All Forum Posts by: T. Alan Ceshker

Don't get ttripped up on the sub to vs wrap thing. They are all the same from a documenting stand point -- if you are documenting them correctly.  There is a note and deed of trust with both.  If anyone does not agree -- they have not been doing these for a couple decades and just don't know.

You can wrap a wrap.  I have even wrapped a wrap of a wrap of a wrap.

You need education, disclosure and understanding by the parties involved.  I call it radical transparency.

The last ditch cure for a DOS clause issue if to do a deed flip flop -- deed back to the borrower - show this to the bank -- deed it back to the buyer.  We have had to do this about 5 times and it has worked each time.

But - I always tell my clients: "have a plan B".  Be ready to pay off the loan, end buyer refi (the reason for a wrap is not always bad credit), sell property, deed back and do a lease purchase option for a while (depending on what state you are in), whatever needed.

The banks are not gods - they are just entities that do not care much for their customers due to being too big.

Stay safe out there kids

There are 3 separate statutory codes governing wholesaling. They are substantially similar.

The bottom-line requirements for wholesalers are:

• A buyer must disclose to a seller of their intention to wholesale the property;
• A buyer must disclose they are selling their equitable interest/contract rights (versus selling the property) in all marketing, advertisements and communications with other parties;

It is important that each and every communication, ad, sign, post and communication have a disclosure that the wholesaler is marketing and selling their equitable interest or their contract rights. If a wholesaler places a sign in the front yard with their number and states: For Sale - 3 bed 2 bath, this is enough to possibly get fines by TREC.

Our suggested disclosure in a separate addendum to the TREC 1 to 4 is:

EQUITABLE INTEREST ADDENDUM

The Buyer and Seller agree and understand that the Buyer may sell an option or assign an interest in this Contract. The Seller agrees that the Buyer has the right to sell and assign their contract rights and equitable interest in the Property. Seller agrees there is no further approval needed from Seller to allow the assignment of this contract to a third party/end buyer.

I have an information form for this - let me know if you wan to receive this.

Also, if you would like to learn more about how Ceshker Group Title can assist you in your real estate efforts, reach out to schedule a time to meet with us.

Absolutely.  This is the typical investment strategy for wraps - buy on a wrap (non-qualified assumption) and sell on a wrap and cash flow.

It is all a matter of disclosure and the end buyer's acceptance of the risk.  All should be ready to cure if the note is called due.  And there are ways to cure other than paying the note in full.

This is a common problem these days - not enough understanding, discussion and disclosure throughout the transaction: regarding the acquisition, the disposition, with the seller and with the end buyer.

I have a law and title office and we have closed thousands and thousands of sub to/wraps.  I teach a 4 hour course on wraps if you want to learn more on how these are supposed to be structured and managed https://wrapu.ceshker.com/

Stay legal and safe out there!

We travel the 4 cities of Houston, San Antonio, Dallas and Austin - in that order.  So it will be a bit before we are back there.

We do have an online version if you want to try that and join our Wrap Community on FB.

Otherwise - hope to see you in Houston!

Learn how to take advantage of the most powerful investment method known - Wraps and Sub Tos.

WRAP UNIVERSITY by T. Alan Ceshker -- The Wrap King

Join veteran real estate investor and 30 plus year real estate attorney, T. Alan Ceshker, for this highly-acclaimed, unique and valuable opportunity.

Alan will be teaching all aspects of a wrap/sub to from finding a wrap to structuring to contracting to managing and dealing with problems.

Entity selection and creation with more than a one person entity is something you should always hire an attorney to get this in place. You may want a 2 entity structure as Bill Hampton references. You may want a series LLC. You may be fine with 1 (non-series) LLC. A single purpose joint venture agreement may suffice. It is all based on your specific needs and plans. You can pay a couple hundred dollars and do this yourself online -- it is my opinion this is dangerous if the structure is tested via a dispute, death or otherwise. In my opinion you should get attorney assistance with this if you have more than one member/partner.

@Sho Asod Lenders do not know or care if their collateral is conveyed to an entity.  This is somewhat similar to a wrap in theory and lenders are even rarely concerned about this type conveyance - much less one that is a conveyance to an entity that is still controlled by their borrower. 

We simply draft a deed from individual to entity and the cost is minimal.  And, if there is an issue raised by the lender (which has never occurred for us), the fix is simple -- just deed it back to the borrower.  If a lender sends notice of default of the due on sale clause, you have 20 days to cure -- ie just deed it back to the named borrower.  The risk is zero.

Reach out and we can send you are documents detailing re wraps, wholesale, title process, reading a commitment, etc.  We are a law and title office and close investor transactions.  We can help get you started.

I have to differ with Nicole, when we close a wrap, sub to, assumption, etc. (I call all wraps), I draft loan documents. This is to ensure a fair and conventional looking, seller finance transaction. Also, having loan documents will allow the seller to get a new loan without paying off the old loan. The seller can show the note and timely payment and the debt will be removed from their DTI ratios.

Brady -- any advice and strategies are going to be contingent on what acquisition methods you are looking to pursue - ie cash, sub to, conventional lending, etc.  However, all would be benefited by having a mentor/coach/partner to advise on things until you have more experience.  You also need to attend as many good investor meetups as possible -- mentors can be found there.  Beyond that, you need a team in place: real estate agents, lenders, law and title, etc.  We have informational documents on the how tos of wholesaling, wraps/sub tos, title process, etc. If you want to receive any just reach out.

I wish you the best of luck in your investing efforts.