All Forum Posts by: Ben Williams

I won't be assuming the mortgage, as that would indicate that the bank has accepted me as the new holder of the debt.... but the bank is not interested in that (especially since I don't have a job). So the bank is in the dark, and the seller and I are in agreement that I'm buying the home by taking over the payments.   There are risks on both sides.  Seller's risk their credit being screwed if I stop making payments.  I risk foreclosure if they file bankruptcy.  I'm trying to understand my side of the risk by better understanding if debts that are being kept current would still be called due once bankruptcy is filed. 

@Alexander Flores, you're right, and I forgot to mention something....

The reason I want to do the Subject To is that I was in the middle of this transaction when I got laid off, and so no longer qualified for a new mortgage.  The sellers are on the verge of foreclosure. The Subject To is a way to stop the house from being foreclosed on and get me ownership of the house.  But if for some reason another 3-6 months pass and the sellers decide to file bankruptcy, I'm at risk of NOT being able to refinance/pay off their mortgage... but I have nearly two years worth of savings that I can use to keep paying the existing mortgage, if the bank would allow it in a bankruptcy situation.  

This is why I'm wondering if the Mortgage is actually being kept current by me, if/when when bankruptcy is filed, would the house still be at risk of foreclosure due to bankruptcy?

I do plan on refinancing the minute I get a new job. I just worry about the risk if I'm unable to find a job for a few months.

Hi all, just reading this thread as I my be entering into a Subject To transaction as the Buyer.  In my situation the seller lost their job some months ago and are falling behind on payments.  If I take over their payments (and make them current) with the Subject To transaction, would the home still be at risk of foreclosure if bankruptcy is filed?   I would be making the payments, so why would the bank even want to foreclose?  Can't some debts be voluntarily be excluded in Chapter 7 if the holder of the debt would rather keep getting payments?

I bought my first rent home 1.5 years ago in Denton.  It's possible to turn a profit if you buy a distressed property and "flip" it to yourself.

I bought a 3 bedroom, 1.5 bath with garage conversion as extra living space.  Purchase price was $95,000.  I put $25,000 into repairs, but could have saved $5,000 if I had gone with the GC's people instead of my own (at the time I had not quite settled on the GC).  That put me all in at $120,000, and I got 3 college students renting the place out at $1200 a month, meeting the 1% rule.   

Now this was two years ago, and the rent has gone up to $1250 with 2 of the 3 students staying with the house and splitting the rent even with the price increase. While it was not a slam dunk deal, I'm happy with it as my first try at this thing.  With the improvements increasing the value of the property, I'm pretty sure I could sell i today for $140-145k, and make a few more bucks.... but as the comments say, the property values keep going up in Denton, so I'll continue riding that wave for now. 

@Marc Tuckey I think that you are correct, but there probably was not a mortgage.  It's very rare as the banks do not want their lien on the property to get second place to a Tax auction, and for this reason usually require taxes to be prepaid in Escrow. So the property would end up in foreclosure before a tax auction as the owner missing payments (therefore missing his prepaid taxes) would alert the Bank and start foreclosure proceedings.    (This is not definitive advice, just what I'm remembering)

@Peter Schuyler, I decided that with my overall beginner status with rentals, and my lack of free time for 2 hour round trip drives, I'm going to stick closer to home for now.  But thanks for making the connection.

@Peter Schuyler  thanks for the tip. I'll check it out. 

@Josue Colunga I decided to stick closer to home for now. 

@Neil Aggarwal, I'm looking in Greyson County because about 5 months ago, when I started really looking for properties, I saw a report of rental markets broken up by county.  Greyson county was the nearest county that received a "green" rating (using a relative scale from red to green colors... would translate to a 1-5 rating with 5 being best, or green).

That piqued my interest at the time, but like you said, "surely there are deals close to me". And while that is true, I don't have a lot of time to spend looking into deals that are outside of the MLS. I got my license so that I could have MLS access and view/write contracts for properties on my own (again, a time saver).

In Greyson County Even with properties listed on the MLS in good-excellent condition, the list price to rent price is at or just above 1%. That is almost unheard of in areas withing a 45 minute driving distance. When there is a home with that ratio, its usually purchased with cash within a few days. I don't have that amount of cash to compete, and I also would rather leverage to gain the benefits of renter paid down mortgage and other tax benefits. Also the entire market is about 40% less expensive than what's around me.

Sherman / Denison Review

The area of Sherman reminded me of Denton, TX.  A college town with most of the town consisting of older buildings, and the random factory scattered here or there.  From my few hours in Sherman there seemed to be more noisy factories than in Denton, and larger areas of about 80-100 year old homes. The condition of these old homes seemed to be very scattered, single blocks having completely unlivable homes, to homes that have been remodeled one or more times through the years, all the way to much newer brick built with slab foundation.  The East side of Hwy 75 seemed to be the "nicer" part of town, with larger homes in more "subdivision" type neighborhoods.  

 Denison seemed to be more "uniform" in its property conditions per block, at least for the areas I was looking at. This made it more "predictable" but also a little more boring of a town. I didn't see any areas that stood out a "nice" or "shady" areas.  It was just sort of all the same, with the exception of a few busy roads where there was a large mixture of residential and converted commercial properties (buildings that were originally purposed for residential, but now zoned commercial).

I did by chance pass by one Commercial property that had a very well maintained and remodeled house with a separate converted garage.  The Garage was a hair salon, and the house served as a Day Spa with massage therapy and sauna.  

Of the properties I visited (about 12) I'm going to do more research and due diligence on 4. This includes the commercial property I mentioned above, A $150k ~2200 sqft home in the "nice" area of Sherman, an older home that's been remodeled to a great condition in Denison, and a new build in Denison.

Since it is so far away, I'm looking for minimal to no rehab on these properties.  The ones that do need some work just need new flooring and possibly a painting of the kitchen cabinets. However after experiencing the drive, I'm nervous about following through, just because of the very limited time I have with a full time job, 3 young kids, and another baby on the way.   I was definitely planning on using property management, but probably going to do that with local purchases as well.  But the idea of having to deal with issues that a property manager may not handle well (or managing the property manager) is a bit intimidating for me with the homes being so far away. I'm thinking my risk tolerance may do better closer to home with a lower return. But I haven't quite decided yet.  Still need to do further analysis on the 4 properties I mentioned. 

thanks for all the help guys. I will let you know how my tour goes.