Seller financing?

[Bilgefisher]

I'm looking tor some feedback on seller financing.

I have run into two properties now that are completely paid off. Both homes are owned by ladies in their 80's whose husbands have died. Each home needs updating, but is overall excellent condition. There is not enough equity to fix and flip. I want to try and see if they will provide seller financing.

Example: Good condition 3/1 1080 sq feet. Needs updating (10k) for retail sale, but would make a solid rental with no work. Rents $900-$1100 (depending on sec 8 or not). Seller may go as low as 100k.

I see three outs for these properties.
-Rent out and keep positive cashflow property.
- Lease option the property. Might be harder without the updates
-Rent property and sell note to investor for a fee. 10k-15k.

Some questions:
Does anyone know any good books or resources to learn how to structure seller financed deals?
In one case a Realtor is involved, is there a way to cover their fees and closing costs with no out of pocket money? (8k worth of fees)
Any other advice?

 

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[MonTexan]

Bilge,
I’m confused when you say that both homes are owned free-and-clear and then you say that there is not enough equity for a fix-and-flip. I’m assuming you mean their ASKING price is too high and doesn’t leave room for a flip??

How long have the properties been listed? What is the financial condition of the owner? Do they need cash from a sale to live on, or would they be happy with an “annuity†by financing the house?

Assuming they are hung up on some high sales price and that they don’t need to be cashed out, this sounds like a potential owner finance deal. You can get pretty creative with terms by giving them their asking price at a very low interest rate. I’m sure 3% is much better than they’re getting on their current cash….you may even be able to get 0% by not even bringing up interest rate. Just structure the note so that “all payments will be applied towards principal.†**Be sure they fully understand any deal you strike. You don’t want to be accused of taking advantage of your elders…**

After striking your owner finance deal to purchase, you should be able to turn right around and sell the property on O/F yourself. Since banks are not lending, you should have plenty of interested buyers. You could sell for EXACTLY the same price but at a 9% interest rate and collect the difference as monthly cash flow. Be sure to also get at least 10% downpayment – the more the better.

Don’t worry about putting doing the 10k rehab, your buyer can do that. If you end up having to foreclose, you’ve already gotten a nice downpayment AND you may just have a rehabbed house. Rather than mess around with foreclosures though, I’d suggest pulling credit, background checks etc. Also ask for a good-credit cosigner.

You may want to employ an escrow company to handle the various payments between the parties. There is one company here in Houston that actually reports on-time payments to the credit bureaus so your buyer can get their credit score up to qualify for conventional/FHA financing. Generally, you’re sales price will be much higher than your wrapped note and you want to get cashed out ASAP. In the above scenario though, this may not be the case. Hope that helps.

 

[Russ H]

I haven't done any seller financing w/80 year old ladies, but I'd think that if they pass, their heirs will want the loan paid off ASAP so they can divvy up the mulah.

This happened to a prop right behind our B&B as soon as we bought in in 2003: 3 houses, all on the same parcel. Back then, these houses would have sold for ~$500K ea if on sep parcels. All 3 went for about $900K-- a spankin' deal for a landlord.

Backstory was: Father died, and son was perfectly happy living off the income from dad's rental properties (dad had actually groomed him for this-- son was apparently a great handyman and landlord).

But dad had 2 other kids (daughters) from another marriage-- and THEY WANTED THE $$$.

Fought the son in court (dad had given son the properties, and given the daughters other things. Daughters had already blown through what dad left them, and wanted MORE).

Daughters won, since they could show that they had nothing of what dad had left.

Long story short: Make sure your PLAN includes this type of occurance.

I'd prolly look for seller financing w/a LOW selling price-- then refi as soon as humanly possible (in a year or two, MAX).

-Russ H.

 

[Sparlin]

What ever happened on these policy changes and will it affect these deals?

http://www.thefastlanetomillions.co...ing-seller-financing-option-re-investors.html

 

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[MonTexan]

What ever happened on these policy changes and will it affect these deals?

http://www.thefastlanetomillions.co...ing-seller-financing-option-re-investors.html

That assinine legislation is still pending. If you haven't posted your comments yet, there is still time to do so....PLEASE DO IT!

