I posted about the deal here http://http://www.thefastlanetomill...sidential/12754-when-deals-drop-your-lap.html
We met at our credit union this afternoon to sign all of the paperwork. I now own (or have contolling interest in) 3 properties including my personal residence.
I now have a pretty good understanding of the process as my dad walked me through it.
1. Find a buyer willing to walk away from their house. They are everywhere just by looking at the foreclosure numbers. If they have equity great show them how the 10k in equity they think they have will be eaten up by going through a realtor with closing costs, realtor costs, etc.
2. The property will be put into a land trust for estate planning purposes. Seller will Quit claim the deed to the trust. (legal everywhere but Louisianna as they are based on French Law and not English Law) This is recorded at the courthouse
3. Find a trustee for the trust. In this case it was my dad.
4. Seller assigns benefecial interest of the trust to you. This gets them out of deal completely and gives you full right to whatever profit may be there now or in the future.
At this point the property is in trust and the mortgage company has no way to know who the beneficiary is as this is not recorded.
5. Send letter to the mortgage company and the insurance company informing them that the property is in a land trust. Also inform them of the management company who will be handling the trust (in this case me). Have all correspondance about the property sent to the new management company. You can assign an EIN number to the trust if you want for tax purposes. Inform the mortgage company of the change allowing you the tax write offs from the property.
This is basically it. no credit checks, no mortgage limits. The mortgage is still in her name until we sell. When she gets ready to buy another house we will supply her with a lease to give to her broker that will exclude the mortgage from their decision process. Win Win situation for everybody.
The deal I did was not that great (see above linked post) but I have had 3 calls about the property just from a sign in the yard in the last 3 days. Since she has agreed to pay July and August, the sooner I can get a tenant in the more upfront profit I will make. Pro rated July, August and deposit should net around 2k. When we change to a ladlord policy on the insurance it should leave us about 100 a month cash flow. Not too bad for our market.
In the future I would like to make sure there is at least 10% equity in any deal I do this way. This one was done to learn the process and gain experience.
This is just an overview of the process and is no way considered legal advice or a how to article. If you want info on where we got our forms and training just ask and I will provide a link.
We met at our credit union this afternoon to sign all of the paperwork. I now own (or have contolling interest in) 3 properties including my personal residence.
I now have a pretty good understanding of the process as my dad walked me through it.
1. Find a buyer willing to walk away from their house. They are everywhere just by looking at the foreclosure numbers. If they have equity great show them how the 10k in equity they think they have will be eaten up by going through a realtor with closing costs, realtor costs, etc.
2. The property will be put into a land trust for estate planning purposes. Seller will Quit claim the deed to the trust. (legal everywhere but Louisianna as they are based on French Law and not English Law) This is recorded at the courthouse
3. Find a trustee for the trust. In this case it was my dad.
4. Seller assigns benefecial interest of the trust to you. This gets them out of deal completely and gives you full right to whatever profit may be there now or in the future.
At this point the property is in trust and the mortgage company has no way to know who the beneficiary is as this is not recorded.
5. Send letter to the mortgage company and the insurance company informing them that the property is in a land trust. Also inform them of the management company who will be handling the trust (in this case me). Have all correspondance about the property sent to the new management company. You can assign an EIN number to the trust if you want for tax purposes. Inform the mortgage company of the change allowing you the tax write offs from the property.
This is basically it. no credit checks, no mortgage limits. The mortgage is still in her name until we sell. When she gets ready to buy another house we will supply her with a lease to give to her broker that will exclude the mortgage from their decision process. Win Win situation for everybody.
The deal I did was not that great (see above linked post) but I have had 3 calls about the property just from a sign in the yard in the last 3 days. Since she has agreed to pay July and August, the sooner I can get a tenant in the more upfront profit I will make. Pro rated July, August and deposit should net around 2k. When we change to a ladlord policy on the insurance it should leave us about 100 a month cash flow. Not too bad for our market.
In the future I would like to make sure there is at least 10% equity in any deal I do this way. This one was done to learn the process and gain experience.
This is just an overview of the process and is no way considered legal advice or a how to article. If you want info on where we got our forms and training just ask and I will provide a link.
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