owner. The man I have fixing up my property is the neighborhood know-it-all. The house is being sold by the woman's children so they can put her in a nursing home. There is no mortgage on the house. The mortgage that was there was paid off, it was 40,000, paid off years ago. He also told me that the property is being sold as is. It's a nice house but the children never wanted to pay money to have things repaired. The reason it's being sold as is is because when they had the house inspected, there were minor violations but they don't want the cost of repairing them. All use this to my advantage when I make my offer.
Oh yea, back to the question. I want this house for my mom but she won't be able to refi because of limited income. Could my LLC refi and it would just be a property I hold? How long does a business have to be in operation before the banks feel they can "trust" them?
Any feedback, you guys know I appreciate it
quinn
Without at least a personal guarantee, A new or relatively new LLC with no credit history, and no, or low income history will not be able to get the financing.
High up on the list of what the financier will be looking at is the credit risks when considering the possibility of the loan. Bottom line, most new businesses fail.[ Edited by jeff12002 on Date 10/24/2004 ]
IF they want cash for the house than you could suggest that they refi to get cash. Than take it sub to in your LLC. Then in a couple of years maybe your mom or your llc could get a mortgage in there own name. [ Edited by ncboater on Date 10/24/2004 ]
Ncboater,
Thats exactly what my plan is. I was just concerned about the LLC thing.
If my mon can show some sort of income and 12 months of on times check payments she should be able to refi right. What if her income is SSI only?
quinn
I would start talking to motgage brokers now and explain to them her situation. There should be some program out there for her especially if you can show 12 or 18 months payments(keep cancelled checks).
If not start getting your LLC some sort of credit. Small personal loans secured by cash could be a start. Then your LLC could possibly be on the mortgage with her. Just a thought.
Check the laws for your state, but in PA - the very best thing for the sellers to do would be to take out a mortgage on the property, assuming the house is still in the mothers name., and sell to you sub-to. The reason for this is - if she is going into a nursing home, the State Medicaid funding will consider the debt and not require that she pay all of the proceeds to the nursing home. Basically when you go into a home, the State requires you to liquidate the majority of your assets and then they will pay for your care. If she has a mortgage, they will consider this debt since the loan wouold remain in her name. You may want to use this in your presentation of your offer. Just a thought,
Wow, Pringle great advise. What about a reverse mortgage for the old lady? Would the cash out or the remaining equity be subject to the State asset jurisdiction? Very interesting post!
[addsig]
Yep, the monthly income would be treated as income in PA, again check the specific State laws. It's one way to deal with a property owner who is about to enter a nursing home - show them how you can save them money and possibly some of their estate.