I can't imagine this actually being passed into law. It does nothing but hurt BOTH investors AND home buyers. If they think they are protecting homeowners against unscrupulous lenders by requiring that everyone be a "licensed" broker they are crazy. Who do you think originated all of the crap loans out there today if not LICENSED brokers.

Being "licensed" does absolutely nothing to increase the legitimacy of a mortgage originator and may even give people a false sense of security therefore INCREASING their chances of being taken advantage of.

:soapbox:

 

[cmaq]

A lawyer would come in handy when putting together seller financing, I would suggest using one.

 

[RealOG]

We had a seller finance a small apartment building.

The great thing is the flexibility it provides. I would suggest you sit down with the owners and someone they trust (their kids or future heirs) and really get a good feel for what they want out of the deal. This way you can address their expectations in the deal while maintaining maximum flexibility for yourself.

 

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[Cat Man Du]

I'm looking tor some feedback on seller financing.

I have run into two properties now that are completely paid off. Both homes are owned by ladies in their 80's whose husbands have died. Each home needs updating, but is overall excellent condition. There is not enough equity to fix and flip. I want to try and see if they will provide seller financing.

Example: Good condition 3/1 1080 sq feet. Needs updating (10k) for retail sale, but would make a solid rental with no work. Rents $900-$1100 (depending on sec 8 or not). Seller may go as low as 100k.

THIS IS THE OLD 1% RULE. Isn't there a better deal out-there? In my land these would sell for no more then $60,000 for that kind of rent.

I see three outs for these properties.
-Rent out and keep positive cashflow property.
- Lease option the property. Might be harder without the updates
-Rent property and sell note to investor for a fee. 10k-15k.

Why would an investor pay $110,000 or $115,000 for these.......less than the 1% rule which is out-dated in this market?

Some questions:
Does anyone know any good books or resources to learn how to structure seller financed deals?
In one case a Realtor is involved, is there a way to cover their fees and closing costs with no out of pocket money? (8k worth of fees)
Any other advice?

I take it that you are putting NO downpayment on these...otherwise the fees would come out of that downpayment. Mortgages would have to be made assumable..to be transferable. If a mortgage does not address this issue..it is assumable! :groove:

 

[Bilgefisher]

Bilge,
I’m confused when you say that both homes are owned free-and-clear and then you say that there is not enough equity for a fix-and-flip. I’m assuming you mean their ASKING price is too high and doesn’t leave room for a flip??

How long have the properties been listed? What is the financial condition of the owner? Do they need cash from a sale to live on, or would they be happy with an “annuity” by financing the house?

One home is listed for 30 days at FMV, but from my conversation they will take 20k less. Its in rent ready condition now, just needs updating to be sell-able. It was originally listed at 20k over fmv, which puts the skills of their agent in question. I have talked to him and he is not organized and not very professional. Heck the listing he did was really poor. He was chosen as their family friend.

The other house is not listed. They are already at 20k below FMV, but again the property needs updating. Both properties do not have enough equity to fix and flip.

Both homes are free and clear. I would like to have them finance the deal. While I do want another rental, atm it would be better to get a bit of cash from the deals. I need more reserves to have more rentals. My rule.

I like the idea of offering seller financing with an up front down payment over their seller financing. That would satisfy cashflow and cash. Another option I like is putting a tenant in place and transferring an assumable note for a fee.

Also, I will follow the recommendation to use an attorney to set up the note to ensure all laws are followed and minimize them coming back after me.

 

[LesG]

Reminds me of my very first deal. Had a lady that owned it with a small 1st and got her to carry a 2nd mortgage. Funny thing is we never talked about interest rates. I was a newbie at the time and actually forgot. Escrow officer asked me what was the rate when we were ready to close. Oh, put 4%, we only talked about paying her $500 for 66 months.

I gave the lady a chart showing the principal buydown that EACH month had equal amount of principal and interest taken off each month. Do you get that?!! I made up my own amortization chart. My mentor laughed when he saw that. How'd you come up with that, Les? I don't know? Just came to me. Amortizations are not concrete and can do whatever you want!

