Sub2 Question

[Ray Keziah]

When a sub2 transaction goes through and you have a l/o to a t/b for a set time (2-5yrs), if the seller wants to get another house will they be able to qualify for another loan? If not, what do you do or tell them?

Maybe that's why I give them $5k to get an apartment for the next couple years huh?

Also, how do you protect yourself if the seller decides to file for bankruptcy down the line? Thanks for any input. -Ray

[Nick J.]

Ask them if they understand the lines 203/503

Tell them you'll be purchasing properties Sub2 the existing mortgage and if the sellers are in need of an additional mortgage that you expect them to be able to perform and not just give it the cold shoulder because they don't understand it. Make your mortgage broker find out exactly how he can get a seller (now a buyer) into a new loan product with having the existing loan still in their name. Make him find out what he'll need to do, what he'll need from the seller and more importantly, make him do his job if he's going to be on you team, don't let him get away with being lazy.

You also need to learn how to take care of your broker, don't use him/her like they're a piece of meat. When you place a L/O tenant in the property, make that tenant/buyer work with your mortgage broker to get them in a position to obtain a reasonable loan to make sure they're going to purchase the property and cash you out.

It's all about knowing what you expect from your team and knowing how to take care of them as well. When you buy Sub2, you tell the seller, when they're ready or if it's now, and they need to get a new loan for another property, call your guy etc.. etc... Now, you're mortgage broker team member is doing 10 new loan originations a year at least and it's a loving relationship between you two.

If you have a broker willing to work with you but the two of you need some clarification, I'll get on the phone with the both of ya and give you the 'inside' scoop ;)