Buying a lien to flip, can it work?

Question

I've found a nice 4/2 MH, owner asking 21k, which is her lien on the home needing to be paid off.

Please tell me if this scenario is doable.

***Sally owes 21k on mortgage

***I with little to no money sign paperwork accepting responsibility of the 21k mortgage, which will be paid off paying the same monthly payments as Sally

***I then find a tenant buyer and process a new mortgage with them at 31k × 11.2% interest.

***now my tenant is paying off the intial 21k mortgage, whilst fulfilling their 31k × 11.2%. Mortgage to me.

***I then sell my 31k note either partially or fully to a private note investor.

Can any of this be done?

Will it be a problem that Sally's mortgage isn't paid in full till I have a note investor pay the 21k off?

Basically can you accept mortgage responsibility, then create a mortgage on property that's under a mortgage already. Only to sell the new mortgage note to a note investor?

Wayne Brooks · Answer

Your major problem is you're trying to do a "Lonnie deal" and will have all kinds of Dodd Frank issues selling to an owner occupant. The note will have little value to an experienced note buyer.

Samson Taylor · Answer

thank you for your response J Beard and Rachel. Mr. Beard what does td stand for?

Ms. Rachel when you say dangerous ground and being prepared if things don't panic out are you referring to if the note buyer doesn't buy the note and I'm stuck with a 21k mortgage to fulfill till I find a note buyer?

At the end of the day I'd like to know if in a PERFECT world, could what I described in my initial post actually work? Obtaining a mortgage, writing a new mortgage for a tenant and finding a note buyer to fulfil the new mortgage?

Thanks all.

Rachel H. · Answer

This is very dangerous ground. It's best to have a plan if things don't pan out. When selling notes to other investors, most I know who do it successfully have a track record and long term relationship with their clients. Good luck!

Jeff B. · Answer

IMO, the issue is, "are you prepared" to take over the 1st td if necessary?

Buying a lien to flip, can it work?

Buying a lien to flip, can it work?

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