How To Buy With The Multi-Mortgage Technique To Give The Seller His Equity – Real Estate Investing

How To Buy With The Multi-Mortgage Technique To Give The Seller His Equity – Real Estate Investing

November 19, 2019 6 By Luis Garrison


Joe: Second in this structure is called multi-mortgage.
This is a structure that I created simply because there weren’t any other out there.
You’re still taking the property subject-to but this time, that property may have some
equity in it. Joe: Now, when you take most properties subject-to,
they’re going to have mortgages up to the value of their property or within 70-80% of
their value. And it’s easy to take those properties over and get that equity for free. But let’s
say somebody has a property and they only have a mortgage on it that’s 20% of their
equity. Let’s say it’s a property that’s worth $100,000 and they owe $20,000 on the mortgage
right now. What you can do is take that property from them, buy that property from them with
multi mortgage and get them their equity. Let’s say it makes sense for you to pay them
$400,000 for that property. Let’s say it’s worth $100,000. You’re going to be able to
get $1,000 of income on it and your payments overall aren’t going to be more than say $900
a month with taxes and insurance and property management — that property might make a lot
of sense to take over. So to do that, what you have to do is put a second mortgage on
there. The seller deeds you the property, you start making payments on the first mortgage
or first trust deed that’s on the property, and then we have a second mortgage that’s
on the property where the beneficiary is the owner or the seller of the property. So they’re
going to have an $80,000 second on that property that you’re going to make payments to. If
you default, they can take the property back from you, so they’re protected, and you — you’re
on the deed so you’re protected and you’re given a stronger position because you’re on
the deed. And you’re going to make payments to them.
Joe: Alright, so that’s the top two structures, subject-to and multi-mortgage. Of course,
as you go down the structures, you have less and less control of these deals. It doesn’t
mean it doesn’t make sense to do — multi-mortgage usually makes just as much sense as a subject-to,
although I’d much rather see you negotiate a much smaller price when you do a multi-mortgage
like that. Joe: Second in this structure is called multi-mortgage.
This is a structure that I created simply because there weren’t any other out there.
You’re still taking the property subject-to but this time, that property may have some
equity in it. Joe: Now, when you take most properties subject-to,
they’re going to have mortgages up to the value of their property or within 70-80% of
their value. And it’s easy to take those properties over and get that equity for free. But let’s
say somebody has a property and they only have a mortgage on it that’s 20% of their
equity. Let’s say it’s a property that’s worth $100,000 and they owe $20,000 on the mortgage
right now. What you can do is take that property from them, buy that property from them with
multi mortgage and get them their equity. Let’s say it makes sense for you to pay them
$400,000 for that property. Let’s say it’s worth $100,000. You’re going to be able to
get $1,000 of income on it and your payments overall aren’t going to be more than say $900
a month with taxes and insurance and property management — that property might make a lot
of sense to take over. So to do that, what you have to do is put a second mortgage on
there. The seller deeds you the property, you start making payments on the first mortgage
or first trust deed that’s on the property, and then we have a second mortgage that’s
on the property where the beneficiary is the owner or the seller of the property. So they’re
going to have an $80,000 second on that property that you’re going to make payments to. If
you default, they can take the property back from you, so they’re protected, and you — you’re
on the deed so you’re protected and you’re given a stronger position because you’re on
the deed. And you’re going to make payments to them.
Joe: Alright, so that’s the top two structures, subject-to and multi-mortgage. Of course,
as you go down the structures, you have less and less control of these deals. It doesn’t
mean it doesn’t make sense to do — multi-mortgage usually makes just as much sense as a subject-to,
although I’d much rather see you negotiate a much smaller price when you do a multi-mortgage
like that.