How To Buy Distressed Properties "Safely' Using SubTo and Wraps

[Ken M.]

Sorry, this is not "safely participate" territory. There is always risk, and these are highly risky and regulated techniques. So, there is even more risk.

The things that you can do, include being properly capitalized, not be greedy, (in whichever way that may be defined in the county you are buying), know solicitation laws, know Dodd-Frank, the Consumer Protection Act, the S.A.F.E. ACT and the various localized distressed property laws. Mortgage laws, title and Deed laws, wire transfer laws, landlord tenant laws.

Realize the seller of a distressed property has rights. A seller can not sign away his rights in a purchase or any other document. Any "perceived" deception at any point, will be severely counted against you by the court. Hiding in a Trust is viewed as "hiding" which implies "deception". You can be charged with wrong doing up to 10 years after you buy the property. 

Just because you haven't heard from the Lender, A.G., FTC, FBI for the last couple of years doesn't mean you are "in the clear". Your seller can complain years down the road that he was "tricked" and you will be thrown into a lawsuit and investigation. It isn't doing "SubTo's" that is illegal, it's how they are done and how they are treated and what your assumptions are and what your unpredictable seller does.

Attorneys love these kinds of fights. You should have money set aside for litigation. A law suit runs about $25,000 and a year and a half. Judges favor the seller. If the seller files for bankruptcy, that will involve you in a legal proceeding. There are serious consequences if things go badly. In some jurisdictions, you are liable for 3 times the value of the property if you lose. Some penalties are far worse.

That's before my first cup of coffee. There is more, but let's focus on doing things legally and properly instead.