All Forum Posts by: Brian Gibbons

For all cash buyers, find title search with words of custodians of RE IRAs. Why? People that use IRA money to buy use custodians.

Title Deed to the property will read "(RA custodian), FBO (Investor's IRA name) IRA."

The number of self directed IRA custodians has grown significantly over the past few years, and should continue to grow as the self directed IRA industry matures.

The following is a list of self directed IRA custodians, as well as third-party administrators (TPA), separated by size (assets under custody).

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List of Large Self Directed IRA Custodians (Over $2 Billion under custody):

Equity Trust Company (acquired Sterling Trust Company)
First Trust Company of Onaga
IRA Services Trust Company
Kingdom Trust Company
Millennium Trust Company
Pensco Trust Company (acquired Lincoln Trust Company)
Provident Trust Group
Trust Company of America

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List of Mid-sized Self Directed IRA Custodians ($500 Million – $2 Billion)

Advanta IRA (TPA)
GoldStar Trust Company
Midland IRA (TPA)
New Direction IRA (TPA)
Next Generation Trust Services (TPA)
NuView IRA (TPA)
Quest IRA (TPA)
Self Directed IRA Services, Inc. (Horizon Bank)
SunWest Trust Company
Vantage IRA (TPA)

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List of Small Self Directed IRA Custodians (<$500 Million)

American IRA (TPA)
Self Directed IRA Custodians of Unknown Size (have not disclosed amount under custody):

American Estate & Trust
American Pension Services (TPA)
Capital IRA (TPA)
Community National Bank
The Entrust Group (TPA)
Exeter (TPA)
Horizon Trust Company
IRA Club (TPA)
IRA Resources (TPA)
Nevada Trust Company
Nexus Direct IRA (TPA)
PolyComp Trust Company
Preferred Trust Company
Premier Trust
RealTrust IRA Alternatives (TPA)
Sovereign International Pension Services (TPA)
Summit Trust Company
uDirect IRA (TPA)

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Write the owner a letter.

@Michael White

Explain the deal, is it hypothetical?

Seller financing from the seller's perspective is to sell fast.

Whats the buyer doing a rehab all about?

California's absolutely insane at $800 to file papers, but it costs a lot of money to do business in California

Jerry thanks for your comments I love how hard you work for your investor clients

@Will Barnard  thanks for your comments advising the OP 

Bottom line doing business in California cost money so make sure that there's an upside potential

 This is wonderful advice.

I also endorse Ben's http://justaskbenwhy.com/cash-flow-freedom-univers...

@Ben Leybovich 

I would contact a RMLO

Seller financing--one property exclusion

This more flexible exception applies only to a more narrow definition of persons (only natural persons, estates, and trusts), that sell only one property in a 12 month period. The exclusion is not available to other organizations, such as corporations, partnerships or proprietorships. To be exempt from the definition of loan originator using the one property exclusion, one must meet the following criteria:

A. The seller provides financing for the sale of only one property in any 12 month period. The property must be owned by the seller and serve as security for the financing.

B. The seller has not constructed or acted as construction contractor for a residence on the property in the ordinary course of business of the seller. (This same requirement is applies for the three property exclusion).

C. The seller provides seller financing that meets the following requirements:

C1. The financing has a repayment schedule that does not result in negative amortization. A balloon mortgage is permitted. (NAR sought relief from the prohibition against balloon mortgages.)

C2. The financing has a fixed interest rate or adjustable interest rate. It has an adjustable rate, it must have reasonable annual and lifetime limits on rate increases and provide for the rate to be determined by the addition of a margin to an index rate based on a widely available index such as in this is for U.S. Treasury securities or LIBOR. CFPB's official interpretations note that an annual rate increase of up to two percentage points is reasonable. A lifetime cap of six percentage points subject to a minimum floor and a maximum ceiling up to any applicable usury limit, is reasonable. (This is the same requirement is applies for the three property exclusion.)

Seller financing--three property exclusion

This exclusion applies to persons as defined broadly under TILA to include not only natural persons but also a wide range of organizations as corporations, partnerships, proprietorships, estates, and trusts. To be excluded from the definition of loan originator using the three property exclusion, one must meet all the following criteria:

A. the seller provides financing for the sale of 2 to 3 consumer properties in any 12 month period. Each property must be owned by the seller and service security for the financing.

B. the seller has not constructed, acted as construction contractor for, a residence on the property in the ordinary course of business of the seller.

C. the seller provides seller financing that meet the following requirements:

C1. The financing is fully amortizing (no balloon mortgages or negative amortization.)

