Tax Liens, Notes, Paper, and Cash Flow Discussions

User Stats

71
Posts
13
Votes
Raul Flores
  • Investor
  • Houston, TX
13
Votes |
71
Posts

Selling land onwer finance

Raul Flores
  • Investor
  • Houston, TX
Posted Nov 21 2018, 15:02

Guys

I would like to sell a land owner finance, so I need to create a note.

My question is what steps do I need to do to create the loan contract or the whole paper procedure? I am located at Houston Texas.

I appreciate your answers.

Thanks.

Raul

User Stats

7,607
Posts
8,526
Votes
John Underwood#5 Short-Term & Vacation Rental Discussions Contributor
  • Investor
  • Greer, SC
8,526
Votes |
7,607
Posts
John Underwood#5 Short-Term & Vacation Rental Discussions Contributor
  • Investor
  • Greer, SC
Replied Nov 21 2018, 15:25

I sell with owner financing by using a Land Contract. That way I keep title in my name until property is paid off.

User Stats

316
Posts
161
Votes
Dennis Weber
  • Real Estate Investor
  • Indianapolis, IN
161
Votes |
316
Posts
Dennis Weber
  • Real Estate Investor
  • Indianapolis, IN
Replied Nov 21 2018, 17:37

You really need a lawyer to write the first one. You determine 3 of 4 things. 1)Number of payments 2) interest rate 3) amount of down payment. 4) payment amount. Use the 10-10-10   method if you want to sell the note later without much discount. 10% down 10 % interest, 10 years. The down payment is the most important of the three. 

User Stats

174
Posts
242
Votes
Wayne Snell
  • Londonderry NH & Frisco, TX
242
Votes |
174
Posts
Wayne Snell
  • Londonderry NH & Frisco, TX
Replied Nov 22 2018, 06:58

If you’re selling the land in Texas be aware that Land Contracts  are frowned upon by the courts and while they not technically “illegal” most people and attorneys think they are.  At this point you definitely need an attorney to write up the contract using all the data @Dennis Weber mentioned above. Whenever possible it makes more sense to do a first position lien with the mortgage and note because Texas is such a fast foreclosure state. 

User Stats

1,837
Posts
1,390
Votes
Guy Gimenez
  • Investor
  • Corpus Christi, TX
1,390
Votes |
1,837
Posts
Guy Gimenez
  • Investor
  • Corpus Christi, TX
Replied Nov 22 2018, 08:17

Don't use a land contract is Texas...it's problematic for the seller. Spend the $500 or less it will take to create a template note, deed, deed of trust. Don't step over a dollar to save a dime. 

User Stats

234
Posts
139
Votes
Shahriar Khan
  • Investor
  • Houston, TX
139
Votes |
234
Posts
Shahriar Khan
  • Investor
  • Houston, TX
Replied Nov 22 2018, 08:59

@Raul Flores assuming you are closing at a Title company .. ask your escrow office to prepare and note agreement for you and buyer. Typically Title Company Attorney will do one for you. 

If you are not closing at a Title Company i would go back to any Title company that you worked before and ask them to prepare a note agreement for you. 

And if you dont know of any .... let me know and i can refer to you to Title Company /Attorney that i work heavily with who can help to wrap this up. 

Happy holidays 

User Stats

71
Posts
13
Votes
Raul Flores
  • Investor
  • Houston, TX
13
Votes |
71
Posts
Raul Flores
  • Investor
  • Houston, TX
Replied Nov 25 2018, 14:15

Thank you guys, I was not sure about how to proceed, you answered my questions, I am waiting the close day this coming week and begin to market this land.

Thanks again.

User Stats

865
Posts
351
Votes
Account Closed
  • Specialist
  • San Antonio, TX
351
Votes |
865
Posts
Account Closed
  • Specialist
  • San Antonio, TX
Replied Nov 25 2018, 18:34

@Raul Flores

1.figure out sales price and interest your hoping for.

2.market your property for sell.

3. Work out an agreement with a buyer.

4.Pay a realtor, investor, or Re Attorney to help with the sales contract. ( buyer will pay for closing cost if contract is written correctly, it is part of the owner finance fee to the buyer.)

5.Have title company or Re Attorney do your closing. Have the payments paid thru a note servicing company which attorney or title company can set up for you a closing. 

6. Send me a gift card to Red Lobster to celebrate .:)

User Stats

71
Posts
13
Votes
Raul Flores
  • Investor
  • Houston, TX
13
Votes |
71
Posts
Raul Flores
  • Investor
  • Houston, TX
Replied Nov 26 2018, 05:23

I like this

Send me a gift card to Red Lobster to celebrate .:)  @Account Closed

User Stats

837
Posts
708
Votes
Jerel Ehlert
  • Attorney
  • Austin, TX
708
Votes |
837
Posts
Jerel Ehlert
  • Attorney
  • Austin, TX
Replied Nov 26 2018, 06:29

The closing docs look different depending on weather there is an underlying loan or free-and-clear, but the process is basically the same.  Make sure the title company you use has done owner finance closings.  There are several around Houston.  Get a contract for the sale and open title.  Myself or other attorney can draft the docs.  Use an RMLO to take the app.  There are state and federal issues you should be aware of, so don't just let the title company order your closing docs.  That attorney will represent the title company, not you or the buyer.

