Possible sub2. Care to share insight on possible creative financing?

Question

The other day I was driving through a my parent's neighborhood and found a vacant property I hadn't noticed before. I knocked on the neighbor's door and asked if they could tell me anything about the property.

The neighbor said the house was, indeed, vacant. The owner(s) inherited the property from their mother who passed away a year ago. She wasn't sure if it had made it through probate yet, although it sounds like she has a close relationship with one of the owners and has gathered pieces of the story.

She went on to tell me that the owner is "completely overwhelmed" with the house. He's put in a new well pump, a new roof and generator. I offered her to leave my name and number along with a brief description about how I could purchase the property from him for cash at whatever time is convenient for him/them.

I got to thinking about possible owner finance options while my main goal for this property is to rehab and sell retail. It's a great neighborhood and looks to be a mid-size project although it's difficult to say, I haven't seen the interior.

If and when the owners call, and for my own knowledge and anyone else who's interested, I was wondering how I could/would lock the property up under contract, negotiate a small down payment ($5-$10K) to show that I'm serious, either take over mortgage payments if there is one, or roll all payments into a lump sum that I pay the owners when I finally fix up and sell the house.

Is this the same as a sub2?

How would I structure this if I ended up negotiating a final payout once i actually sell the house, without necessarily covering mortgage payments along the way?

Tim G. · Answer

Taylor, you don't know if they are motivated yet*

Be sure to listen, when we are new we are too busy thinking I what to say and don't LISTEN to the other parties involved.

Gather info, listen and then move appropriately.

Account Closed · Answer

Taylor,

If Tim is busy you can PM me the address and I will help you.

Joe Gore

Tim G. · Answer

Joe has the right idea, but you can do that for free. PM and I'll do it for you.

Most importantly, don't get carried away with ideas and just contact the owner. A title search would also get you their name and or address. Then hop on google, often you can find a linkedin profile, phone number, facebook etc... use that to reach out to them.

Happy hunting.

Account Closed · Answer

Taylor,

You should pay a title agent to run a title search to see how many liens on the proptrey before you get all work up.

Joe Gore

Rick H. · Answer

I say, write down a few questions in advance and just pick up the phone and call them (when you can call without distractions and focus 100% on the call).

Your objective ought to be simple: to introduce yourself and inquire if they've made any plans to fix up or sell the property yet.  Your short list of questions shouldn't be any more intrusive than you'd ask a store clerk at a deli counter, meaning you are not trying to negotiate, merely satisfy your curiosity. If the owner talks about moving to Montana, for instance, that's what you ought to be talking about. That, and how you might be able to help make they move easier.  Give it the light touch.

Just like the Frank Zappa song goes..."Moving to Montana soon. Gonna be a dental floss tycoon."

Bill Gulley · Answer

I wasn't aware that Joe or Tim were in the title business, gee!

Talk to the owner, gauge the motivation and needs. They can give you the best information as to any outstanding probate issues and see where they are.

You should be working with a title company that can give you a preliminary search, mine were free as I closed enough with them they did free searches and commitments for me. Ask for the preliminary, as to clear title, not a full search until you have the property under contract. You can also get the seller to prove they have good title to convey and have them pay for it, you pay for the policy.

As to the deal, yes, it could be a sub-2, any heir can assume any existing mortgage, but you do have the same issues with the due on sale as if that seller were the original borrower.

I have also drafted purchase contracts, gotten future advance notes signed by the seller to fund rehabs, got a construction contract to perform work at a set price which can be financed as well. Then the owner signs authorizations for the contractor to obtain licenses and permits, obtain materials  and do the work. The work is accomplished, the property is sold either to me under the contract or they selling to the end buyer paying off the construction and financing outstanding and my name never appears on title! I have two areas of control, one as a contractor performing work with the ability to place liens on the property, by law a better position than a mortgage, and then again as a lender funding the construction process. A seller/owner really loses control if they do any twisting, one way or another or both ways, I get my money.

Check on a contractor's license in your area,  or work with someone who has a license. You don't need to take title to profit off the property.

A residential property that was occupied will be considered an occupied property for the heirs to seller finance it, and the time frame for financing  under the circumstances could be 100% with the right agreements in place if I were buying. To do that you may need to show experience, but you should not need  big down under these circumstances. Work with the seller to solve the problem, getting rid of the property at an agreed price. Lots of ways to do that. :)

BTW, all this "contact me" and "I'll do that stuff" is really for a PM as such really looks like solicitations to assist in a deal or work out some arrangement, we don't do that in the forums, not to be a forum cop, but I do have the badge....LOL! :)

Account Closed · Answer

Alex,

Nothing is free, and it cost to run a title search. You might have better luck if you pay the title agent to run the title report and that way you can get your foot in the door and believe me the title agent has heard that before if you run this search, I will use you on my deals. I will run one for free for you.

Alex Baev · Answer

@Taylor Shapiro

I've been wondering about the same question myself, how to access title info... people on here often speak of "free title accounts", etc., but then get wishy-washy about how to get one of those

It seems like it costs money either way

If you're curious, you can go to propertyshark.com and search for your property. It will give you basic info, but then offer you to create a free account, which will give you one free title search to use for one property only - with any liens and permits filed against the property in the last 2 years - after that first free search, each additional search is $6 i believe

In that search, you may have an option to see a PDF or photocopy of the deed, but it will only show you the cover page, and then ask you to pay to see the actual document.

I'm currently in a very similar situation as you, and I plan to contact a local title company tomorrow - Monday - and either offer to pay for a full title search, or talk them into a free one, provided I promise to use them if the deal goes through - I've heard that strategy often works

Account Closed · Answer

Taylor,

There are no online database unless you are licensed or want to pay a large sum per month to access it.

Joe Gore

Taylor Shapiro · Answer

@Rick Harmon thanks for your insight

As I mentioned before, this is the first time I've ever inquired about a vacant property. We've only dealt with the MLS in the past. I was thinking of sending them a simple, hand-written yellow letter or leaving a note at the vacant property. For some reason I feel as though calling them would be too intrusive/have a negative effect.

Thoughts?

It looks like I'll be teaching myself how to pull title this week :)

BTW- @Joe Gore and @Tim G., is there an online database you'd be pulling title from? How would you be able to gather that information without being in the same state/town as the property?

Possible sub2. Care to share insight on possible creative financing?

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