Newbie needs advice on this deal.. Please help! - Posted by Nick

Posted by chefist on September 09, 2003 at 11:38:50:

No, have him sign a quit claim over into your name or a land trust (recommended)…then record the quit claim at the county’s recorders office…

make sure you get all the loan info for the payments…if you keep the house insurance in his name, and then a secondary policy in your name, the banks will not even now what happened…but just make sure you get your friend to sign a “Due on Sales Agreement”…that means he understands the banks can call the loans due and he will be held repsonsible…but this is where you assure him you will find the financing…this almost never occurs…

Newbie needs advice on this deal… Please help! - Posted by Nick

Posted by Nick on September 09, 2003 at 10:56:46:

Hello everyone:

I ahave been lurking on this site for some time. I came across an opportunity. A friend of mine has a single family house appraised around 180 k, he has no equity (took a second mortgage). He wants to get rid of the house (personal reasons) and even offer to sell it under market price. His real estate agent told him that the bank would not allow it as it would be way under the market price of the house.

Anyway, he wants out NOW. What can I do, L/O, subject to (he is not interested in sticking around, would even like to give it away as long as he does not deal with it (bank, selling, real eastate agent).

Any input as to how to structure the deal will be greatly appreciated.



Re: Newbie needs advice on this deal… - Posted by Brent_IL

Posted by Brent_IL on September 09, 2003 at 12:30:36:

If the house is worth $180K and he has no equity because he owes $180K, your friend can’t sell it below market value because any buyer will have to pay off the liens. Even if the new buyer takes over the loan payments subject-to, the loan balances aren’t going anywhere.

The banks won’t care about the selling price as long as their loans are paid in full.

Your friend is going to be stuck with responsibility for the loans, regardless. He took the money from the second and now doesn’t want to make the payments. He’s trying to give away his problems, but it doesn’t work like that.

No-money-down doesn’t automatically mean that the deal is a good one. In fact, in the hands of the inexperienced, NMD deals offered by sellers are rarely profitable in most areas of the country.

The bottom line is the relationship of the monthly total of mortgage payments to rental rates and operating expenses, or, as an alternative, to the local premium paid for owner financing. If there is an adequate spread, you may be able to help him to pass the payments to someone else. If the numbers don?t work out, your friend may have to bite the bullet and at least partially subsidize the monthly payments to get rid of his headache.

Re: Newbie needs advice on this - Posted by Chefist

Posted by Chefist on September 09, 2003 at 11:05:23:

You could do a subject to…put in a L/O tennant with a big down payment…keep paying the two loans if the rent isn’t too high to cover them…

Re: Newbie needs advice on this - Posted by Nick

Posted by Nick on September 09, 2003 at 11:08:01:

Thanks Chefist!

In the subject to, will he keep the title of the house? He really wants out.