Owner Finance, Dodd Frank Questions

[Benjamin Blackburn]

I've been researching a lot lately on Owner Finance Investing. In a nut shell... I plan to use private money to take down properties, turn around and sell the property at a higher price and rate to an end buyer who typically couldn't qualify for regular lending through a bank. Basically the Mitch Steven method.

In regards to the Dodd Frank act. From my understanding, it's there to protect the consumer for not getting into something they can't handle... Is that correct?

Obviously I will be doing the ethically but to make sure I'm protected, do I simply just need to make sure I'm going through a title company for everything? Or are there other things I need to be sure to look out for? I'm in Texas btw. 

Any information would be highly appreciated. 

Thanks

[John K.]

I would recommend you use the services of an RMLO. They will ensure that all regulations are met, in regards to disclosures and TIL statements. The fee is usually paid by the buyer. This will give you the insurance in case something were to be challenged. 

[Danny Webber]

agree with John K. 

Use an RMLO to button up the transaction. I do a lot of these and you definitely need to put in some safeguards. Look for a title company that does these as well. Capital Tile- Ceshker Group does mine. I know they do transactions in Houston as well.

[Benjamin Blackburn]

@John K. Thank you very much for your response. I’ll look into that now.

[Benjamin Blackburn]

@Danny Webber Thanks a ton. Yes I actually use Capital Title right now for everything.

[Jerel Ehlert]

There are lots of pitfalls waiting for the unwary. Talk to a lawyer. If you can avoid it, don't let the title company draft your closing docs because that lawyer isn't representing you in most cases, but representing the title company or is a courtesy representation. RMLO is a basic requirement for the initial disclosures. Find a loan servicing to pick up some of your ongoing regulatory requirements.

[Kaelyn Motzel]

Use an RMLO. We use AugustREI currently https://www.augustrei.com/residential-mortgage-loan-originator/

[Benjamin Blackburn]

Originally posted by @Jerel Ehlert:

There are lots of pitfalls waiting for the unwary. Talk to a lawyer. If you can avoid it, don't let the title company draft your closing docs because that lawyer isn't representing you in most cases, but representing the title company or is a courtesy representation. RMLO is a basic requirement for the initial disclosures. Find a loan servicing to pick up some of your ongoing regulatory requirements.

Thanks a ton. That makes tremendous sense in regards to the lawyer not really representing me if I were to rely on the title company.

[Benjamin Blackburn]

Originally posted by @Kaelyn Motzel:

Use an RMLO. We use AugustREI currently https://www.augustrei.com/residential-mortgage-loan-originator/

Thanks, I'll definitely check them out and get in contact. I notice you're in houston as well. Do you specifically focus on owner finance?

[Kaelyn Motzel]

@Benjamin Blackburn We have 11 rentals and 3 owner finance. Two of the owner finance deals are sold and one just went under contract. We just started that about 6 months ago but would really like to get some more under our belt! I'm a big Mitch Stephen fan too! How about yourself?

[Benjamin Blackburn]

Originally posted by @Kaelyn Motzel:

@Benjamin Blackburn We have 11 rentals and 3 owner finance. Two of the owner finance deals are sold and one just went under contract. We just started that about 6 months ago but would really like to get some more under our belt! I'm a big Mitch Stephen fan too! How about yourself?

That's so awesome! You're killing it out here. My wife and I only have 1 single rental right now in Humble. Looking to acquire more and sprinkle in some OF properties as well. 

My partner and I have a wholesaling company and a about 3 months ago a light bulb came on and we realized we need to start keeping some of the properties that we are selling to other investors. So the plan is to now start cherry picking from our inventory and start building wealth for our families. 

Rentals are great and they will always be the main goal. But I feel that the Owner Finance route will be for that "Right Now" type cash flow that could provide financial freedom for my family now vs the rental's "long play". So that's why the plan is to sprinkle to OF in there as well. I've binge listened to a lot of mitch's podcast and trying to fully understand the private money sides of things. I get the gist of it but need to understand fully before I start pitching it to potential lenders. 

Currently we have about 3 PML that lend on our wholetails and flips but they aren't looking for the longer type notes... Only the short quick ones. 

So that's where I'm at. Sorry for replying with such a long book, Lol.

[Kaelyn Motzel]

@Benjamin Blackburn that's awesome!!! Humble is a great rental market. I 100% agree with you - owner finance is more "now" money. We just started making money on that and plan on letting that pay for future rentals and/or dividend accounts.

Sounds like you're making the right move with wholesaling!! I'll shoot you a message. Would love to connect more!

[Mark Sewell]

Originally posted by @Kaelyn Motzel:

Use an RMLO. We use AugustREI currently https://www.augustrei.com/residential-mortgage-loan-originator/

Oh wow, didn't know they were an RMLO.  I've made payments to them on a HM loan I did a couple years back, so I just assumed that they were some kind of mortgage servicing company.

[Kaelyn Motzel]

@Mark Sewell You are correct, I made a mistake! We use august REI for loan servicing. We've used two different RMLOs on our deals. We talked to local agents to find a local lender who would help us out. I believe they charged $500 to approve. We made a mistake of processing someone on our first deal and lost the $500 before we got a deposit. Now we have the buyers pay for it.

[Thomas Weidner]

@Benjamin Blackburn Safe Mortgage Service’s is another Loan originator.

[Thomas Weidner]

@Kaelyn Motzel are your properties that you have owner financed wraps or did you pay cash for them?

[Kaelyn Motzel]

@Thomas Weidner They are wraps

[Mark Sewell]

OK @Kaelyn Motzel so tell us, who are the RMLOs that you have used here locally?