Posted by Mark (SDCA) on March 15, 1999 at 16:13:17:
It doesnt really differ from borrowing against the equity. But it is cheaper (no points, no fees). And if the seller will go for it, it gives you access to 100% of your equity. No bank will do that.
The default issue is the real question. The seller would have a problem. That is why he better be motivated.
You use the equity in A to buy B. Then you use the equity in B to buy C.
Quick example. You own A, FMV 100K, equity 20K. You offer a 2nd mortgage on A to seller of B (FMV 200K), for his equity and assume the 1st mortgage of 180K. Now you have 0 equity in A and 20K in B. Use the 20K in B to buy C. And so on. It’s called pyramiding your profits. (VERY aggressive so be careful).
PS You would probly get more responses by posting this on newsgroup I.