Land Contract instead of Subject To?
Hi All,
If a seller is not willing to deed you the property, is it possible to structure a deal where you buy the house on land contract and then turn around and sell it on land contract? Of course, the terms would have to be structured correctly...
I haven't seen anybody mention this, so I suspect there's a problem. Any input would be appreciated.
Thanks,
Mike
Mike,
Sure its a Viable option. Just ask yourself this question? In the state that your in How long does it take to get someone out of the house on a Land Contract? YOu need to make sure that you get enuf money as a down payment. Some GURUS state 5-10%. I think that 10% or more is better. That way you can use there money to get them out.
Mike,
No, there's no problem with the theory itself. The devil's in the details as they say. So, depending on the specific regs concerning that type of transaction in your state, it may or may not be worthwhile.
The big push behind Sub2 is that the gurus claim there's no personal liability. Since there's no doc with language like what would be in a CFD, most folks believe that.
My personal opinion is that with only one or two deals, that may be true. If you have a larger portfolio of Sub2's and they go bad, I'd much rather be in a CFD position than a Sub2. I think the investor who loses a bunch of Sub2's will discover they DO have liability issues and most judges will be familiar with CFD's.
So, that's just something to consider. I still buy Sub2 and there's nothing inherently wrong with your suggested method as long as you mitigate all risks by doing the deal properly, etc.
HTH
JR_FL & trandle,
Thanks for taking the time to reply. I appreciate it.
Mike
MikeC
If you do a L/O, L/P, CFD or what ever be sure to have the document signed before a notary and then record your document ASAP but do not do the same it you L/O, L/P, CFD to another.
This will somewhat protect your interest unless the actual owner gets foreclosed on, then you be in trouble!
[addsig]
Hi,
Thought I'd add my two cents. We do lots of subject to's. We will buy on a land contract if needed, however we don't sell on a land contract. First off, nearly all the sellers that call us have no problem giving up their deed. You see, that's what a 'sale' implies. The homes in the MLS are all there with the intent to give up the deed.
Getting the seller to keep the mortgage in their name is the trick.
Don't sell on a land contract, since that's where the foreclosure rules usually trump the lease eviction rules.
If we buy on a land contract (rarely) we have a deed held in escrow with OUR attorney. Then when we satisfy the terms of the purchase, we get the deed. We keep the seller out of the way as much as possible, to avoid issues like bankruptcy, divorce, change of mind, etc. from affecting our ability to sell the home.
Hope this helps,
Bob Meister