What I am saying to you is consider making up your own seller finance note.
I just had title write it up for me as I never did one before. Nowadays you can goggle things. Seller finance notes.

This is all i read prior to doing my first seller finance note...

Wade Cooks, How to build a real estate money machine.

John Behle's, The paper game.

HP 12-C Calculator manual.
====

I sold it with comments like: What will you do with the money? Put it in the bank? What rate are they giving you? I can double that and you won't have to pay for cost of funds and tellers to boot.

 

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[Bilgefisher]

Another option I just read about. Get seller financing then sell it to an end buyer with a wrap. Essentially offer my own bit of owner financing in the deal.

Ex. Seller offers for $500/mo payment. I sell for x down payment and $600/mo. I get some cashflow without tenants issues. The seller gets a better price for their home and the buyer doesn't have to try and get financing.

I even thought about placing a tenant in the property, and selling it as a turnkey rental. I haven't a clue on how to do that, but I'll learn.

Heck its even got me thinking about marketing to homes free and clear.

 

[Chitown]

Bilge,

The fact that you are even considering different options is great. I wish you well with this potential deal.;-)

 

[Chitown]

Russ,

This is a damn shame! Not to hijack the thread but is there anyone in the forum with an estate planning background that can offer up solutions to prevent this kind of crap? Would a living trust have mitigated something like this?



But dad had 2 other kids (daughters) from another marriage-- and THEY WANTED THE $$$.

Fought the son in court (dad had given son the properties, and given the daughters other things. Daughters had already blown through what dad left them, and wanted MORE).

Daughters won, since they could show that they had nothing of what dad had left.

 

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[Chitown]

My bad about Russ' quote placement.;-)

 

[Cat Man Du]

Reminds me of my very first deal. Had a lady that owned it with a small 1st and got her to carry a 2nd mortgage. Funny thing is we never talked about interest rates. I was a newbie at the time and actually forgot. Escrow officer asked me what was the rate when we were ready to close. Oh, put 4%, we only talked about paying her $500 for 66 months.

I gave the lady a chart showing the principal buydown that EACH month had equal amount of principal and interest taken off each month. Do you get that?!! I made up my own amortization chart. My mentor laughed when he saw that. How'd you come up with that, Les? I don't know? Just came to me. Amortizations are not concrete and can do whatever you want!

What I am saying to you is consider making up your own seller finance note.
I just had title write it up for me as I never did one before. Nowadays you can goggle things. Seller finance notes.

This is all i read prior to doing my first seller finance note...

Wade Cooks, How to build a real estate money machine.

John Behle's, The paper game.

HP 12-C Calculator manual.
====

I sold it with comments like: What will you do with the money? Put it in the bank? What rate are they giving you? I can double that and you won't have to pay for cost of funds and tellers to boot. This is GOOD !

Hey..LES ..........Good to see ya here!

Boy, I'm going to have to strongly DIS-agree with the above. I'm a broker and have SEEN........many of these and I would NOT make one up myself ...especially for my own property!!! YOU are LOOKING for trouble!!! And you don't need to with an attorney!

 

[Red]

Boy, I'm going to have to strongly DIS-agree with the above. I'm a broker and have SEEN........many of these and I would NOT make one up myself ...especially for my own property!!! YOU are LOOKING for trouble!!! And you don't need to with an attorney!

:iagree:


As a broker as well, I whole-heartedly agree with Cat -don't go it alone if it's not your area of expertise. If you're in a state that utilizes title companies, often they can draw up the paperwork to cover your rear end for a nominal charge. It's well worth whatever pittance they'll charge to CYA.

 

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[LesG]

Attorney or Self?

Hey..LES ..........Good to see ya here!

Boy, I'm going to have to strongly DIS-agree with the above. I'm a broker and have SEEN........many of these and I would NOT make one up myself ...especially for my own property!!! YOU are LOOKING for trouble!!! And you don't need to with an attorney!

Cat thanks for the welcome. I respectivefully respond. Had a blind spot forgeting most of you all do it that way. Yes, the book answer is to hire an attorney.

I too am a broker in good standing for over 17 years with a mortgage co and a real estate company. Your reply reminds me of how blessed I am to have not gotten into trouble and by having this "I can do it attitude".

