Very Stupid Question But Please Bear With Me.
ok I am a student of re investing and believer of buying right etc etc, I just do not have the numbers and cents come out right, YET.
I have read a number of books and courses but still a sceptic (soon see why). Please www.explain.if I am missing something....
Assume I find a hourse where the owner is in arears for mortgage and taxes for $15000. He has the house and has equity of $20000.
(now I would not touch the house and do sub 2 unless these numbers jingle righyt.So I offer him a sub 2 deal where I pay off his arrears and give him moving money to be square.
I agrees I write him a check for 15000 and give him $500 cash. I own the house and I have some paper profit of $4500.
Now why does not he go and borrow the money on the equity? If he owed $20000 and the equity was $15000 then I would not touch the deal right? buit that would be more plausible)
The main line of question is how do I make money when dealing with sub2? If the guy has equity that makes a deal borderline kosher why would he deal with me? Assumably anyone can get money on any equity as long as the appraisal is ok. He can be the biggest deadbeat ever!
Just because you have equity doesn't mean that you can borrow against it. The lender will still want evidence that you have the ability to make the payments on the loan. Being in arrears on taxes and the mortgage will raise serious questions, and unqualify them for the loan. I know that you're in California and that's its own world as far as real estate goes, but 15k is probably not a real number. They should have already lost it by then. And you'd be looking at an REO, not talking to the prior owner about Sub2
Thanks,
The numbers were only pulled out of a hat. We here in CA see all sorts of stupid ads on tv about pushing loans on any equity, since houses appreciate like crazy. Of course I have no first hand experience and I do not know who can borrow and who can't. CA is a safe place to buy but it is also a hard place to find motivated sellers I imagine. However they are out there...