Buying rental property but deferring the actual purchase
I want to buy a house to use as rental property and I have a willing buyer and seller. Seller owes $93,000 on property and has a 6 % mortgage (variable rate but set at 6% for three years). We have agreed on a purchase price of $101,500. I want to give him $8,500 in cash; he has agreed to keep his mortgage (PIT payment is $780) if I make the payment. I guess owner would have to change his homeowner's policy to a rental policy if I now have deed. I would rent the property for about $900 per month. I would like to structure the deal so I can legally own the property but not trigger his due-on-sale clause for 2 to three years.
Can I have owner sign a quick claim deed to me but not file it right away? I would give him a note for $93,000 less whatever principal would be paid down by that time that would be due to him in 3 years. I would file the deed after 2 years, 9 months (or so) so that by the time I have to refinance, I would have one year's ownership in the property. Then I could refinance and use the property equity as the 20% down payment. Would this work?
How long after you file a quick claim deed does the owner's mortgage holder get notified? Or do they get notified at all? Are Quickclaim deeds legal in all states?
Or would I be better off to rent with a guaranteed purchase price in three years? Or could owner somehow get the house back from me then in three years and keep the appreciated value?
I'd appreciate all ideas and observations.
I would really like to suggest that you invest a few hours on TCI doing a search on a large number of topics.
To name a few:
--Comps
--Subject to
--Title
--Lease Options
and whatever else comes up during your reading of what's posted.
If you want to make a seious go of RE Investing, order some of the courses that are being offered by our moderators, and learn from their experience.
RE concepts are deceivingly simple, too simple perhaps.
The reality is that it is one of the toughest environments to be in, and that you need a basic structure of knowledge to avoid a one-way ticket to ruin.
I believe that this forum is the best environment of free mentoring that is presently available to all of us.
But do realiza that in the end our mentors can only guide us, and that decisions such as the ones you seek info on, have legal ramifications.
A Quit claim is only one way of doing this...and certainly not my favorite.
I don't feel comfortable in being more specific, as there just is not enough info in your post for me to work with.
Perhaps one of the "great ones" will be able to be more specific.
But welcome to our world, and keep posting on how it develops.
[addsig]
I wrote an Article here on TCI entitled:
"Avoiding DOS Clause:
and using Land Trust to SAFELY acquire ownership in Property!
try going to the SEARCH: Avoid DOS or ARTICLES by: Derrick Ali
I Hope this Helps!
Derrick Ali
[addsig]
I read your artical on Avoiding the Due On Sale clause and it was outstanding! I definitely rated it a '5'.
Is there a way to acquire the legal paperwork to set up a NARS PACTrust with hiring a local atty (!!) to do so?