All Forum Posts by: Arron Paulino

So I don't really have experience in this but I recently got an offer on one of my listings with a subject to and spoke with my broker who was in the mortgage space for about 30 years.

You are correct, if the lender finds out, they will call the loan. My broker also received a few subject to offers and when looked them up in public records on other properties he say Notice of Defaults. Basically the concern is they tie up the property, collect enough rents to make a little bit, and then just default. I'm saying that's what's happening and I'm sure there are some legit ones out there.

The offer I got I called the number and it wouldn't go to anyone. It screamed sketchy. To be honest as a broker I'm not sure we can really suggest accepting these types of offers given the high risk potential. It would need to be a savvy Seller to agree to this.

What they want to do is have the property transferred into a trust (days, hours, minutes) prior to settlement. The declaration identifies the would-be buyer as trustee; and the current owner as the beneficiary of the trust. At settlement what is sold is the beneficial interest in the trust rather than the property itself.

On paper the lender just sees a common estate planning tactic rather than a sale of the property. But what is being proposed is nothing more than an effort to avoid implication of the due on sale clause. This may actually be the best method to prevent the sale from being discovered, but of course there are other potential pitfalls.

Under federal law a transfer to a trust where the grantor retains the beneficial interest WOULD be exempt from the DOS... but notice how in the context outlined above the exemption would disappear.

For simplicity, it's a way that some people choose to take title. At closing, you would deed the property into the trust and the new buyer would have beneficial interest of the trust. So that's what I was simply saying was a moot point on the front end discussing with a seller. The question is are you fine with someone taking over your payments and leaving your loan in place. if you are fine with that, then the Sub2 buyer should simply instruct the attorney and/ or title company how they want to take title of property. Like I said, I am not telling you to sell your property Sub2 and I'm not telling you not to.

@Arron Paulino

Responding to this and your other posts, has any actual real live investor from Memphis offered you cash? Not - Sub2, owner financing, wholesale, contingent offers, but hard verifiable cash.

Someone who knows and works the area regularly?  

If you need an exit for a reset this may be an option you want to investigate further.  

I'm not here to promote or denounce Sub2. I will say this, there are a number of investors if you want to call them that that have VA's that are making multiple offers for them. Now you said they wanna buy it in a trust account.

Here’s my rant.. talking big words is quite stupid for them to do. It’s juvenile behavior. The confused mind says no so by them using difficult to understand terminology….They’re confusing people.

@Arron Paulino you can find some great information online (youtube) from Pace Morby on this subject.  In a subject to transaction the buyer is taking over the responsibility of the seller loan without the lender knowing about it.  If you do it correctly and have the correct paperwork its a great way to buy property with little or no money down.

Seller financing is the "Seller" acting as the bank with their equity and loaning the buyer that amount of money for a negotiated period of time.  This is also a great way to buy property for a longer term.

You should do your research first.

Good Investing...

Consolidation versus liquidation, as in consolidate the portfolio rather than fully liquidate from RE. Sell these 4 properties, go buy 2-3 significantly better one's with better reserves and really extract the value from REI by buying distressed & fixing up, and holding.

These aren't set it and forget it type investments. As much "passive" income is pushed here, or turnkey, etc., these are active investments for one for two these are physical assets. They require significant more work than people account for.

The first 1-5 years this will yo-yo, so be over equipped for it. Buying distressed & fixing yourself gives you the full intel on the quality of your product, buying 2 rather than 4 you can pay for better locations, then having reserves gives you a healthy peace of mind.