Yes, the reader is going to have to decide which path he is going to take. Play it conventional or unconventional. I forgot the majority of the readers will side with "professional" help. Oh, and consider how much wealth you are protecting.

Yesterday, I asked my Realtor, "Next time just forge my name, instead of wasting 30 minutes of our time" Realtor, "No I would go to jail for that." Les thinks, "Sigh. Why bother?"

Just today I was saying to my associate, google a partial assignment of mortgage we need to write it up. Associate: Don't we need an attorney?
Les: It is true I've only done one, but how hard is it? It's a simple form and what damage can there be if I do it wrong? I'm the seller and I'm servicing the note. It's a good note that is very solid.

Les thinks: Didn't even dawn on me to hire an attorney. If I look at all the partial assignments and put the best together am I taking steps to becoming an expert? And what is the possible harm? Who is going to spend more time writing these things up? In the early years I would spend countless hours working on contracts. Warning: Make it look too professional and you might not have the other side sign.

My mentor taught me how to write purchase contracts on blank sheets of paper. Keep it simple was or motto. KISS. Have the other side get nervous and make it look professional then they want to use an attorney. But that is contracts.

Seller finance notes.. okay what clauses you going to put in? Title companies will probably not spend much time with you on it. My title officer spent 2 minutes with me. Attorneys not so much unless you ask alot of questions and willing to pay for their time. Best if you studied as much as you can before going to an attorney if you go that route. Nothing wrong with that. You will learn both way. The copy of the executed note and mortgage should be with the title officer in the gobs of papers that the seller gets. They actually don't sign it! You do.

Notice in my post I asked the title officer to write it up for me. Heck that was my first deal.

Consider: if you have nothing to protect when you are starting up, you might be slowing yourself down by paying for high price suits, and more importantly giving away your power to think you are not a capable human being.

In my career, I was the expert on many things. i.e. remember doing a Shared Equity Mortgage tied to a self directed ira in 1993 having never done one before. Heck, find one an attorney that has done 2 SEMs outside of a Ira and that would have been hard enough 17 years ago. How about an option tied to a roth ira. Grow that 2k roth by 50k in 1 month.

Reminds me of the story of the guy that buys insurance and yet makes very little money. Buying too much insurance can keep him poor.

I hear all the time, I'm starting out should I ...
1) set up a corp, LLC
2) get investors
3) get contractors ready
4) can a title officer
5) get an attorney.


Anyway, let the reader decide. I'm just sharing what I did and will not be held liable for any damages. :banana:

fyi: I've hired 2 attornies this last quarter. 2 types of evictions.

Ex-owner left when he got official docs from esq. I tried for 1 month with no luck.
mm, set up a dba Jones, James & Tyler get an answering service. Send out official looking docs and scare any future ex owners out of there. Or how about hiring someone in a sheriff like uniform to go a knocking. :nono:

 

[Cat Man Du]

Re: Attorney or Self?

OK............Here are 2 cases that I know about:

1. An investor friend of mine had a similar situation to Bilge's: (He did all of his own paperwork!)

Found a home thru "word of mouth" Elderly lady moving to AZ. to live with daughter.

Investor goes out knocks on door........makes a deal for $35,000...$5,0000 down...owner to carry the $30,000@6% for 5 years...Investor FLIPS property to another Investor for $50,000..new buyer assumes $30,000 mtg. held by nice lady and gives $20,000 down to investor 1.

In 2 months time original lady sees that her mtg. payment is now a different person and being concerned...goes with daughter to atty.

Atty. checks deeds and sees what happen. Files suit against investor number 1. TRIAL....judge finds investor 1 GUILTY of defrauding ELDERLY LADY AND CANCELS FIRST SALE. Orders investor 1 to give the $15,000 gain to nice lady.

Investor 1. says, but your honor I'm out closing & other costs..what about that?

Judge peers down from bench and says: If you would like to make a complaint...I will instruct the DA to file FRAUD charges against YOU. Investor # 1 says thanks judge.......... I'll be going now!

Have to post no. 2 later.

 

[kwerner]

Why highlight the word elderly??

