Hello I'm hoping to get some insight on if this deal structure makes sense. I've bought properties before via "Subject-To" but I've never done a novation or a land contract.

Deal Details

I have some sellers who are falling behind, but they have a good mortgage at 3.25% interest rate. The property needs some work but not much. Planning to give them about $10,000. Take over mortgage of $125,000. Put about $20,000 or less in repairs, then sell it on MLS for about $220,000.

My plan was to "self-perform" a land contract by filling out a purchase and sales agreement for a land contract that specifies I will take over the mortgage payments, get authorized on their mortgage, and be authorized essentially to fix up the property and eventually sell it on the MLS since the land contract will give me that control/equitable interest. So I was going to start title search first, then if it comes back clear I'll give them about $10k cash for them to move out and catch up on bills, then fix the place up really quick and turn around and sell it on the MLS. Then payoff their mortgage/liens and I take the rest.

If I structure it this way I've been told I don't necessarily need to go through a title company and formally "Close" on the property which would save me a few thousand bucks. I think it would be lower risk than a novation since I'll have more control. Instead I would just need to do the title search first, then once I pay the down payment file a memorandum for the amount I paid them, and then record the purchase and sale contract/land contract with the county so it's on record and clouds the title for extra protection.

Does that sound like I am doing this right or should I just buy the property subject-to with maybe a one year balloon, then just bite the bullet and close on the property and once it's fixed up turn around and sell it again. My biggest concern other than the closing costs was that if an FHA buyer tried to come buy it my understanding is they would need to wait 90 days from when I bought it and I think it would only take about a month to fix it up. Any insight here is greatly appreciated!!

Dallas, Texas

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