Wrap Around Mortgages or Subject to

[Latasha Shipman]

What can I say, I am a busy Lady!

Seeking experienced investors with wrap mortgages and or Subject to...

Problem

Would like to take over a family members mortgage (who stays in NC). I will pay their mortgage the first month but after that I intend on moving a section 8 tenant into the property. (She is my cousin and currently fell onto hard times). Anyhow there is paperwork that has to be done through FHA, probably even a verification process in order to receive rental payment for staying on the property. If this falls through I would be her landlord.

Questions for the EXPERIENCED

1. WHICH CATEGORY OF OWNER FINANCING DOES MY SITUATION FIT INTO? Wrap or Subject?

2. Is it possible to rent this property out ASAP and should I stay away from FHA tenants who require a strict verification process since I am using an unorthodox strategy of creative financing?

3. Lastly, jail nor breaking the law looks good on me. So, if what I am purporting is to sketchy PLEASE FEEL FREE TO STOP ME NOW

Sincerely,

A visionary! Who doesn't look cute in STRIPES!

[Patti Robertson]

While this is a doable transaction, you would not be able to rent to this tenant. To fulfill the SEC 8 paperwork process you just have to link your legal ability to rent the property to the tax record. The easiest way to do this would be to have the owner of record sign a property management agreement in addition to your SUB2 contract at closing. While SUB2 should work, it will likely confuse the government workers not familiar with these docs. They see prop mngt agreements all day long. 

The issue you are going to have is that a SEC8 voucher holder cannot rent from a relative. One of the forms you will have to sign says that you are not related to the voucher holder. You can rent to someone else, but not your relative.