Wraparound questions. - Posted by Tim Stern

Posted by Ed Garcia on November 30, 2000 at 09:50:53:


Wrapping a first mortgage on units, is a little different than wrapping a first mortgage on a house. Unfortunately, the lender is a little more trigger-happy. My suggestion is, to ask the seller to see the information on his underlying loan before you do it. Also make sure you make your payments to the underlying lender and if there is a difference that goes to the seller, then I would give him a separate check each month. The reasons for this is so the seller doesn’t accidently forget to make the payments on the first, or fall behind causing notice to the loan.

Would I do it? Tim we’re talking about risk/reward. I would do it if, I felt that something went wrong, I could qualify for a new loan.

Tim, on the second part of your question, I would design it for a refinance in three years, not two. The reason for that is that the lending community for commercial is different than the lending community for residential. The vast majority of National lenders, who do multiple units, require 3 years. It’s true you can go to a local small bank that will have different considerations.

Ed Garcia

Wraparound questions. - Posted by Tim Stern

Posted by Tim Stern on November 29, 2000 at 10:06:04:

I have located and negotiated a nothing down deal on a 10 unit apartment building. The owner will hold an AITD on his equity and the existing mortgage. My intent and only means of profit is to rehab and hold the property for cash flow.

Will a lender likely refinance such a property within two years? Will the existing lender likely call the loan if they learn of the contract? I have heard conflicting opinions so I’d like to hear from people who have experience with AITD’s.