All Forum Posts by: Brian Gibbons

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Marketing to Home Sellers for Terms Deals

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Dont do a land contract in PA.

Do a note and mortgage.

Buy Sub2 existing financing plus single payment note.

If he is not motivated for terms, look for .7 of appraisal, which most will not do.

Why does he want to sell?

You may also do a lease purchase sandwich, but you need cash reserves to evict and remarket.

Seller Financing 101 - When Buying or Controlling

A. Not free and clear - If there is existing financing, you can

- buy-control on a wrap, sub2, lease with option, lease purchase, TIC agreement, land contract

- sub2 can have a note (promissory note)

- there is a due on sale clause issue, loan could be called, if payment is made and insurance is kept in force, DOS usually not an issue, many times property trusts are used.

B. Is free and clear of mortgages - If there is NO existing financing, you can

private first mortgage, installment sale contract, lease purchase, lease option, TIC agreement, etc.

- No DOS clause because there is no existing financing

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Seller Financing 101 - When Selling

Understand Dodd Frank - If Selling to Owner Occupant, Use a RMLO or Registered Mortgage Loan Originator.  The Ability to Repay Rules from Dodd Frank must be adhered to or penalty is severe to owner-seller.

To avoid Dodd Frank (not legal advice)

1. Sell on a lease and a ROFR (right of first refusal)

2. Sell on a Lease plus Option, use separate documents, no rent credits, no performance tied to either document.

3. Sell on a lease and Contract for Option to Purchase.

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Note: When dealing with Investor to Investor, there is no Dodd Frank, as long as Purchaser is not living in it, and Purchaser is doing a straight rental as an exit strategy.

Read everything on oncarrot, webuyhouses, yellowletters, marketlikeawholesaler,

Consider a live answering service like PatLive, voicemail is useless.

Learn how to talk to home sellers on the phone.

Get a "I buy houses, any condition" business card at vistaprint.

 Hi Kellum, 

You are investing out of state with out market knowledge of the area. Hire a local broker for Intel.

Seller financing is not for bad credit borrowers.

Look into a lease and ROFR instead of lease and option.

Buy and hold investors want desirable areas and responsible long term tenants.  Get them that.

sub2 = subject to existing financing

land contract - contract for deed - put some down, have some kind of ownership, seller holds deed until cfd buyer gets new loan

note plus deed or not plus dot deed of trust =  seller financing, usually free and clear

TIC = tenants in common agreement - you share ownership

There are more...

@Bill Gulley

A remainder in property law of the United Kingdom and the United States is a future interest given to a person (who is referred to as the transferee or remainderman) that is capable of becoming possessory upon the natural end of a prior estate created by the same instrument. Thus, the prior estate must be one that is capable of ending naturally, for example upon the expiration of a term of years or the death of a life tenant. A future interest following a fee simple absolute cannot be a remainder because of the preceding infinite duration.

For example, a person, D, gives ("conveys") a piece of real property called Blackacre “to A for life, and then to B and her heirs.” A receives a life estate in Blackacre and B holds a remainder, which can become possessory when the prior estate naturally terminates (A’s death). However, B cannot claim the property until A's death.

There are two types of remainders in property law, vested and contingent. A vested remainder is held by a specific person without any conditions precedent; a contingent remainder is one for which the holder has not been identified, or for which a condition precedent must be satisfied.

@Rick H. how are you mate?

@Maggie Nickerson

Buying on Owner Financing - Installment Sale is much better than Lease Purchase, with rights to sublease.

Get a 30 year amoritization schedule.

Tell sellers you are not living in it and Dodd Frank does not apply.

It may be a great buy and hold instead of lease purchase exit.

Can you guarantee the payment to the OWNER if the tenant you lease purchase to does not pay?

Have 3 months payments in reserves.

Best wishes,

Brian

Hi Maggie

you're in Maryland and you need good legal docs in Maryland. There's lots of attorneys that sue everybody every day.

If it's in an AB area meaning good area versus CD area landlord in your area that makes a difference. 

A B areas where people want to live in  if it's in an AB area meaning good area versus CD area where it's mostly landlording blue collar or Secction 8 area that makes a difference.

A B areas were people want to live and buy.

If there's existing financing on the property versus free and  clear you have different tools

If there's existing financing and there's little equity you would use a subject to, lease option - lease purchase or wraparound mortgage to buy or control.

 If there's existing financing and there's little equity you would use a subject to, lease option - lease purchase, or wraparound mortgage  to buy or to control .

 If there's existing financing and a moderate amount of equity say 50% of value, you can take over their payments and give them a single payment note in the future. This is called sub to and a note.  You could also help the seller arrange for a new first mortgage at 80% of value if they have the credit to refinance and then you take over those payments.

 it's important to understand that you need the right documentation for subject to and for wraparound mortgage purchases because there is a due on sale clause issue.

If it's Free and clear you can offer to buy on installment sale which is a payment over time, the IRS allows residential sellers to sell on installment sale.

  I hope this framework as hell to has helped you. You can search the site on any of these terms with my name Brian Gibbons, for many years I've written about these subjects.

@Maggie Nickerson

I agree 

don't sell on land contract - contract for deed

Sell on lease with option or lease purchase or lease w ROFR or lease and contract for option