OfflineHi,
First I'd like to state that I do business in Quebec, Canada so it's done a bit differently here but maybe some of you have encountered the same problems I have.
The problem I'm having is with the person I'm reassigning the contract to. I'm currently in the process of reassigning 2 deals to people I know and they're having both the same issues. The bank is giving them a hard time (to approve the loan) because the purchase contract is not "originally" in their name. The reassignment contract has been signed. The amendment stating the the contract is now assigned and in the name of the new buyer is also signed but yet, the bank is still giving them trouble.
I don't know if this is a local thing but have any of you run into such issues and if so, what was your solution to circumvent it?
Thanks,
Steven
The recommended solution is to only work with cash buyers.
Hope that helps and good luck!
- Tom
Hi Steven - I do not know how things work in Canada, so please take my question/comment with a grain of salt.
Is there a reason why the person you are assigning to is trying to get a loan vs pay in cash? We have only done 5 deals, but all deals were paid for in cash when we assigned them therefore a bank didn't need to get involved. If you can find cash buyers, you might have a different outcome? Alternatively, can the person seeking finance approach a private money lender or hard money lender instead of a traditional brick & mortar bank? PML and HML have different rules and do not have to abide by the strict standards of traditional banking laws which cause hiccups like this.
Interested to hear the final outcome...
BEST OF LUCK! Wish I could help :|
Kristin
TIME = WEALTH = FREEDOM
Live STONG & Live with PASSION
Contract assigning usually does not work when the buyer needs financing. You stated the exact reason it won't work. You don't own the property! You could finance the deal yourself (PM or HM) close and then immediately sell it to your buyers providing there are no deed restrictions.
Assigning contracts is most often a strategy we use when flipping the contract to a cash paying investor/buyer NOT a homeowner/owner occupant buyer.
Hope this helps,
Michael
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It is no different in Canada regarding buyers. In order to make our deals work we must have CASH buyers. The banks do not like the assignment game. If they looked closely at the deals they would see there are no problems, but the banks usually will not bend on this matter. Therefore, we must build a cash buyer's list in order to wholesale.
Roy Voeks
Official RE Coach
Ahhh that clarifies a lot of things then. I've read up on the matter and had several courses/seminars talk about it but I've never seen them mention that it only works with cash buyers or people going through private financing.
The reason why the people are going through standard loans is one person is my dad and was interested in taking over one of my deals and the other is a guy we know that we are mentoring and since it's a rental property, getting a private money loan for 8-12% makes it a negative cashflow deal (we obviously don't want that).
Thanks a bunch for the info but that leaves me with the question, can you generate positive cashflow for rental properties through private lending? The lowest I could find was 6% but they ask for a percentage of the profit, which kills the deal as well.