SubTo in LLC

[Neal Weinstein]

I am looking to purchase an investment property from another investor strictly for the rate. I will make him whole, and I will take the house subto. He currently owns the house in an LLC. If I have him put the insurance into the LLC name and then sign the LLC over the me can this keep the lender from seeing what is going on? Is there anything I am missing? I really appreciate any input.

Thanks

[Caroline Gerardo]

Quote from @Account Closed:

Quote from @Caroline Gerardo:

An LLC had tax filings, you have no idea if they were honest in the past and you become liable.

Is the loan type existing conventional or FHA? If FHA seller was not allowed to vest in LLC if conventional seller had to apply for lender/servicer to allow. My 99% guess is lender doesn't know vesting was changed via transfer deed or sale deed to LLC and never approved it. Also insurance won't match the original terms. You can't just assume seller's hazard insurance ~ fire insurance cost and rating has to do with the owner of record's FICO, Clue Report, prior claims. What I am saying is you will be un-insured with your plan and soon servicer lender is going to put forced place insurance at 400% of the normal cost.

Regarding refinancing:

Forever in the future you need the seller to be alive, able to be notarized, willing to help you, not have liens or file bankruptcy as those cloud the title.

Can you qualify to refinance quickly if lender calls the note? No, the lender servicer will never accept you "taking over his LLC" which they certainly never approved in the first place. You need to have the income in past two years, good FICO seller had when he was approved, and fit the terms of the loan he got- if it was owner occupied and you are investor you won't be able to meet that. Then you have twenty to thirty days to pay them in full or lose everything you invested.

Doing this without title insurance is swimming with sharks with a bloody arm. You have no idea what liens and ghosts will appear. Surely the tax assessor bumped the property taxes when seller changed to LLC.

You raise great points that they don't cover in the "SubTo Community" I guarantee it.
Ah, investing was so simple before I knew what I know now. There will be some pretty surprised “investors” when they find out how much ignorance costs. They are enthusiastic though, aren't they. Lol.

Wait for the day: seller's divorce puts lien on house, pending lawsuit puts lien on house, seller has other financing they didn't mention that miraculously pops up the day of closing, seller is audited by IRS and state and liens the house, takes away Neal's car with the tow truck jaws, there is any insurance claim and insurance company denies because of fraud and goes after seller and Neal, or insurance company issues check in lender's name and seller's name but seller is dead or unavailable,
In some states you can BUY a LLC. There are tax consequences of purchasing a LLC for buyer and seller. We don't know how many years of depreciation were allowed. We don't know if seller cheated on expenses and has no paperwork for an audit in the next five years. If LLC was only owned by seller and he amazingly never mingled money (which is very rare) the seller could sell the LLC but buyer assumes all the risks.
People cannot assume a hazard insurance policy. Need to get new policy but an agent is going to question the ownership.
Neal says the seller bought with LLC and this is a conventional loan. Seller lied, that does not exist. What else is untrue? Tenant never pays? Books cooked?
Gee I paid $10000 for this class.