Selling low cash flowing properties using a wrap. Any advice?

[Sunil Kapoor]

Hi All,

I have a few SFH's which don't cash flow so much, but I have a great 30 year fixed loan with a low rate on them. I'd like to increase my cash flow and one thought is selling them on a wrap.

My current P&I payment is $280/month with 25 years left on my mortgage.

If I do a wrap at 30 years, 7% the P&I payment would be around 980, giving me $700/month of cash flow and no other costs.

Sounds simple, but the devil is in the details. Has anyone done this, or have any advice?

Thanks!!

[Jerel Ehlert]

Could be done, but very carefully.

Talk to an attorney to get specific advice, because there are many factors that can dramatically change what you should do.

Calling a loan because of the due on sale clause is rare, but does happen.  If the underlying terms are extremely favorable and the principal large, maybe.  Notice to the buyer and appropriate language in the closing docs could cover most of the liability.

You will want to use an RMLO, inspection, and title company.