- Joined
- May 18, 2012
- Messages
- 100
Have an opportunity to do an RTO with someone who currently owns their house. They currently have an associate as a co-signor however the associate now wants off title and to no longer be attached to the mortgage.
The owner is unable to qualify on her own due to slightly bruised credit from a divorce and would like someone to do an RTO with her. She has $16,000 to put down as option money and has good income. The mortgage has $552,000 left @ 3.79% for another 16 months. Property is currently appraised @ $570,000.
To buy this from her traditionally@ 20% DP, and turn around and RTO it to her would require approx. $115,000 investment. The deal would cash flow nicely for the 3 year term she is seeking and shows 38% ROI p.a. based on an agreed purchase price and monthly rents. So not bad.
However, less capital is always better and lets assume I qualify for the mortgage:
- It was suggested to consider assuming the mortgage in an effort to put as little into this deal as possible. I have no experience with assuming a mortgage - would this be a good option? Rate is high, but not sure how much cash would be required in this approach.
- I'm also wondering if anyone would consider taking over the co-signor role and having an RTO inside this arrangement?
- Would a lender typically be happy swapping out the 2 'less qualified' people on title for someone with strong credit and qualifies?
- Any thoughts on doing this ethically/legally without 20% down and doing an RTO with owner?
Thanks for any input.
Michael
The owner is unable to qualify on her own due to slightly bruised credit from a divorce and would like someone to do an RTO with her. She has $16,000 to put down as option money and has good income. The mortgage has $552,000 left @ 3.79% for another 16 months. Property is currently appraised @ $570,000.
To buy this from her traditionally@ 20% DP, and turn around and RTO it to her would require approx. $115,000 investment. The deal would cash flow nicely for the 3 year term she is seeking and shows 38% ROI p.a. based on an agreed purchase price and monthly rents. So not bad.
However, less capital is always better and lets assume I qualify for the mortgage:
- It was suggested to consider assuming the mortgage in an effort to put as little into this deal as possible. I have no experience with assuming a mortgage - would this be a good option? Rate is high, but not sure how much cash would be required in this approach.
- I'm also wondering if anyone would consider taking over the co-signor role and having an RTO inside this arrangement?
- Would a lender typically be happy swapping out the 2 'less qualified' people on title for someone with strong credit and qualifies?
- Any thoughts on doing this ethically/legally without 20% down and doing an RTO with owner?
Thanks for any input.
Michael