Assumable Mortgage

[TonyMandrique]

Hello there,

This is the first time I`m doing this.

I am negotiating a 10BR-student rental property by the University in one of the top cities identified by REIN. The mortgage with Resmor carrries a 6% fixed interest with two years to go before mortgage renewai. According to the owner, Resmor will charge him a penalty of around $20K if he decided to terminate the mortgage. (By the way, the arrears as of now is 6 months with little equity on the property).

My questions are:
1 - Has anybody dealt with Resmor before? Can you please share your experience in dealing with them?
2 - My plan is to assume the mortgage with Resmor and then move it soon to another lender for a lower interest rate. Is this possible?
3 - How can I avoid the penalty from Resmor and get a better rate?
4 - Are there experienced mortgage brokers who can help me on this?

Thank you for the immediate advice.

Cheers,
TonyM

 

[Thomas Beyer]

you could try an agreement for sale .. with a clause that would bring mortgage current with your cash !

You could negotiate with the bank if you find the right contact person.

Assuming little equity is left you will likely NOT be able to get a new mortgage for the same amount, likely MUCH lower, say 65 to maybe 70% loan-to-value.

Thus: avoid this deal unless you have a written agreement from Resmor that makes sense to you AND the property is properly valued (i.e. you don`t pay too much)

 

[TonyMandrique]

QUOTE (ThomasBeyer @ Apr 10 2010, 06:46 PM) you could try an agreement for sale .. with a clause that would bring mortgage current with your cash !

You could negotiate with the bank if you find the right contact person.

Assuming little equity is left you will likely NOT be able to get a new mortgage for the same amount, likely MUCH lower, say 65 to maybe 70% loan-to-value.

Thus: avoid this deal unless you have a written agreement from Resmor that makes sense to you AND the property is properly valued (i.e. you don`t pay too much)

Hi Thomas,

Thank you very much for the sound advice. I really appreciated it.

I tried Agreement for Sale but the owner did not like the arrangement. He really wants to get rid of the mortgage. By the way, even though the property is cash flowing based on my calculation (or maybe I am missing something), they have not paid Resmor for six months now. I guess there are more personal aspects of the story than what was disclosed to me.

I plan to contact Resmor to find out what assistance they can provide me to make the deal appealing.

Again, thanks a lot for your immediate advice.

Cheers,
TonyM

 

[Thomas Beyer]

QUOTE (TonyMandrique @ Apr 10 2010, 08:06 PM) ..

I plan to contact Resmor to find out what assistance they can provide me to make the deal appealing.
get more FACTS .. then decide .. assess if time and risk is well spent here on a potentially marginal deal !

 

[TonyMandrique]

QUOTE (ThomasBeyer @ Apr 10 2010, 07:15 PM) get more FACTS .. then decide .. assess if time and risk is well spent here on a potentially marginal deal !

Hi Thomas.

My timetable is set tomorrow after getting more information from Resmor and talking further to the owner. We will see what we can come up with.

Thanks again. Have a nice day.

Cheers,
TonyM

 

[housingrental]

Hi Tony
If there in default its likely a good indication that the property is not cash flow positive... Have you properly factored in vacancy, uncollected rent, and most important of all maintenance and repair costs?

 

[Thomas Beyer]

QUOTE (housingrental @ Apr 11 2010, 10:20 AM) Hi Tony
If there in default its likely a good indication that the property is not cash flow positive... Have you properly factored in vacancy, uncollected rent, and most important of all maintenance and repair costs?
seller might live there .. has nothing to do with cash-flow !

 

[housingrental]

You might be correct.
In practice I`ve not seen too many investors... err any... live in a 10 bedroom student rental property

And if it was there child living there with 9 potential rooms of income they should be able to pay the mortgage.

QUOTE (ThomasBeyer @ Apr 11 2010, 12:33 PM) seller might live there .. has nothing to do with cash-flow !

 

[TonyMandrique]

QUOTE (housingrental @ Apr 11 2010, 10:20 AM) Hi Tony
If there in default its likely a good indication that the property is not cash flow positive... Have you properly factored in vacancy, uncollected rent, and most important of all maintenance and repair costs?

Hi Adam,

Yes, I factored them in. I will find out tomorrow what their real situation is.

Thank you for your input.

Cheers,
TonyM

 

[TonyMandrique]

QUOTE (ThomasBeyer @ Apr 11 2010, 10:33 AM) seller might live there .. has nothing to do with cash-flow !

The seller does not live there and have a principal residence in nearby city.

The place was fully rented until the owner advised the tenants to look for another place. Now, they`ve got six students who are willing to stay.

I believe the property was mismanaged.

Hope to find out more tomorrow.

Thank you for the input.

Cheers,
TonyM

 

[Bankfighter]

Hello
Most lenders will not waive the penalty. With new regulations in place you may not be able to blend and extend. Best to contact the lender directly. Try Googling Resmor or have your real estate agent supply you with a copy of the charge. it should have contact information on it. QUOTE (TonyMandrique @ Apr 10 2010, 03:54 PM) Hello there,

This is the first time I`m doing this.

I am negotiating a 10BR-student rental property by the University in one of the top cities identified by REIN. The mortgage with Resmor carrries a 6% fixed interest with two years to go before mortgage renewai. According to the owner, Resmor will charge him a penalty of around $20K if he decided to terminate the mortgage. (By the way, the arrears as of now is 6 months with little equity on the property).

My questions are:
1 - Has anybody dealt with Resmor before? Can you please share your experience in dealing with them?
2 - My plan is to assume the mortgage with Resmor and then move it soon to another lender for a lower interest rate. Is this possible?
3 - How can I avoid the penalty from Resmor and get a better rate?
4 - Are there experienced mortgage brokers who can help me on this?

Thank you for the immediate advice.

Cheers,
TonyM