Friends are purchasing another house.... - Posted by Shenesa

import · October 23, 2000, 2:41pm

Posted by JohnBoy on October 24, 2000 at 07:48:46:

I haven’t dealt with any homes purchased through this program. But regardless of what changes occur in the future, I would think that wouldn’t have any bearing on people that have used the program in the past. I would think that would only apply to people who use the program at the time any changes have been made. Everything they would be required to do regarding this program should be in their documents they signed when then got the grant. READ their paper work and see what it says. Unless their paper work specifically states that any changes in the program made in the future will apply to their grant, I seriously doubt they can force them to the new changes made since they entered into the program. You need to read all their paper work to see what they are required to do and go from that, not what someone tells you regarding the current program. When you involve people working with these government programs, ask 5 people the same question and you’ll probably get 5 different answers because no one seems to know exactly how things really work. The originally documents they signed at the time they used the program is what I would go by, not what someone else thinks it is.

import · October 23, 2000, 2:41pm

Friends are purchasing another house… - Posted by Shenesa

Posted by Shenesa on October 23, 2000 at 14:41:18:

thye have asked for my assistanct. Problem is the area they are now living in is a not so good area. The house is a 4br 1ba house which was appraised at 65k. The existing mortgage is 42k, PITI ($513 @ 6.5%) I am thinking of doing a L/O with them with a balloon payment in 5 years and leasing the property out for $750 (section 8)

Or doing a “subject to” deal. I know that they are not looking to get any money out of the house, they just want out. However, they are good friends and I do not want to lease the property out to someone who will destroy the property because the title will still be in their name if I go that route.

I have spoken with a couple of other investor early on in my REI endeavors and I know that this house does not meet their criteria so I would not be able to flip or assign to them.

Your suggestions,

Shenesa,NY

import · October 23, 2000, 3:17pm

Re: Friends are purchasing another house… - Posted by JohnBoy

Posted by JohnBoy on October 23, 2000 at 15:17:52:

If the property is currently worth $65k and I took it over “subject to”, I would offer seller financing at $70k with at least $5k down. Then I would carry the balance of $65k at 11% amortized over 30 years with a two year balloon. The PI payment would be $619.01 PLUS taxes and insurance. You don’t say what the PI payments are without the taxes and insurance, but I’m guessing your cash flow would be around $300 per month plus the $5k down, plus the backend profit when they refi in two years to pay you off.

import · October 23, 2000, 3:10pm

Re: Friends are purchasing another house… - Posted by JohnBoy

Posted by JohnBoy on October 23, 2000 at 15:10:45:

If you take the property “subject to”, then title will be in YOUR name. Only the mortgage remains in their name which you become liable for to the seller. The seller remains liable to the bank.

If you L/O the property then title remains in the sellers name until you exercise the option.

In either case I wouldn’t just rent the property. If you do a L/O then I would L/O to someone else.

If you take title “subject to”, then I would either L/O it or offer seller financing on it, by selling on a wrap around the current mortgage by way of “Contract for Deed”.

import · October 24, 2000, 7:29am

Re: Friends are purchasing another house… - Posted by Shenesa

Posted by Shenesa on October 24, 2000 at 07:29:29:

Thanks Johnboy for your response. I failed to mentioned that my friends went throught this first time home owners program 8 or 9 years through the Housing and Urban Developement. This program gave them a grant of 15k which they had to occupy the property for 5 years and when they sell the property, it would have to be sold to someone who has gone through the same program. This is to keep the homeownership percentage high in this community. However, when my friend went to the office to inform them of his plans and to inquire more about the situation, they informed him that the 5 year term to occupy the property was changed (unknowingly) to lifetime. This is rediculous! My thoughts are to have them to put the house in a trust and go through that whole process to keep them(banks and Urban Development) from knowing about the transaction.

Your thoughts!

Shenesa,NY