Subject to/ using trust assignment to do a flip? - Posted by John Busch

Real Estate Investing
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Posted by Brent_IL on February 06, 2002 at 23:05:43:

If there is a $52K first, and a $20K second on a property that is worth $110,000 after $5,000 fix-up, why would the holder of the second ever want to discount the loan?

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Subject to/ using trust assignment to do a flip? - Posted by John Busch

Posted by John Busch on February 06, 2002 at 12:43:08:

I have a deal that I started out planning on utilizing a trust assignment to gain control of the property but have decided it will tie up too much money long term but thought it might make a decent flip if I do the work and flip it retail. Here’s the deal! The sellers are in foreclosure and have had an offer from another investor to buy the deed for 2k. They liked the idea of using the trust assignment and I figured I would give them $2500, $1000 when they move out and sign the deed into trust and the other $1500 upon final disposition of the property. I have an option at this time and am waiting for the bank in 2nd position to get out of denial and see if they accept my 5k offer for their 20k note. They have come down to 10k so far and I have told my offer will drop to 4k by end of week. The numbers look like this: the house will easily sell for 110k after 5k in repairs, the bank in 1st loan is 52k and it will take $6700 in arrears and fees to be brought current, $3100 in back taxes, $2500 to sellers, 5k to buy out 2nd, $1500 to carry loan a couple months and $9500 in realtor/seller fees. If I give the sellers the $2500 up front to get the deed and get out I figure my out of pocket to be $23800, profit after realtor/seller fees should be about $24700. My questions are:

  1. Am I forgetting anything and does it look like an ok deal?
  2. What would be the steps and the paperwork needed to do this flip using a trust assignment and or just taking the property subject to?
  3. Would a trust assignment be better or worse than taking the note subject to for the purpose of closing the deal with an escrow company?
  4. Any other pitfalls and precautions that a newbie should be aware of in trying to put a deal like this together?

Thanks a million in advance for any info and suggestions!!
John Bellingham