Seller insisting rent to own, unsure of process

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Found a profitable hold property but the seller is insisting on a rent to own contract. Short story is the seller bought the house from wholesaler, used a 82k private money loan(11/16) from a local investor with 1 year minimum interest, 3 year balloon. The seller and I have agreed on a sale price and I asked to assume the loan. The seller won't allow me to assume the loan and is insisting we do a rent to own contract with 10k down,and he continue to cover the taxes and insurance. I've never done a rent to own contract before so am not familiar or comfortable with the agreement he has proposed.

My question is if this is a safe/secure method of transaction and if not why, if yes what steps do I need to follow to cma with title, liens past and future, and ability to finance out in 6-12 months? Thank you in advance for your advice.

Presumably the seller doesn't want to sell right now and have to fork over the remaining 6 months interest he owes. I would consider if offering to pay that yourself and buying the property outright would be more advantageous than jumping through all of these hoops he wants you to

Thanks for calling me yesterday @David Domine . The fact that your sellers investor wants a minimum of 1 year worth of interest is just saying, that even if he pays it off prior to 1 year, per the contract he owes the private investor the remaining amount of 1 years worth of interest plus the payoff. He wants to do an RTO with you most likely because that's what he knows and he doesn't want to pay the sellers closing costs (excise tax 1.78%, title, escrow & recording) out of your down payment. So he chose an RTO so he will pay that later when you pay him off?

The problem for you is that your putting down a lot of money, and your planning to BRRRR the property. Technically at that point your putting a down payment into the deal, and your time and money to rehab the property all without being on title as the owner per a contract. I wouldn't suggest that you plan to do that, it just leaves you open to the seller messing with you and your deal after you have put all this money into it. If you do decide to go forward, I would insist on a contract where your recorded onto title. You must also get a copy of the title report before you complete the contract so that you know the liens against the property.

When your done with the rehab, I can take the contract out with a cash out refinance to get your money back out of the deal. Your then left with a nicely cash flowing property, your money back in your pocket to go find another deal, rinse & repeat your way to wealth. 

This can be safe and secure if structured properly. I would not put that much money up and trust the seller to make payments, pay taxes and Ins or sign the deed when you are ready to buy. Instead, you can suggest a lease option with an escrow agreement.

You would have your attorney draft the proper contract to include the following terms:

You would pick an escrow company and have them hold title in your LLC or Trust, receive lease payments, pay the seller the difference, pay mortgage, taxes and Ins. You may need to call a few firms to find the best one to do this. Some will do this for ~$30-$40 per month.

You may want to negotiate part of the payment credits to DP along with the $10k.

You would also want to record a Memorandum of Agreement on the Option. 

This done correctly is low risk on your end.

If his lender has a due on sale clause in the contract and becomes aware of the transfer of title, he can accelerate the mortgage (start the foreclosure process) unless the lender agrees to allow it?

You will now show on title as the owner and it will show in the chain of title the previous transfers. It will show all liens as well. So the seller could record his lien as a second mtg. or he could do a wrap mortgage which is most likely what he would do?

There is no transfer of title on record, therefore nothing that would accelerate a Due on Sale. The only thing of record is a Memorandum of Agreement. This is a very sound way of doing the deal with very little risk.