Posted by Randy D. Pena on September 23, 2009 at 24:50:48:
I agree with you, and from a lender’s point of view, I would be doing the same thing. I understand that banks will not lend on just a portion like a share of the property. That is why I am looking to a private lender for the funds. Plus I have to make the deal sweet by offering a high rate of interest and even offering to give him $100,000 out of the $300,000 loan. But on the other side of the fence, I would see it the way you did, I would want more risk on the table than just 20% interest and I wouldn’t offer that much of my money for it.
mortgage of an undivided interest - Posted by Randy D. Pena
Posted by Randy D. Pena on September 22, 2009 at 16:42:23:
I think that I am correct about this, but could I mortgage my share of an undivided interest in some property? I own 20% interest in like 10 different properties. I found someone who has like $2 million stashed in the bank. I was thinking that I could borrow like $200,000 from him and mortgage my 20% interest in all those properties. The way I look at it, is, if I can’t or won’t pay him, he could keep my share of those properties and he would become “partners” with the rest of the owners. I am thinking of offering him like 8% interest on his money. I am also thinking of asking him to lend me $300,000 and from that I could give him $100,000 as a finder’s fee type of arrangement. Then I would still owe him $200,000 at 8% interest (The mortgage will be for $300,000 and will encumber my share of all ten properties). For a 10 year loan, my payments would be like $3,000 per month. Then I could use that $200,000 to invest in properties and even get a few formal educational classes such as take an appraisal course. My question is: what are the advantages and disadvantages of making this deal work?
I am also thinking of offering to pay any penalties (such as early withdrawal penalties) that he may suffer if he had to cash-in on a CD prematurely.
All replies, criticism and comments are very welcome.
Posted by John Merchant on September 25, 2009 at 24:47:14:
A long time back I bought into an undivided interest in a tiny rent house for $2500. I got a half interest in the little SFR from my new partner who’d found the house.
I didn’t pay much attention to it and in fact didn’t even get a deed for my 1/2 undivided interest for several years…then didn’t record it for another 2 or 3 years, in fact forgetting I had it.
When I finally did get it recorded I learned that my partner was in the process of getting a new loan on all her RE interests, and in fact had told Transamerica that she owned 100% of our little house.
My female partner figured what Trans. & I didn’t know wouldn’t hurt her. Nice lady, huh?
Anyway she ended up giving Transamerica a 1st on her 1/2 undiv. interest, then was foreclosed upon when she went broke amd Trans. foreclosed on all her properties.
So I ended up with F& C half interest, being partner with Ocwen Bank. No way I could have sold that 1/2 interest w/o Ocwen’s also selling its 1/2.
We finally got together on a sales price and did sell it for a nice profit so my small investment turned out to be profitable.
Re: mortgage of an undivided interest - Posted by Natalie-VA
Posted by Natalie-VA on September 22, 2009 at 17:56:06:
Hi Randy,
If I were the money investor here, my lending criteria would be very conservative. For example, if you owned 25% of a property worth $200,000, that had $100,000 in equity, I MIGHT lend you $5000. I would have to leave myself plenty of room to foreclose on your share and then bring a partition action to force the sale of the property if the other owners wouldn’t pay me off. Just my thoughts…