First Serious Buyer Only Does Land Contracts?

Question

So this is my situation, through my beginning marketing I ran into a gentleman that does a lot of property management and works with 3 millionaires investor friends that he brings in for bigger deals when he can't do it along. He's a buy and hold investor and is currently renting out over 300 units in Kent County. Now he is only looking for housing that is 40,000 ARV and wants to do a land contract with 10% down and a 5-7 year plan. Now I don't have too much cash to be the cash buyer myself since I was laid off. But the wholesale opportunity with this guy is amazing and where hit it off right away even bring business for my family flooring business. So the meat of the question is how can I pull off this wholesale deal as a land contract but I myself can't be the cash buyer? Is it even possible?

Another question to maybe take someone for a loop. Would it be possible to get a land contract home under contract and then wholesale it as a land contract without having to be the cash buyer?

Thank you in advice for all those who have answered and I apologize if this is somewhere else or I just made a mess of this. I’m still very new and this is my first real post. soooo BOOM BABY!!!! Taking steps! LOVE IT!!!!!!

Bill Gulley · Answer

Steve Babiak, you're right, I was :) 10% is too skinny to make money, so selling at a higher price is an option. I have done one installment on top of another, but only for a sort period of time, the buyers are really at risk, double trouble. You'll have an insurance nightmare if there is an insured loss. If the end buyer performs and the first buyer fails, for any reason, you can have problems. It complicates issues of death, estate settlement, underlying mortgages, bankruptcy, foreclosures and throw tenants in there and you have a real mess. If you have a CFD and another CFD, the second is really no more than giving possession, allowing equity to be established and agreeing to buy, but it's just a contract that gets you to closing with the right to take title. A lease option after an installment purchase does the same thing and has less pain at the end buyer's side. The guy in the middle has two masters, one selling you can cause trouble and the one buying. It's ackward and nothing you want to do long term especially if you're picking up a small fee at the end with a few bucks a month spread. A daisey chain of installment contracts IMO isn't practicle, if you have the skills necessary to buy from a seller in that manner and disclose future installments, then you should have the skills to acquire it by title with a Sub-2 if necessary and then be in a better position to pass tiltle. Many at 40K may be paidoff, just take title and sell under your CFD, I'm assuming exceptions under the SAFE Act too. This also goes to having the right of sale of the property (popular discussion lately) with an option you only have a contract you don't have the power of sale. With the CFD it is generally accepted (asusually deeds were escrowed) that the buyer may list and sell, payoff the installment note as any mortgage would be. The same is true with a Sub=2, being in title and paying the amounts due for clear title. Much cleaner.

Cameron P. · Answer

Hey Brian Gibbons, Thank you very much for you imput. Thats what I have been doing now! Just finished sending out my first yellow letters as well as 2 websites and 6 online ads! So now im just waiting to gather all the information and going from there. :)

Brian Gibbons · Answer

Bill Gulley u r such a transaction engineer! lol Cameron Parker living in MI CFDs are common, I know. U may want to hang out with a MI contract attorney or MI title co and learn about contracts in MI. I have received an incredible education from title company reps. I found these MI forms http://www.libertytitle.com/forms/ An idea... Receive an option from the seller to 1. purchase with cash, 2. purchase subject to existing financing 3. purchase by cfd or 4. to lease with option is called a Flex Option. You would spell out terms of all 4, with details. That may be a tool to give the seller choices to sell to you. Then you could sell that option to a qualified buyer. Happy hunting! And, IMHO find a Motivated seller, not a "player" like the guy in your post. A simple family that has urgency to move and needs debt relief.

Cameron P. · Answer

Go after it Bill im not going outside to lick any snow off this ground. Haha enjoy!

Bill Gulley · Answer

Yep, thanks and no problem, but it is 65 degress out now, so I'm heading out to ejoy!

Cameron P. · Answer

Wow @Bill Gulley That was an amazing reply! Thank you so much for your time on that cause I know it wasnt on your fun things to do today list! Ya im not going after the land contract it was just a deal I stumbled upon and got a little curious. Thank you all for helping me not waste days going after something stupid!!!

Cameron P. · Answer

Hey thanks Steve Ive been trying to take all these words I have no idea what they mean and google them and try to make sence of everything haha. I thank you for a detailed response (dummed up a little for me) and I STILL HAVE MORE RESEARCH TO DO hahaha but hey ill get there sometime maybe lol

Steve Babiak · Answer

In some training that I attended on seller financing techniques, I was introduced to the concept of the "sandwich installment sale", which is essentially buying on land contract and then selling via (a different) land contract - but I haven't done anything like that. Bill Gulley has already given you another way to accomplish your objective by using the land contract (CFD) along with an option. And I think Bill was hinting that for you to get paid in that scenario, that your "fee" would have to be taken from the down money.

Cameron P. · Answer

Thanks for the thought fellas I just swear I ran across this the other day on f2f but I can’t find it anymore. And the partners Brian where when they were buying packages from the Banks and 20 units a pop for 200k they slowed down now because of the investors are conservative. They are only in play now for like 4 units a month he said. He is trying to build is own cash flow currently buy using the tenants rent to double his land contract payments and get the houses paid off early and own them free and clear.

Brian Feltz · Answer

Also, if he only wants properties that ARV up to $40k, why would he need to bring in millionaire partners??? Especially at only 10% down!