 

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[LesG]

Re: Attorney or Self?

I don't understand the fraud, but your friend made another mistake on top of that. He got in trouble when he let the seller assume the note. Why'd he do that. Why not instead do a AITD and continue servicing the note?
Why didn't he precall the elderly lady saying checks will be coming from xyz company? I did that one before. Lease option and I was the buyer. I sent my payments to escrow co, which then sent to countrywide. Countrywide never called us on it being sold! Actually never was.

So your story of not doing your own paperwork does not apply in this case.
So all that don't do your own paperwork and go to an attorney. Well...

The problem was what your friend did afterwards. He did not keep his relationship with the first seller. He didn't think it through. e could have made money if he did an AITD if the interest on the seller carry was low and he charged more. Or he could have set up an escrow company.

 

[bflbob]

Gotta agree with Les here, especially on the fraud issue.

It sounds like there is something else going on is your friends case.

I don't see how any judge could ever find a note to be a fraud, unless he wasn't really the person whose name was on the document. For example, if I signed a note with your name, filled out in your name, that might be fraud. But if I filled out a note in my name and signed it with my name -- no fraud.

That being said, I'm always signing documents (including checks) in our offices with the owners signature. I think you'll find that the norm in many offices.

The issue is more one of intent. If I sign a check to pay taxes that the owner would have signed without question, I don't have an issue signing it. But if it is a check made out to "CASH" for $10,000 -- I'm not signing it for love or money.

That's what makes me think there is more behind Cat's story.

 

[Cat Man Du]

Why highlight the word elderly??

Remember......................He is dealing with elderly....See below how this plays out!

Gotta agree with Les here, especially on the fraud issue.

It sounds like there is something else going on is your friends case.

I don't see how any judge could ever find a note to be a fraud, unless he wasn't really the person whose name was on the document. For example, if I signed a note with your name, filled out in your name, that might be fraud. But if I filled out a note in my name and signed it with my name -- no fraud.

That being said, I'm always signing documents (including checks) in our offices with the owners signature. I think you'll find that the norm in many offices.

The issue is more one of intent. If I sign a check to pay taxes that the owner would have signed without question, I don't have an issue signing it. But if it is a check made out to "CASH" for $10,000 -- I'm not signing it for love or money.

That's what makes me think there is more behind Cat's story.

Atty. for nice old lady states his case:

Your honor:

My client.....nice elderly lady...was sitting in her home...minding her own business and answers a knock on her door. Here enters WILEY investor .....who has come to HELP ( yes LES...HELP) her. He worms his way into her confidence with this approach.

He has come to HELP her move to AZ. and live with her daughter...he heard thru the grapevine about her plans. He tells her that he is an investor who would buy her house and HELP her on her way. Talks her into signing contract and deed to convey property to himself @$35,000...$5,000 down 6% for 5 years. Tells that mtgs. are hard to come by and she will have a nice income from the payments.

After she moves with daugther she finds that they could use a bigger place and is sorry that she didn’t have the cash rather than the payments from old house to pay for larger digs. Atty. says that investor knew the TRUE value of her home $50,000 as evidenced by his FLIP in 1 month to buyer #2 for the 50 g’s. States that he BAMBOOZLED nice old lady and cheated her....had her sign papers...with NO representation ....poor OLD nice lady DIDN’T know what she was signing...Judge you know how these OLD people are....they just don’t know things. The last time my client sold a house was 30 yrs. ago and her HUSBAND took care of that. This OLD people bit can be USED for anyone over 60. :smx4:

This is a brief outline of what happened!

 

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[bflbob]

So the problem wasn't with the seller financing, nor the note, but with buying a property under market value.

I'm assuming he just flipped, not fixed and flipped?

I could see the judges point perhaps in that case.

 

[Cat Man Du]

Re: Attorney or Self?

I don't understand the fraud, but your friend made another mistake on top of that. He got in trouble when he let the seller assume the note. Why'd he do that. Why not instead do a AITD and continue servicing the note?
Why didn't he precall the elderly lady saying checks will be coming from xyz company? I did that one before. Lease option and I was the buyer. I sent my payments to escrow co, which then sent to countrywide. Countrywide never called us on it being sold! Actually never was.

