All Forum Posts by: Zack Zimet

I believe it's to insure against the due on sale clause being called. There's a subject-to guru named Pace Morby who claims to be a partner in a company called Equity Assurance where you pay 1% of the purchase price as the premium and they allegedly insure against the due on sale clause, where if it's called they'll refinance the loan for you at the same rate and terms as the existing mortgage. I have no idea if it's legit though.

Thanks for your response.  There was no promissory note when we executed the JVA, just the agreement itself, although the language states that "Developer shall acquire and hold title to the Property in his name but on behalf of the joint venture between the parties." I don't know if that really means anything for real world purposes though.

Hi all. Here's my situation. I did a private loan as a JVA with a rehabber who used a hard money loan for the primary funds and my loan for the remainder and rehab costs. Only the hard money lender has a mortgage on the property, my loan isn't secured by the property itself, so any claim by me would be against the rehabber (mistake 1).

As it turns out, he significantly overestimated the FMV of the property (mistake 2) and now the only offers he can get on it wouldn't be enough to pay me back all of my principal, never mind points and interest.

So the primary option is to sell the property for what it can get right now, the rehabber pays off the hard money lender, and the remainder would pay back only part of my principal. He would then do a promissory note and payment plan to pay back the shortfall on my principal/interest.

However, as I thought about it I decided there might be another option. Based on the FMV of the property and what is owed to the HML, if I were to purchase the property myself I would have approximately 35% equity in the property. I would essentially need to obtain a mortgage for the amount owed to the HML. From running the numbers, based on the rents in the area if I held the property as a rental I think it would cash flow positive by $800-1000 a month. I could then hold it as a rental for a couple years or more until the market firms up enough for me to sell and get my funds back out of it whole, plus the rental income.

Am I making another huge mistake considering this as an alternative option?