I am in the middle of putting my first seller-financed property into contract. I am looking for any tips or extra no-nos that BP might have to share along with your first-time experiences.
How do I make sure this thing gets done the best way possible? All info is appreciated.
Do not convey title with deed, secured by note. Place ppty into a Land Trust first. Then issue Beneficial Interest. If you don't know how, hire an attorney. You do not want to put yourself in possible Foreclosure position later on.
Thanks @Joseph Ball . The financing term specified is only for 1 year as I will attempt to refinance out or bring more cash to the table as soon as possible. Is it worthwhile hiring an attorney to set up a trust for that small period of time?
Another POST today was from a woman who SOLD, Seller Financing, with note and mortgage. After 1 payment, Buyer went BAD, and she must now endure $2,500 foreclosure, which could take up to two years, based upon state of property. And if Buyer invokes Dodd Frank, it could be worse.
If you go through a RMLO in Indiana, whether you are selling to a Rent to Own Tenant, seller carry, or installment sale, the RMLO should be able to protect the seller.
This is not a substitute for an attorney well versed in foreclosures or evictions.
See @Terry Lewis a great RMLO, he should be able to refer you.
I will be fine making the payments and could probably close on the property in cash if I REALLY wanted to stretch myself thin. I'm not worried about the balloon but I do want to make sure that this promissory note and mortgage are recorded appropriately and legal title is mine.
@Evan Manship Can't offer any help with seller financing as I haven't done it but glad to see you are moving forward. Where is this property located?
Evan, your last comment was key. Seller financing to an investor (assuming you will not live in this property) dodd frank and using a licensed mortgage originator is not needed.
If it where me, I'd get longer terms than 1 yr. At least 5 yr. Since you asked, I'd get longer than 7 yr term. Use the money saved to buy another property. :)
@Evan Manship - This is a great question! Being a semi-fresh investor, I am eager to hear the responses......ESPECIALLY after having seen so many posts lately about folks who have done Seller Financing INCORRECTLY and not used RMLO's, had them properly recorded, etc...
I'd love to hear how you progress through the deal, and your thoughts on the outcome once you've completed it.
In talking with fellow investors that have SOLD their properties in this fashion, I was given one piece of advice (although I am not sure of the legalities behind this method). As a seller, it was suggested to me to file all the necessary paperwork, and and also have the buyer sign a copy of the deed back to me (as the seller). I'm not sure how legal this is, but it was suggested to me as a way to avoid a lengthy foreclose battle...
Anyone else know if this is an acceptable practice? Any downfalls?
The seller whom was offering financing countered my original offer which he had verbally accepted with a $10k premium for seller financing. Given that I don't want to worry with a balloon payment in one year for an additional $10k, it looks like I will be financing this one conventionally. Bummed that I have to deal with a bank but excited to get this show on the road.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing