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Updated over 7 years ago,
Sell a home I have a mortgage on as a LC
Can someone tell me what kind of risk I'm running if I sell a home on LC that I have a mortgage on? Is my risk simply a financial risk in the sense that the the bank could exercise the "due on sale" clause on me if they wanted to and therefore force me to come up with the balance of the mortgage? I'm not too worried about that risk since I know I could come up with the cash if I needed to... I'd just rather not come up with the cash if I don't have to.
Or is my risk more legal, in the sense where I could get in some sort of legal trouble, or have issues with title?
I'm asking because I do flips and rentals but have never sold on LC before, and I'm thinking it might be beneficial in situations when I'm "in between" on what I'd like to do (flip it or rent it). For example, with this house, I'd love to hold on to it because it will cash flow well (80k house with $1,300 in rent) and also because it has more appreciation potential in my opinion than the average 80k home I buy.
However, I'd rather not do my typical rental strategy on this one because the quality of the home isn't quite up to the standard that I like to keep (it's not bad, it's clean and safe) and it's too large a home for me to economically renovate it up to my normal standards. It's also not really worth flipping because the comps in the neighborhood max out at $90k and therefore limit me from doing much more than breaking even or making $10k. So rather than flipping it for $90k (5-10k profit), and rather than renting out a home that is not up to the standards of the home I like to manage, I'd rather sell it on LC for $90k with 10% down (quick $9k cash out) and then cashflow on it for 5 years while I don't have to manage the property (or pay taxes, insurance, maintenance).
Any thoughts on if I'm able to do this, what risk I have if any? Or general thoughts on my thinking/logic?