Posted by JohnBoy on February 17, 2002 at 02:54:43:
Based on how you are proposing to do this deal, I have only one question…where’s the deal???
You are talking about getting a new loan in your name that you will be liable for just to break even up front when you get a tenant/buyer and settle for only $100 - $150 per month in cash flow. That doesn’t justify the risk.
You said he has a private note that needs to be paid. Is that note secured against the property? If it is then that would have to be paid off before your lender would fund your loan. Either that or your lender will require the note holder to subordinate in order for your lender to have 1st position on their loan secured against the property, which also means you will have qualify for those payments in addition to the payments on your new loan as far as your debt ratios go.
Based on your numbers the seller wouldn’t be getting any cash from this, so why even bother with trying to get a new loan?
Instead, just take over his payments on his loans! Buy the property “subject to” his existing loan.
This will save you from having to put out $6k from your pocket and allow you to keep your buyer’s option money as your profit!
You would own the property without any personal liability on the loan since that remains in the seller’s name!