assignment of sub 2
Posted by: jerryb real estate
Posted on : 8/19/2011 1:17:53 PM
Have you heard of Phil Grove's Assignment of Mortgage Payment System? He will do a wrap or assign a sub 2 deal to a buyer who cannot get bank financing. Wholesaling a sub 2 deal has some serious risk if the bank enforces the due on sale clause or the new buyer defaults. Even with full disclosures to the buyer and seller at the closing thru an attorney, I believe there may be too much risk in the future. He is notifying the lender in writing with the first payment that there has been a deed transfer. I would like your opinion.
assignment of sub 2
Posted by: ErikW
Posted on : 8/19/2011 5:02:19 PM
Wouldn't it be as risky as putting a wrap or land contract, or lease option on a property taken subject2?
Re:assignment of sub 2
Posted by: WilliamGA Still Master of ALL I Survey
Posted on : 8/21/2011 12:44:29 AM
While I don't think the actual deal described by Phil is any more risky that any other deal when sub2 is involved, there are a couple of things he teaches that I don't like.
Mind you, I have never read the MAPS course. My views stated here are based purely on how the course details were laid out for me by those that have read it.
Anyway, for what it's worth, here are the 2 primary problems I see with it.
1. You do not stay in the deal until the end.
This is crucial. I have always felt this way about doing sub2 deals but really learned just how important this is during my divorce. If anyone else, for whatever reason puts themselves between you and the seller (or you and your seller financed buyer, for that matter) in the transaction, bad things happen.
With MAPS, you assign the deal to the end buyer and walk away totally. Even though both the buyer and seller know what is happening, you can bet if things go wrong someone is going to be looking for YOUR ass.
2. No equity in the deal.
This is another problem I see with the MAPS system.
MAPS was designed as a way to make "something out of nothing" as far as I can see. Those deals I (and most astute investors) would say pass on are a go for a MAPS deal.
Sure, some people who can't buy a house any other way won't care about equity or upside down properties but then again, some will. I just don't like taking over payments on something that really has no upside.
Yes, there are cases where this rule will not apply such as in a high cash flow situatuon with a rental for example but as an entire business model? No thanks.
How beautiful would this world be if we all practiced what we preached?