Legally Can I transfer/purchase a house like this?

2 Replies

I am a United States Service Member, and have a Soldier friend who is leaving the Army and wishes to sell his house so he can move back closer to his family. He has made a “half-attempt” to sell the house but as of now still owns it, and doesn't want the headache of renting it. He realizes that if he doesn't sell the house, he will be stuck here and can’t move back home. I made him a casual offer and wonder how I can legally do the following to purchase the property as a rental/investment property.

Transfer the title to a third party. Give my friend X number of dollars each month for the remainder of the mortgage (apx 28 out of 30 more years). He continues to the pay mortgage every month. When the mortgage is paid off/all payments have been made the title is transferred into my name. If I fail to make Y number of payments the title is transferred back into his name and I forfeit the money already paid. My payment of X is about 80% of the mortgage and escrow payment each month so my friend would still be on the hook for the other 20% each month. If my friend fails to make Z number of payments to Wells Fargo I would have some “option” to step in and continue making payments and transfer the title into my name immediately (to then sell the house and cash in on any equity and just dump it).

The motivation to do the following is about a $375 difference between my X payment and the rent collected. Of course I need to factor in all my expenses but all in all I am expecting the house to be financially self-sufficient. In addition, since this isn't an official mortgage it doesn’t saturate my debt/income ratio freeing me up to finance additional properties through conventional means later.

Your explanation is a little confusing but I think your referring to a Subject To transaction. Search and read up on Subject To, I think that's what you're trying to do.

Sounds more like you want to do a contract for deed. Again as the other poster mentioned read up here on BP. Personally I'd rather do a Sub2 than a CFD since I'd prefer having title in my name.