For those who want to enter real estate investment in today's market, there is a unique way of profiting, no cash or credit, and no risk or headache of renting a property. In this article, I will show you how to place an unsaleable home under a contract for an existing mortgage and then assign the contract to a buyer who cannot be mortgaged. Your profit is on average about 5% of the purchase price.
This is not a mortgage allocation
One of the latest booms on the Internet, as well as many investors and e-mail, is a concept called mortgage distribution. For those who may not be familiar with this, it sounds like you are just allocating a mortgage from one person to another. Keep in mind that this is different from the mortgage assumption that the lender legally transfers responsibility from the seller to the buyer. Conversely, a mortgage allocation is simply to distribute the payment to the buyer, while the seller retains the mortgage in his or her name. In the mortgage distribution plan, the underlying transaction is still sold by the existing mortgage. In either case, if the mortgage is not paid, the seller of the property is still in credit. What you will do is find sellers who are willing to sell their properties, which are affected by existing mortgages and sell the property to cashier buyers, but they are not eligible today for stricter underwriting standards for mortgages.
Why don't you need to be a real estate agent?
One of the first questions raised was how to achieve this without becoming a real estate agent. Well, this is very simple. All you have to do is let the seller agree to offer you a purchase option on their property. You now have a fair interest in the property. You will market your interest in this property to other buyers. This is no different from marketing your own property as a FSBO to a buyer.
Understand "subject to" transactions
In a "subject to" or "Sub2" transaction, the property you purchased is subject to existing financing. This means that existing mortgages will not be repaid. If the seller wants to redeem the equity of the house, the buyer needs to have cash, or the seller can agree to pay in the form of a second mortgage. Normally, Sub2 transactions are done with little or no equity in the property, as the seller cannot afford to pay off the mortgage at the time of settlement, or pay any fees and commissions, or both. The alternative is short selling or foreclosure, any of which is easy or enjoyable.
The biggest problem facing Sub2 transactions is the "sales expiration clause." This means that when a property is sold, the lender has the right to call the collateral a mortgage, which means that the buyer must refinance the property that the seller is facing foreclosure. However, from the experience of almost all Sub2 investors, no mortgage is called payable sales. Many masters teach various tricks to prevent lenders from being informed about the sale, including land trusts and contractual deeds, but others will tell you to lie or hide anything as long as you work with the lender. Lenders often find that the way to sell is not when the new contract is recorded, but when the homeowner's insurance policy has a new owner. In my lookup and distribution package, I explained the expiring sales terms in more detail and why it is not something you need to worry about.
Seller's dilemma
The market is currently very suitable for Sub2 tasks. Many homes are now under water, which means that the seller's arrears in mortgages are higher than the value of the home. Some sellers are unable to pay for mortgages. They either pay monthly or are late for payment and face foreclosure. In Find and Assign, I have a matrix that shows the sellers various options for getting rid of the property, as well as the cost of each option. If you can show the seller how he or she left their property and pay the mortgage without affecting their credit, then you will have a proactive seller and a person willing to accept your offer.
Buyer's dilemma
In the past, all you had to do was to atomize the mirror in order to get a mortgage. This means you have to live! Banks and mortgage companies issue loans to anyone who can fill out an application form. There are subprime loans, reporting income loans and subprime mortgage buyer loans. Advance payment is as low as zero. Fast forward to today. Now you need to prove your income, provide a two-year tax return, a bank statement and a credit score of 680 or higher. We now have buyers who can get a mortgage a few years ago, but who can't do it now. Therefore, you can sell unsaleable homes to non-saleable buyers by simply letting the seller purchase purchase options based on an existing mortgage and assigning the agreement to the buyer to obtain the transfer fee. The new buyer gets the contract at the time of settlement and pays the settlement cost.
Find a seller
There are many ways to find sellers, including advertising on Craigslist and newspaper classifieds. A sample ad can say, "We buy a house with little or no equity. Exit more mortgages." A great way to find a seller is to call a real estate agent and ask them to provide clues to those who want to sell. But who can't, because they can't get cash to settle. You can provide a referral fee to your agency. If the agent is honest and says that he or she can't accept the referral fee, you can still legally pay the agent by having the agent become your buyer agent. When you obtain a home under a contract and then assign the contract to the final buyer, the agent will receive their legal commission at the time of settlement, depending on your consent. In the search and distribution, I searched the seller of the Sub2 Assignment program in many other ways.
Looking for buyers
Of course, you need buyers to complete the transaction and make money. You can find buyers by placing an ad that says "Buy unsecured homes." 10% cash is required. "You can run these ads on Craigslist and newspaper classified ads. You can also call the mortgage lender and ask them to find potential customers who want to buy a house but are not qualified for the mortgage. All you have to do is give these The loan officer will provide your information to the buyer you want. You can pay LO for any transaction.
Write protocol
There are two ways to do this. One way is to write a simple real estate purchase agreement, after you write "and/or specify" after your name. In the Purchase Price section, you will write the price and then "based on the existing financing detailed in Appendix A. In the appendix, you will list the balance of the mortgage or mortgage of the property, as well as the existing monthly payment. No need Special form. Only the words you must use. The second way is to write a purchase option at home, using the same main language. The option for new buyers. If you use the purchase agreement, you need to make sure you have the appropriate tax evasion clause. If you don't find a buyer, you can get out of the deal. This is what the agreement says. With the purchase option, the seller gives you the right to buy the property, but you are not obligated to do so. During the 90-day period, you just have to walk away.
In the course of these transactions, there are also some disclosures that need to be signed by the seller, which actually reveals that the transaction is affected by the existing mortgage and the mortgage will remain in their name. You can also distinguish the possibility of a sales expiration clause. I always recommend that before you start this, you will find a real estate lawyer who has previously done a Sub2 transaction. You can find the same way on me on Craigslist! In the search and distribution, I share with you how I did this and what questions you need to ask. You may also need an equity agency to complete the transaction, which I cover in the search and distribution. Your real estate lawyer should also know the real estate lawyers to use.
End the transaction
What you really need to do is to have the final buyer write a certified check for your transfer fee, including title search, check, etc., after due diligence on the property. The title search will show you any and all liens attached to the property, as well as any judgments on the owner and any refunds owed. You can search using any title agency. The cost is about $60. You can either let the buyer do this, or let the seller do this and provide it to potential buyers.
If you have a property buyer, you would like to refer it to your real estate lawyer to complete the transaction. In this way, you have completed the work of bringing the two parties together and getting the transfer fee. The key is to get real estate lawyers to participate in these transactions instead of trying to close the "kitchen table". You don't want the buyer's seller to come to you because you have no difference what you should have. If you do this, you can earn a reasonable income by assigning one or two attributes per month. If you search online, you can find everything you need on forums and other websites. There are no special forms other than purchase options, purchase option transfers, purchase agreements, and CYA disclosure forms. Other forms involved are authorizing the release of information, and possibly an authorization. If you find a real estate lawyer who has completed these transactions, this person can provide you with all the forms...
Orignal From: How to profit by assigning a "subject to" purchase option to a mortgage challenge buyer
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