Sub To Refi And Exit Strategies
Hey gang...if buy and hold are my primary strategies, is acquiring properties thourgh sub 2 generally a good idea? If so, how soon should I look to refi and will I have any difficulty in doing so after say a year or so of making payments?
Also, If I want to simply use the unit as a rental for a year and then sell, will I have to obtain financing before doing so or simply use an attorney familiar with doing a double close?
I am familiar with acquiring the property through this method, simply not very familiar with handling the deal on the back end.
Thanks in advance.
Sunztu18
suntzu18,
You asked:
"Hey gang...if buy and hold are my primary strategies, is acquiring properties thourgh sub 2 generally a good idea?"
REPLY:
Why not?
If you can buy a property with a nice low owner occupied interest rate, plenty of equity, cashflow, and do so without much if any money into the deal, why not buy this way?
I buy properties using a variety of methods, but frankly, the majority do seem to be sub2 deals.
I look at investing this way.............I will not buy ANY property, no matter what method used to acquire it, if I cannot IMMEDIATLEY resell it for cash.
This just means buying with plenty of equity spread, allowing for a quick exit if need be.
You then asked:
" If so, how soon should I look to refi and will I have any difficulty in doing so after say a year or so of making payments?"
REPLY:
As to how soon you look to refi?
Why do so at all?
I do a few here and there, but its usually to pull cash out.
Again, with good underlying financing in place, and the deal working well, I fail to see what anyone would refi unless they were forced to......or wanted to as part of another plan.
Will you have problems refinancing after making payments for a year?
Nope!
As long as you are credit worthy in the first place.
You OWN the property, and have payment history, so this is a refinance.
Next:
"Also, If I want to simply use the unit as a rental for a year and then sell, will I have to obtain financing before doing so or simply use an attorney familiar with doing a double close?"
REPLY:
I think you are confused a bit. A 'double close' is not needed when you BUY a property sub2, then sell to someone else later.
Why?
Because when you BUY SUB2, you OWN the house, and the seller is no longer in the picture at all.
No need for a double close, so no, financing on your part, just prior to sale to an end buyer with cash or funding, is NOT needed.
HTH,
Jim FL
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How can you refi when the loan is still in the original sellers name, how does it work??
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you can refin. at any time because the loan is the "previous" owners. the prop. is yours..........km
the light bulb just got brighter !! Thanks kenmax
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glad to be of help. good luck...........km
suntzu:
I just got a quote for a refi on a sub2 I was looking at: seller's mtg was terrible (6.875%, PITI $1,400+/month, mkt rents around $1,000).
My mtg broker could get me a non-owner occupied refi, no title seasoning (provided I could show I really owned the prop), no points, 90% LTV (80% mtg, 10% HELOC). This would bring my PITI down to $960/month.
So if you can find a mtg. broker to work with you to meet your needs, you could refi right after taking over the prop.
Andy