subject to : possible problem? - Posted by beau

Posted by Jim FL on March 20, 2004 at 17:09:09:

beau,
This is an easy one.
First, when you buy the property, don’t follow the mainstream sub2 teachers who tell you to buy with no equity.
If you buy with plenty of equity NOW, under present market conditions, you can rest assured that most likely, in 3-5 years, that property will be worth a whole lot more.
Meanwhile, you owe less on the house, so a refi, or quick sale for under value, or even retail, would solve the problem.

So, what is the problem or question you are asking about here?

By the way, with the sellers SELLING the house to you, they are not in the picture at all any more.
The loan you took the house with does remain in their name, but they don’t own the house, you do.
So, your mentioning the sellers “renewing” the loan, is simply not an option.
You cannot barrow against something you don’t own.

By below value, and make sure your numbers work well under TODAYS market.
That would be the best advice I can give you.

Good luck,
Jim FL

subject to : possible problem? - Posted by beau

Posted by beau on March 20, 2004 at 14:06:02:

With a “subject to” the original owner is still responsible for the original bank mortgage which has a 3 or 5 year term. You have put in a renter/option buyer which covers the original mort. payments and more. As time goes on the renter doesn’t exercise the option and leaves. Good for now as you have had a good ride $ wise. The next renter does not take the option either. Now the term of the bank’s mort. has expired and the the original owner won’t renew as he wants out of the responsiblity and your tenant won’t option and leaves too . The bank says where’s my money? Now you have to scurry for a new bank or private lender, but now you are responsible for the mort. If you can’t find another tenant/option for a few months, you are paying the monthly mort. which starts to gobble up your past profits. Any comments?

Re: subject to : possible problem? - Posted by Tom-FL

Posted by Tom-FL on March 22, 2004 at 21:22:20:

Are you saying you bought a house S2 that had a 3 year balloon note, depending on a a L/O tenant to cash you out before the balloon came due?

OUCH!! That’s one expensive seminar. I’m in pain over hear and I didn’t even do it.

Your last few sentences pretty well sums up where you are now. Yes, you do have to REFI pronto. And yes, you do have to carry the thing till you find someone else to make the payments for you.

Not much good news I can give you.

Had it been me, I probably wouldn’t have done that S2, or, If I did, I would have only bought it at steep discount and IMMEDIATELY started aggressively marketing it retail. Basically grab some cash and get out ASAP. L/O tenants are notorious for not following through.