Real Estate Investor · San Antonio, TX · Member since 2009 · 44 posts · 13 votes
I know that lease-options or rent-to-own in Texas are basically illegal (or at least strictly prohibited), but people are still advertising properties for sale on lease-option and rent-to-own in San Antonio. So I have two questions:
1. How are they getting away with it?
2. What other options are there? What are other investors in Texas doing to creatively sell their properties?
Hi, I'm not in Texas, but I love San Antonio, so I'll take a stab at it! LOL
They might be leasing the property and doing an unrecorded option agreement and with some smooth talking the Optionee (buyer) is probably holding an unsigned copy with some silly agreement that the deal is off if he makes the deal public. Just a guess. I have dealt with some seller financed types in and from Texas and they were all crooks, not saying that all are, just the ones I have had dealings with, I'm still lokking for the honest one, LOL.
Texas is a hard state for installment contracts, probably because those I dealt with made an impression on the TREC.
I'm not 100% sure on this, but I think you can do subject to deals with a deed. That's one way, maybe.
Another would be to transfer as a sale a one half undivided interest to your property hedl jointly with you and have a quit claim deed held conveying it back to you in the event of their default. You can do that part with the down payment. You might rent your undivided interest and after a certain period of time, allow your interest to be sold to your partner.
Another way would be to place the property in an LLC and admit the buyer as a partner in the company. His contributions to capital will eventually buy the company. The buyer after making his full contribution the buyer asks you to resign from the company and there he is, owning the company that owns the property. The company is closed with the property being transferred in his name.
Another way is to transfer the property to a non-profit housing organization and finance the deal to them. They can sell the property on other arrangements, I think a 501c3 is exempt.
There are some basic ways to do a deal without getting way out there....I'll leave room for someone else, maybe a Texan, LOL! Just kidding....good luck, Bill
Hi, I'm not in Texas, but I love San Antonio, so I'll take a stab at it! LOL
They might be leasing the property and doing an unrecorded option agreement and with some smooth talking the Optionee (buyer) is probably holding an unsigned copy with some silly agreement that the deal is off if he makes the deal public. Just a guess. I have dealt with some seller financed types in and from Texas and they were all crooks, not saying that all are, just the ones I have had dealings with, I'm still lokking for the honest one, LOL.
Texas is a hard state for installment contracts, probably because those I dealt with made an impression on the TREC.
I'm not 100% sure on this, but I think you can do subject to deals with a deed. That's one way, maybe.
Another would be to transfer as a sale a one half undivided interest to your property hedl jointly with you and have a quit claim deed held conveying it back to you in the event of their default. You can do that part with the down payment. You might rent your undivided interest and after a certain period of time, allow your interest to be sold to your partner.
Another way would be to place the property in an LLC and admit the buyer as a partner in the company. His contributions to capital will eventually buy the company. The buyer after making his full contribution the buyer asks you to resign from the company and there he is, owning the company that owns the property. The company is closed with the property being transferred in his name.
Another way is to transfer the property to a non-profit housing organization and finance the deal to them. They can sell the property on other arrangements, I think a 501c3 is exempt.
There are some basic ways to do a deal without getting way out there....I'll leave room for someone else, maybe a Texan, LOL! Just kidding....good luck, Bill
Thanks, I like the way you think. I like the idea about buying subject to. How do you feel about buying a house subject to and then selling it owner finance?
Hi, buying sub-2 has it's own problems and then to turn around and mrotgage another wrap (a 3rd interest) complicates things further. All of the sub-2 deals that I have seen I had to re-do them for people, many came up when the original seller had a divorce, bankruptcy, someone died, etc. Most are never properly drawn in the first place, but it can be done. I really don't think it's a good idea at this time due to the SAFE Act, since there are too many things in the air, even if you found a mortgage originator to do it for you (they will probably think they can't do that) Another option is to locate a good attorney in your area (mention the contingencies I brought up aswell), perhaps an attorney would draft the arrangement. Instead of seller financing, I'd lean more toward a lease and admit the buyer to an LLC to partner with you in the acquistion of the property. All of that can be covered in the Operating Agreement of an LLC. I'll be going into the details of that later on.....Good luck, Bill
"I really don't think it's a good idea at this time due to the SAFE Act, since there are too many things in the air, even if you found a mortgage originator to do it for you (they will probably think they can't do that) "
Would the "mortgage originator" be the title company when I sold the house or are you talking about when the purchaser refinances? What I am trying to do is to find a profitable way to buy houses with only about 15%-20% equity and flip them to an end buyer. I believe all of the methods you mentioned are both legal and ethical, but I'm not confident the average end buyer is sophisticated enough to be comfortable using them. Do you think that this is a worthwhile strategy at all? (properties with only not much equity) or should I drop it and move on to something else? The reason I thought about this strategy is that there are a lot of homeowners who need to sell but don't have much equity in their house. They are not behind on payments so the bank won't talk to the about a short sale. Do you think I'm better off renting the properties for a year or two instead?
Anyone able to walk us through a lease option in Texas? I know that it can be done, I just don't know how.
I have a deal right now that I want to do this with. The seller is about $8000 behind in payments, I would acquire the property subject to the existing mortgage, the new tenant-buyer's option consideration money would bring the loan current (or I'd pay the $1 - 2k difference). At that point, I would be paying the mortgage for the original seller with the rent money collected each month, I'd have ownership with the deed, and I would be waiting for the tenant-buyer to secure a mortgage to purchase the house. When the mortgage is secured and the tenant-buyer closes on the house, I would take home the equity spread between the underlying mortgage and my sale price :)
This setup doesn't violate the SAFE act, does it? There isn't actually any owner financing in this strategy, so I don't think it would matter. The only challenges I can think of are securing my buyer's mortgage (I would have a credit repair company and a mortgage broker involved from the beginning).