In your circumstance, there would probably be 3 parties involved.
Seller
Investor (you)
Resident Beneficiary
By putting the property into a land trust, you can control the property without obtaining new financing, and offer the property to a buyer with "owner financing"
This is how it works:
You go to a seller, usually it will be a distressed seller. They agree put the property into a trust, and they keep the current financing in place. They become a 10% owner of the trust.
The house becomes owned by the trust. But, the due on sale clause is not invoked because they owner is still a part owner (they own a portion of the trust).
2 or 3 parties own the trust. The seller and you.... or the seller, you, and a new buyer.
If there is a new buyer, they become the RB (resident beneficiary). They own a portion of the trust, and they make rent payments to the trust. The trust pays the mortgage and the investor gets the difference (cashflow)
Let's use an example.
House with a loan of 150,000 . House is worth 200,000.
Seller can't sell. At risk of falling behind in payments. You agree to take over their payments for them. Seller signs house over to the trust (you). You can agree to pay them some equity or none... what ever you negotiate. If you do agree to pay them some equity, you can agree to pay when the house sells. In this example, let's say you agree to pay them 50,000 when the house sells.
Now. Your trust has the house. worth 200,000. Your seller has 50K promised to them when the house sells. Payments are 1000/mo.
You go find a resident beneficiary.... a buyer. someone that has the income to make a payment, but damaged credit.
You find someone that can pay 1500/mo plus 5,000 (down). They would like to buy the house for 250,000 in 4 years.
Now. The house is owned by the trust.
The trust is owned by:
Seller (10%)
You (45%)
RB (45%)
The RB pays the trust 1500 a month. The trust pays the mortgage 1000 a month. There is 500 left. That gets paid to you.
When, in 4 years, the RB decided to buy - they refi and get the house into their name and out of the trust. This is what happens.
RB gets a loan (or whatever) and pays the trust 250,000 for the house.
The trust pays the mortgage of 150,000
and the seller 50,000
and you get the remainder .... 50,000.
make sense?
questions?
Seller
Investor (you)
Resident Beneficiary
By putting the property into a land trust, you can control the property without obtaining new financing, and offer the property to a buyer with "owner financing"
This is how it works:
You go to a seller, usually it will be a distressed seller. They agree put the property into a trust, and they keep the current financing in place. They become a 10% owner of the trust.
The house becomes owned by the trust. But, the due on sale clause is not invoked because they owner is still a part owner (they own a portion of the trust).
2 or 3 parties own the trust. The seller and you.... or the seller, you, and a new buyer.
If there is a new buyer, they become the RB (resident beneficiary). They own a portion of the trust, and they make rent payments to the trust. The trust pays the mortgage and the investor gets the difference (cashflow)
Let's use an example.
House with a loan of 150,000 . House is worth 200,000.
Seller can't sell. At risk of falling behind in payments. You agree to take over their payments for them. Seller signs house over to the trust (you). You can agree to pay them some equity or none... what ever you negotiate. If you do agree to pay them some equity, you can agree to pay when the house sells. In this example, let's say you agree to pay them 50,000 when the house sells.
Now. Your trust has the house. worth 200,000. Your seller has 50K promised to them when the house sells. Payments are 1000/mo.
You go find a resident beneficiary.... a buyer. someone that has the income to make a payment, but damaged credit.
You find someone that can pay 1500/mo plus 5,000 (down). They would like to buy the house for 250,000 in 4 years.
Now. The house is owned by the trust.
The trust is owned by:
Seller (10%)
You (45%)
RB (45%)
The RB pays the trust 1500 a month. The trust pays the mortgage 1000 a month. There is 500 left. That gets paid to you.
When, in 4 years, the RB decided to buy - they refi and get the house into their name and out of the trust. This is what happens.
RB gets a loan (or whatever) and pays the trust 250,000 for the house.
The trust pays the mortgage of 150,000
and the seller 50,000
and you get the remainder .... 50,000.
make sense?
questions?