C2. The seller determines in good faith that the consumer or buyer has a reasonable ability to repay. The regulation does not require documentation of the determination, which significantly eases the regulatory burden, though CFPB points out that it may be a good idea in case questions arise whether the seller made the determination. CFPB's official interpretations of the regulation provide guidance on how a seller could make the determination that the buyer has a reasonable ability to repay. This could include considering earnings as evidenced by payroll or earning statements, W-2s, etc.; other income from a federal state or local agency providing benefits and entitlements; and or income earned from assets (such as financial assets or rental property). The value of the dwelling may not be considered as evidence of the buyer's ability to repay. The seller may rely on copies of his tax returns.

C3. The financing is a fixed interest rate or adjustable interest rate that is adjustable after five or more years. It has an adjustable interest rate, it must have reasonable annual and lifetime limits on rate increases and provide for the rate to be determined by the addition of a margin to an index rate based on a widely available index such as indices of U.S. Treasury securities or LIBOR. CFPB's official interpretations note that annual rate increase of up to two percentage points is reasonable. A lifetime cap of six percentage points, subject to a minimum floor and maximum ceiling, up to any applicable usury limit, is reasonable. These "safe harbors" are not mandatory, but sellers would be wise to adopt.

Obviously, the other third option to the above exemptions from the safe act is to engage an MLO to qualify the transaction. The MLO review is a safe harbor. If the seller\lender is assisted by an MLO engaged by the lender as a vendor or to assist in the loan in its underwriting, and alone does not seek these limited exemptions from the safe act but instead treats a transaction is a full-blown activity in the lender will either itself or through the brokerage of the MLO generate a loan in full compliance with RESPA, TILA, Cueva, Apple, HUD and jump through all the conventional private money financing and lending hurdles, the long-term amortization above does not apply, and the seller's\lender can provide for terms that are not inside the exemptions, such as balloon payments.

Note: if the sellers considered a creditor under TILA because the seller makes two or three high-cost loans under the home ownership and equity protection act (HO EP a), the sellers automatically considered to be a loan originator for purposes of the loan originator qualification requirements and 12 CFR section 1026.36(f) and (g) and any other rules applicable to creditors under TILA. This is true even if one is exempt from the definition of loan originator under the three property exclusion. Check with an expert to avoid providing seller financing subject to HOEPA, which imposes many more limits and requirements.

Other requirements apply even if seller is not classified as a loan originator

Even if the sellers excluded from the definition of loan originator, the seller is only exempt from the loan originator requirements of the regulation. In exempt person would still be subject to the rule prohibiting anyone from paying a loan originator compensation based on the terms of the transaction (e.g. higher payments for loans with higher interest rates). This would occur if the seller financier engages a loan originator to assist with setting up the financing for the seller finance. In addition, the limits on mandatory arbitration would also apply, i.e. the contract and other agreement for any credit transaction, including any seller financing, we not require arbitration or other non-judicial procedures to resolve disputes. After dispute arise however, the parties may agree use arbitration or other non-judicial procedure.

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I recommend 

 Hi @Dave 

John Jackson is a great guy and knows TX REI better than all I know.

I taught him lease options in 2002 and he taught Joe McCall.

@Bill Gulley

knows more than I will ever know, especially Dodd Frank-Safe Act-TILA. Respa, etc.

he is a great sales person too.

@Brandon Turner wrote an awesome book on Seller Financing and Alternative Financing.

@J Scott 

@J Scott undefined

 wrote an inexpensive primer on Wholesaling and Pricing Renovations.

http://www.biggerpockets.com/store

That said, If you ever need to set up a Lease Option Assignment business in FL, call me.

Get a deal done baby!

Best wishes,

Brian

I wish people would get licensed if they're going to do lease-option assignments

I also wish people would be very straightforward when talking to Sellers about their intention to enter into a lease and option and to assign the deal for a fee

There are sooooo many internet articles and videos and NOISE out there.

Do you want a seller to say yes to your offer and make some money for yourself and your family?

Here are some planning your REI business articles.

http://www.biggerpockets.com/blogs/3/blog_posts/42...

Pick a niche

Get going!

GOYA = Get Off Your A$$ !

Read it again, are you assigning the deal or you staying in the deal as a sandwich?

Why don't you keep it simple and just say I propose the following:

I wish to enter into a lease and option with you what ever the sellers name is, under the following terms, 

The name of the terms such as rent amount, length of term exercise price etc.

If you have a copy of the deed use the legal description

I would say something like 

this agreement is not binding and the seller(s) agrees to sign a lease and option within three business days days of signing this letter of intent with the buyer

To protect yourself I would not sign actually in the presence of the sellers at their home, I would do it in the title company or lawyers office