All Forum Posts by: Jason F

I love this method. I bought a house a couple of months ago from a lady that owned it outright and she agreed to hold the financing for a year with a little bit down.

I think this is one of the simpliest and most often overlooked way to buy RE. Its even better if you are a new investor.

Plus it is far easier to negotiate with a seller who stands to make a lot of money either way, than with a bank or HML.

James,

I'm not bugged by anyone.

Some one said: Don't close on a property...Ever.

I said: I don't understand that, if it's a great deal, why wouldn't you just do the deal instead of selling it for $10k

Jon said: Well, some people just want the cash quick and dont' want the risk.

I said: Good point, to each his own. (meaning everyone has his own investment criteria, I'm pretty sure that's how the saying goes, but I could be wrong)

Jon actually brought up a good point that not everyone is into rehabbing properties, some just wholesale and I agreed with him.

I read it over and can't really see how that could have been taken negatively. ??

Yeah, I'll read them but I'm going to have to let this thread go too. I don't think we are getting anywhere.

Good convo though. It made me think about things a little more.

I guess you are right, Wheatie, to each...his own.

from the price differences and the fact that one of the houses in newly built, while the others are older, means that you are probably looking in an area that has a lot of different style and size houses. this neighborhood was probably built over the course of many years, rather than by one builder.

you need to look at sq. ft. and use that as a function in your determining price. come up with a price per sq. ft. for your comps and apply it to your house. different builders would also indicated different materials used to build, establish a discount for houses that are wood frame rather than block.

I don't mean to 'assume' anything here, but from those headlines it sounds like those investors were doing a little bit more than 'getting the deed' and closing the same property in one day. I'd love to read the actualy articles, where are they posted?

It just bothers me that a few people do things unethically and create a 'cause' for legislation that affects everyone. This is very true in the RE world and evident in our country.

For instance, previously it was seen as common place to purchase a property without seasoning. Now, because a few morally challenged maverick investors took advantage of their mortgage financing and ability to sway an appraisal, it’s extremely difficult to buy a house and sell it quickly to a retail buyer. Does that mean that all ‘flippers’ are scamming the mortgage company with a jacked up resale value? No, not at all. It means that a lot of people decided it was better to make a quick buck rather than doing things the right way.
Does that piss me off? More than you know. Because not only are they slime-balls, but they’ve ruined things for the rest of us.

The same holds true for Sub2's. Why would it even be necessary for people to look for "red flags" if things were done correctly? Because people took advantage of their knowledge of the RE business over their sellers.

I guess it's that, compounded with the fact that I do have a negative disposition towards some RE attorney's. A good majority of them just shoot down ideas or raise concerns to cover their own *$$. It goes back to a major problem in this country, everyone is soo afraid of being sued that it's ruining a lot of things for everyone. Your friend is warning you about double-closings? Double-closings have been taking place in RE for years. I guess I really don't see any element of fraud in that. When I buy a can of corn from the grocery store, do I really care how long ago that corn was purchased, or for how much? No, I'm buying that can of corn from the store and I don't care what their profit is. I can understand the grey area with Sub2's and that some could see it as border-line fraudulent towards the bank. But the thing to remember, like Wheatie said, is that it is completely outlined in the civil agreement between the two parties. 99% of institutional mortgages have a clause outlining what "Due on Sale" means and the ramifications for not complying. The punishment is having the loan called due. Therefore, they are addressing the issue and have even outlined what happens if it occurs. Fraud is more along the lines of deception, for instance if you told the seller's you were going to save their credit and then just stopped making payments. But if you do that maybe you do deserve what's coming to you.

I understand your points that everyone should beware of what they are doing out there, but I also know that most investors, especially new investors are hearing this cautious talk from EVERYONE. Most of the time the title companies, banks, attorneys, buyers/seller and even their friends and families are telling them their ideas cannot be done. I think a lot of people come on here to speak with people who know what they are talking about and they take their opinion very seriously. You look like you have a lot of post so I’m sure people take your opinion more seriously than other. I know it’s something to consider but posting that these RE practices are usually fraud, or raise red flags and could lead to prison time is definitely not necessarily 100% true, whether coming from you or your attorney.

i think you are trying to conclude that whenever these methods are used they are, in fact, fraud. not true.

you can creatively finance a deal and not be anywhere close to fraud.

this website is full of people who do sub2's and double closings all the time. raise of hands, who's served time?

your attorney friend sounds like an attorney. always bringing up 'issues' and saying things can't be done.

can you please point me of the right direction of the federal or state law/statute that describes the punishment for breaking the 'due on sale' clause with CitiMortgage?

"In a fraudulent transaction, the perpetrator may make millions of dollars, and the attorney will make $1000., but you will both wear the orange jumpsuit and serve the same amount of time…. "

Spoken like a true attorney.

I hardly believe last minute contract changes, double closings and sub2s will put you in prison. I wonder if the fact that he works for banks has anything to do with that. I would like someone to show me anyone who is currently, or has been in prison, for doing a sub2 or a straight forward double close with no fraud. Anyone.

The truth is, the attorney only stands to make that $1,000. So why would they risk anything or advise you to do anything out of the box? They won't. They can make that $1,000 from the office telling you not to do deals and bringing up all the worse case scenarios that could happen. Well, unlike attorneys, most RE investors don't get paid from sitting around NOT doing deals.

Basically, from the lender's point of view, your friend (their borrower) could be in this just to split the $90k with you. For a while, sleezy investors were entering into this kind of deal and promising a profit split for people that would line up the financing to buy the house. After closing the borrower, having over paid for the property, would never make a mortgage payment and let their credit take the hit for the $45k they were making from the deal.

Now lender's are very weary of this and it makes it hard for everyone else who does things on the up and up, like you and your friend.

You will need to tell your friend how much you are making and assign the contract to him. Then hope that the bank doesn't get too picky with the $90k that is being paid to someone other than the seller on the HUD-1.

I don't know if this is possible but could you hold a second mortgage for the amount your friend will owe you. Then it would should up on the HUD-1 as a mortgage and not a 'fee' or cash disbursment. Just an idea. Does anyone else know if that would work? Then you would just get the payments from that $90k loan or you can sell the note.