Contract for Deed on flip

[Matthew Louks]

I've found a deal I like. FSBO property for 49k. 10k down gets me keys. 15k reno. 110k arv. I love the cash on cash return on this deal. The only problem I have is that the owner wants to sell on contract for deed through proper escrow and does not want me to sign through my llc, which is set up for s-corp taxes. I understand his need for protection, which is why he is doing contract for deed. I just want all the write-offs and the growth and protection of my llc. Is there a way to appease both parties while maintaining the seller financing terms? I have offered to put a personal guarantee on the contract. Thanks

[Jerry W.]

I don't think putting the note in your name and the property in your LLC's name is a good idea. You need to keep corporate formalities. Technically the way you are doing it and the way he wants it done has no real effect on him. There is no guarantee of payment under a Contract For Deed.. You miss payments you walk away with nothing. The only remedy usually in a CFD is getting the property back. Some folks have put penalty clauses in CFD's but often when you do that then courts start treating the CFD as a mortgage and make you do a foreclosure.

You might try explaining how the CFD will work. Otherwise your sole remedy is do it like Seller wants. Good Luck