How Is This Investor Avoiding The DOS?!?!?
I know a Texas investor doing lease/options...and very successful too I might add. I know they are not putting it in a living trust. He is taking deed and filing it in his company's name once they sign the papers with the lease/option tenant so they may move in. The insurance, water bill, deed and the monthly payments, and anything else you can think of, have his company's name on them. I just don't understand how (using moral and legal avenues to protect himself and his rent-to-owners). Getting sued because the bank exercised DOS and your rent-to-owners were kicked out is not smart business practices. I don't expect him to fork over his secrets because I know he paid good money for attorneys, etc.. Heck, I wouldn't either. That’s why I’ve been researching for weeks on end and can't find anything. I'm willing to pay and don't expect knowledge for free. He claims it won't trigger DOS and charges $1,500 if you have him to compile your deal. Can anybody recommend any lease/option books or websites that may provide some insight for a new investor? The only thing I can formulate is he is speaking with the bank and telling them what’s going on and get some type of written guarantee they won’t DOS as long as the loan is performing under his possession. Has anybody ever tried this avenue? They say the most simple explanation is usually the correct one. Honestly communicating with the bank seems the simplest to me. The only way they make money is if somebody keeps feeding their pig principle and interest every month. Are the banks trying to cut us investors out or do they just want to be kept in the know since it’s their money being played with (pardon the term). I would appreciate any positive and informative replies. Thanks and wish you much success. . 
You need to clarify the situation.
1. Is he buying with a L/O? If so there are really no issues with the DOS. The title remains with the owner.
2. If he then does a L/O with another person (sub-lease) we are still in the same situation.
3. If he is buying subject-to, he is taking a risk. What you will experience as a practical matter is most lenders do not check the title. If the payments are current and the insurance is in place, the taxes, paid, etc. the lender is pretty much going to assume all is well. They might want to exercise the DOS. Depending on the situation the investor would then get new financing or something similar. A bit messy but still workable.
4. You need to disclose to your L/O buyer what your position is in the home so they can not claim later that you misrepresented the deal. Once that is done they can not really complain if they signed up for the deal knowing that you did not already have clear title.
John
PS. All the normal warning about this is not legal advice, get a lawyer to advise you, etc.
I must first say that I NOW buy sub-to properties in trust that the owner sets up and then assigns their interest to me at a later time. This is safe.
In the past, I have bought properties sub-to in MY OWN PERSONAL NAME. There was never a due on sale clause invoked. The banks really do not care or know that someone else is making the payment. Their main concern is that it is current. I stay current with all my properties and there are no questions asked. Why would a bank, mortgage co, etc bother a good payor?????
I learned exactly what he's doing. Just FYI, he's buying it sub-to and then doing a L/O. What he's doing is creating a Jr lien in the amount of equity. I've been told that this gives him right to transfer the deed, insurance, make the payments, etc. and the banks can't DOS because of his 2nd he placed on it. If the L/Optioner isn't able to refi and if he can't get a new L/Optioner, he just deeds it back to the original distressed owner and drops the lien and they have their property back with a current mortgage. What is everybody's feelings on this method? Thanks for the replies.