So your story of not doing your own paperwork does not apply in this case.
So all that don't do your own paperwork and go to an attorney. Well...

The problem was what your friend did afterwards. He did not keep his relationship with the first seller. He didn't think it through. e could have made money if he did an AITD if the interest on the seller carry was low and he charged more. Or he could have set up an escrow company.

Ahhhhhhhh......Les, thanks for this. You are an icon here from the old forum and are highly respected by our members....With that said ....and I'm prolly going to be UNpopular for my post below, but it's a matter of conscience!

I'm going to be brief here.

What you have outlined above is simply HOW to HIDE what you did. Experienced agents know these " tricks of the trade".

This raises 2 problems:

1. The mtg. holder ( bank or indivual ) has made the loan on certain conditions ...and MUST be notified if ANY of those conditions CHANGE. ANY change ie. transfer of title..land contract...lease to option.....ANY change that could affect title. They should have this as it's THEIR money on the line.

Morally...........if I HAVE TO HIDE something ..... I am flirting with DANGER !
Legaly............if I HAVE TO HIDE something ......I am flirting with DANGER !

YOUR advice simply, is how to be UNdected....NOT being HONEST!

Of course, you may say that it's JUST to escape the "due on sale clause" and the most the mtg. holder can do is call the loan. TRUE....but the larger lesson here is:
ARE you honest..............OR not! and that is what any member who follows this advice must decide. :chatter:



BlackKnight

 

[LesG]

Cat, It is I that should be saying AHHHH. But no worries.
Again, from your post there was nothing wrong with what your friend did.
Except not thinking it through. Of course the lady will be upset. But the judge should not have thrown it out. Even if he had an attorney writes up the initial note, what is to stop the judge from throwing it out.
NOTHING. It is how he treated the elderly lady. Thank you lady, I made my money and I'm out of here. You can't enforce the due on sale because none was written.

As for your comment of how to hide... give me a break.
If you do everything right, there will always be some people that will get jealous. I believe it is common courtesy to let the elderly lady know what is going on.

Reminds me of Jack Miller that mentioned.
1) You did nothing wrong so come on IRS audit me every year. I have nothing to hide. I crossed my tees and dotted my eyes.

2) I stop at every stop sign so come on police have camera on me every minute as I drive.


Real Estate is not black and white. We strive to do the best we can.
If you think youve done everything legal and youve done real estate transactions you are misguided. Ignorance is not an excuse.

Be respectful of all parties EVEN when we are legally doing the correct thing. Legal is not moral, so I have a higher standard. I follow the moral code of doing unto others.

There should have been no due on sale clause on the mortgage, so selling to another party would have been legally correct. However, do you think morally the lady might be pissed off or concerned? Of course.
So by doing a Wrap (AITD) or having a service company handle it that would have alleviated the novice elderly lady's sleep. In text that you wrote I would have done a AITD and hence the my new buyer would pay me the mortgage and I would then pay the lady. Of course i would charge a higher interest rate to the new buyer.
I continue to service it, profiting from it and making sure the buyer can pay. If not I know how to proceed with the lady. This is how I would want to be treated if I were the elderly lady. She has no worries with me.
What she doesn't know doesn't hurt her. And truth be known, she is actually safer by me staying in and assisting with the transaction.

 

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[kwerner]

After she moves with daugther she finds that they could use a bigger place and is sorry that she didn’t have the cash rather than the payments from old house to pay for larger digs. Atty. says that investor knew the TRUE value of her home $50,000 as evidenced by his FLIP in 1 month to buyer #2 for the 50 g’s. States that he BAMBOOZLED nice old lady and cheated her....had her sign papers...with NO representation ....poor OLD nice lady DIDN’T know what she was signing...Judge you know how these OLD people are....they just don’t know things. The last time my client sold a house was 30 yrs. ago and her HUSBAND took care of that. This OLD people bit can be USED for anyone over 60. :smx4:

Couldn't this situation have been avoided altogether by closing at a title company / attorney's office, rather than doing a kitchen table closing?

