Posted by John Behle on November 21, 1998 at 12:48:44:
The technique works fine. There is no problem with the due on sale clause, because you are paying the first loan off.
The figures used in the example create a yield for the note investor of 10.78% That’s on the low side. Your loan to value ratio is 65/75 or 87%. That is also quite high for most investors - expecially if your purchase price is $63k. Many do not like to finance above the sales price.
You’d be better off just getting a new $50k first loan - and cheaper.