All Forum Posts by: Yinan Q.

The house is schedule for foreclosure auction this Friday (3/10/2017). I am wondering if it is too late to buy the house prior to the auction as an investor? The house is in Washington State. 

Thanks

Jeff, that's a very good point. I understand a clouded title would deter some buyers. So it's important to clearly document the "clouds". My plan is to find the good title company to work with to make sure everything is done right. When sell, I will use the same company, hopefully they would be able to help explain the situation to buyers. 

All these are my hypotheses, I'd appreciate any comments / critiques. 

 Rocky, can you please elaborate what you have in mind on an Option to Purchase deal? When will I get the title? What would be the risks?

Jessica, it's going to be a fix and flip. It will done through my llc so getting conventional loan is almost impossible.

@Jessica Zolotorofe, I am not trying to avoid the excise tax. That will be paid with transfer of title. 

What I am trying to do with subject to is to use less capital. Let's say the mortgage is 250k and I buy the house at 300k, fix it up, sell, and make a profit of 45k. Let's say fix-up and holding cost totals 70k.

Scenario 1: I pay off the mortgage upfront. My total investment is 370k (300+70). My ROI is 12.2% (45/370).

Scenario 2: Subject to. My total investment is 120k (300-250+70). My ROI is 37.5% (45/120).

Although the numbers are simplified, I think this makes my point. The difference is how much I have to pay out of pocket. With 370k, I can only do 1 deal a time for Scenario 1. Or I can do 3 deals at the same time for Scenario 2. 

@Jay Hinrichs, thanks for your inputs. I was hoping you could chime in and here you are. Since I am new to subject to, I will have to read your post a few times to digest. 

@Jessica Zolotorofe, thank you for your reply. It's good hear from the attorney's perspective. I get your point, subject to without getting approval from the lender is a gray area. To answer your question, I could pay off the mortgage. The reason I am looking into subject to is to save on capitals. If subject to works, my out of pocket will be significantly lower than paying off the mortgage, thus my ROI will be much higher.

Of course, I will only do a subject to if it can be done legally.

@Chris Mason, I love your analogy. Does it mean nobody would insure title for a subject to deal?

I got a potential subject to deal but when I talk to title companies, most of them won't do it because of the "due on sale" clause on the exiting loan. 

Only one title company I talked with said they can do it but won't be able to issue title insurance. They will need the lender's agreement to do be able to insure the title. I guess my luck of getting the lender to officially say yes it close to none. 

I am wondering which title companies / real estate attorneys that investors in the Washington State, especially in the Seattle area, have used for subject to transactions? I've call all the big ones (Chicago, First American, Fidelity, Old Republic, Ticor).

What's your thoughts on proceed without title insurance? Many title companies I talked with can do a informational title report looking for liens and judgments for a small fee. Is that report sufficient to guarantee a clean title? 

Any suggestions will be appreciated!

Wow, what a great start for 2017! I will reach out and make things happen.

@Michael Quarles, I'd like to get a copy of your book too? Where can I find it? Thanks