I mean, if he HAD gone to title company / attorney to close and the lady's attorney accused him of "taking advantage" of her, the investor's attorney could reply: "Did you or did you not go to a title company / attorney's office to SELL your house to the investor? If you didn't INTEND to sell your house to the investor at the price and terms you mutually agreed upon, what did you THINK you were doing at the title company / attorney's office that day?"


Your friend's situation serves as an example of why to stay away from "kitchen table closings".

 

[MonTexan]

Another option I just read about. Get seller financing then sell it to an end buyer with a wrap. Essentially offer my own bit of owner financing in the deal.

Ex. Seller offers for $500/mo payment. I sell for x down payment and $600/mo. I get some cashflow without tenants issues. The seller gets a better price for their home and the buyer doesn't have to try and get financing.

If you go this route, it's important to keep your end-game in mind. You obviously want to capture the equity spread between your purchase price and sales price, and FHA is probably going to be your buyer's best bet for permanent financing.

There are certain note servicing companies that are reporting to the credit bureaus for on-time OWNER FINANCE payments. This is rare to find, but important because it'll boost your buyer's credit score so they qualify for the refi.

I had this exact deal lined up on one of my SFH rentals but the deal fell through when the buyer's good-credit cosigner got cold feet. Selling on O/F is my intended exit strategy for each of my properties down the road...

 

[Bilgefisher]

One thing on some of these cases is disclosure. I will let the seller know that I intend on reselling the property at a future date for a profit. I will also have an addendum that allows the note to be assumed by a third party. Anytime I read about these fraud cases, its because the investor hides some information. Let all parties know. Will I lose deals because of these. Maybe, but it will keep me out of jail.

 

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[Cat Man Du]

As for your comment of how to hide... give me a break.

WELL THAT'S EXACTLY WHAT YOU ARE DOING!!

So What she doesn't know doesn't hurt her. And truth be known, she is actually safer by me staying in and assisting with the transaction.

THIS IS WHERE....WE PART COMPANY....IF THAT'S YOUR MINDSET...NOTHING LEFT TO BE SAID!! I'm not going to address this issue after this post!

Couldn't this situation have been avoided altogether by closing at a title company / attorney's office, rather than doing a kitchen table closing? YES............A THOUSAND TIMES YES!

I mean, if he HAD gone to title company / attorney to close and the lady's attorney accused him of "taking advantage" of her, the investor's attorney could reply: "Did you or did you not go to a title company / attorney's office to SELL your house to the investor? If you didn't INTEND to sell your house to the investor at the price and terms you mutually agreed upon, what did you THINK you were doing at the title company / attorney's office that day?" Atty. would have advised her...'due on sale" clause.

Your friend's situation serves as an example of why to stay away from "kitchen table closings".

YEP!!

One thing on some of these cases is disclosure. I will let the seller know that I intend on reselling the property at a future date for a profit. I will also have an addendum that allows the note to be assumed by a third party. Anytime I read about these fraud cases, its because the investor hides some information. Let all parties know. Will I lose deals because of these. Maybe, but it will keep me out of jail.

YOU SAID IT ALL ......RIGHT THERE!~!

 

[LesG]

Couldn't this situation have been avoided altogether by closing at a title company / attorney's office, rather than doing a kitchen table closing?

Les responds: Since you are getting incorrect advice from another I will respond. The answer is NO. A title company suppose to be neutral. They do not give advice. If fraud occured, the title officer would not know. His original post I believe did not say it was a kitchen table closing but it should not matter.

I mean, if he HAD gone to title company / attorney to close and the lady's attorney accused him of "taking advantage" of her, the investor's attorney could reply: "Did you or did you not go to a title company / attorney's office to SELL your house to the investor? If you didn't INTEND to sell your house to the investor at the price and terms you mutually agreed upon, what did you THINK you were doing at the title company / attorney's office that day?"

Les responds: No it does not matter. If you buy for $400k less say then sell it for $400k more in 1 month, the judge can still overrule for unconsciousable advantage.


Your friend's situation serves as an example of why to stay away from "kitchen table closings".

Les responds: No, there is something else Cat is not telling us on the story. Kitchen table closings are not illegal.