Question For John Locke...
John,
When an individual is getting started working subject-to property you mentioned the value of having a "trust fund" available in order to cover life's little surprises.
Does that mean that a person should try and establish such a fund at first or getting more enough money up front to cover missed payments etc. The property that I plan to sell on a land contract has a mortgage of $67K, how much upfron money should I ask for? Is the amount set by some sort of law?
Thanks!
William,
i'm obviously not John, and I'm sure he'll respond.
In fact, he is best to answer most of your post.
I just wanted to address one small part of it, as I too used to invest in Illinois before moving south.
There is no law as to how much you must take, minimum or maximum as a down stroke on a land contract.
However, you might want to look carefully at the laws governing a land contract and its use in your state.
In Illinois, as I recall, and of course, check/verify all this with a qualified attny, as I'm not one.......
anyway, with a land contract in Illinois, should the buyer default, you can evict rather than foreclose, as long as the contract is set up properly.
Much easier on the pocket book if/when buyers default.
I never sell on contract for less than 10% down.
I seem to recall in Illinois, that if the contract is for less than 3 or 5 years, and there is less than 20% equity in the deal, or 80% or more of paoff to you, the seller, then default for the buyer can be fixed with eviction.
More equity, and longer terms, mean foreclosure for a defaulted contract.
Like I said, I'm not a lawyer, and its been a few years since I was there in Illinois.
But, just make sure if you sell with a land contract, you have a lawyer set it up correctly, to cover yourself well.
Good luck, and wise choice on John's course materials, he is top notch!
Jim
[addsig]
Thanks for the response, Jim, your information is very helpful and I will start looking for a good lawyer in the area who is well versed in creative real estate financing techniques.
Just one other thing, I believe that John Locke's materials are the best. However, I would like your opinion in a comparative way between John's materials on subject-to and those of the ABC of Subject-To otherwise known as "Get the Deed" program out of Indy, Indiana. Which is the best or offer the most direct skills set for hands on "how to get a deal done"
Thanks!
William,
That's an easy one to answer, hands down, John Lockes mateirals are way better.
Good stuff, great guy, wonderful support, and........
Well, you get the picture.
I like him, respect his style, and he definitely knows what he is doing.......and has some good folks working with him as well.
My two cents,
Jim FL
William,
Glad to meet you.
The Trust Fund I refer to is set up at the Loan Servicing Company (LSC), so you should have a minimum of two months worth of payments set aside, if your buyer is late in paying, the LSC will cover that payment. This way your seller's loan will always be current without late fees or reflecting on their credit.
There is no law govening this only common sense, on a $67K house the payments would be low enough that your down payment on the property would easily cover the trust amount payment money
John $Cash$ Locke
PS: Jim FL, thank you for your kind words. When are we meeting at the Branch Ranch for lunch?