User Stats

36,632
Posts
52,825
Votes
Jay Hinrichs#5 All Forums Contributor
  • Real Estate Broker
  • Lake Oswego OR Summerlin, NV
52,825
Votes |
36,632
Posts
Jay Hinrichs#5 All Forums Contributor
  • Real Estate Broker
  • Lake Oswego OR Summerlin, NV
Replied Nov 26 2018, 06:35
Originally posted by @Jerel Ehlert:

The closing docs look different depending on weather there is an underlying loan or free-and-clear, but the process is basically the same.  Make sure the title company you use has done owner finance closings.  There are several around Houston.  Get a contract for the sale and open title.  Myself or other attorney can draft the docs.  Use an RMLO to take the app.  There are state and federal issues you should be aware of, so don't just let the title company order your closing docs.  That attorney will represent the title company, not you or the buyer.

 bare land is exempt from Dodd Frank correct ????  I get the RMLO on 1 to 4 ?  maybe its different in Texas.. I am a NMLS licensed mortgage banker and that is my understanding.. I could be wrong though.. just like contract for deeds are popular in some states and in Texas looks like no Bueno :)

User Stats

837
Posts
708
Votes
Jerel Ehlert
  • Attorney
  • Austin, TX
708
Votes |
837
Posts
Jerel Ehlert
  • Attorney
  • Austin, TX
Replied Nov 26 2018, 08:02

Sure.  Raw land is exempt because it cannot be used for a consumer purpose, but the minute the buyer moves a trailor or starts building a dwelling, it can BECOME a consumer loan and you have a non-compliance issue.  Your remedies are to foreclose for a performance default (instead of a payment default) or reformation.  Easier to just treat as a consumer loan from the start.

CFD and L/O are executory contracts, and the state compliance issues are nearly impossible to comply with in a consumer transactions.

User Stats

390
Posts
297
Votes
Steve Hodgdon
  • Investor
  • Novato, CA
297
Votes |
390
Posts
Steve Hodgdon
  • Investor
  • Novato, CA
Replied Nov 27 2018, 07:23

Congrats on closing a deal!

If the paperwork is all by the book, I might buy a partial on that mortgage so you get your working capital back. 

User Stats

71
Posts
13
Votes
Raul Flores
  • Investor
  • Houston, TX
13
Votes |
71
Posts
Raul Flores
  • Investor
  • Houston, TX
Replied Mar 28 2019, 15:08

Ok, guys, I am back, I finally bought it, took for ever from the Title company, I am checking your posts for foruth time the best approach to sell it owner finance.

User Stats

165
Posts
88
Votes
Meir Greenblatt
  • Rental Property Investor
  • Houston TX / Tacoma WA.
88
Votes |
165
Posts
Meir Greenblatt
  • Rental Property Investor
  • Houston TX / Tacoma WA.
Replied Jan 13 2022, 15:11
Originally posted by @Jerel Ehlert:

The closing docs look different depending on weather there is an underlying loan or free-and-clear, but the process is basically the same.  Make sure the title company you use has done owner finance closings.  There are several around Houston.  Get a contract for the sale and open title.  Myself or other attorney can draft the docs.  Use an RMLO to take the app.  There are state and federal issues you should be aware of, so don't just let the title company order your closing docs.  That attorney will represent the title company, not you or the buyer.

 do you have a place you recommend in Houston that can help me sell a condo with owner finance?
thank you

User Stats

837
Posts
708
Votes
Jerel Ehlert
  • Attorney
  • Austin, TX
708
Votes |
837
Posts
Jerel Ehlert
  • Attorney
  • Austin, TX
Replied Jan 18 2022, 08:25
Originally posted by @Meir Greenblatt:

 do you have a place you recommend in Houston that can help me sell a condo with owner finance?
thank you

 Not sure I understand the question.

You can post the condo for sale anywhere you can list any other property for sale. Owner financing is just one of many terms you are willing to accept. RE agents can list it on the MLS just like any other. Get ready for an onslaught of responses. Have your terms well defined (cash, cashflow, credit, DTI, job history, etc.). Talk to an RMLO.

User Stats

42
Posts
24
Votes
Harrison Silverstein
  • Investor
  • Los Angeles, CA
24
Votes |
42
Posts
Harrison Silverstein
  • Investor
  • Los Angeles, CA
Replied Jan 19 2022, 19:16

Lots of sound advice here!

I recently originated my own land contract. Main 3 points I determined was
1) what the sale price is (principal)
2) what interest rate you want (and what is legally acceptable) 
3) how long of a term you want the contract to go for. 5/10/15yrs etc. 

I use Karl's Mortgage Calculator (app for android and iPhone) and I just play with the numbers, whatever is acceptable for you I would take to an attorney. (Preferably a creditor's attorney) and have them draw up the contract in compliance with the state regulations. Hope this helps!