Need some advise on a wrap

[Ron Jones]

I'm looking at an investment property in NC. I know the seller. It's a 3/3 house with a 2/1.5 garage apartment. The seller would like to move into the garage apartment and rent it from me and my brother would like to move into the house and also rent from me. So far sounds good right? The house will sell for approx. $300K. The owner has a note left for $220K. I can afford to put down $80K but not in a position at this time to get financing on the $220K. I will be in a year and a half. I was thinking about a wrap note from the seller with a 3 year balloon just to give me a little extra time if needed to refinance. I have not examined the sellers mortgage yet but I'm sure there will be a due on sale clause. Any thoughts on how to do this??

[Rick Pozos]

You are going to have to talk with the seller more to find out exactly what they need. Maybe they can get by with only getting 30k now and 1k per month. Maybe they need40k now and the rest in 3 years. I would ask the seller directly, "How much of the cash do you need right now?"

My question is why are you buying at 300k if it will sell for 300k???? This is not really a deal. I guess you have your reasons for buying at market price.

To your question, I would get the property deeded to me. Keep making their mortgage payment. After a year and a half you could refinance the property. I would also not pay the 80k all at once. Do some research of "sub-to" or buying a property subject to the mortgage. 

I have done this a number of times to rehab a property and sell within about 3 to 9 months. I also have a rental property that was purchased sub-to. I would not recommend it as a long term strategy, but it can help you get into a property that you would not otherwise be able to get into.