All Forum Posts by: Andrew Pappas

Wow..I thought Rich Dad was a pretty reputable company, or did these investors just sell to bad tenant-buyers?  Are you against lease-options?  What about assigning lease options for a small fee so you are out of the deal?  

This could be an issue with any sort of seller financing though, right? New buyer defaults, and eventually the investor can't/doesn't pay the monthly payment to the note holder.  I see how this is a big problem if there is an existing mortgage on the property, but if the seller owns free and clear, I would think buying seller financed and re-selling seller financed could work fine.

Yeah that all makes sense.  The only other option I see is to lease-option it and assign the lease option to someone else, and be out of the deal?  I explained this to the seller and he wasn't crazy about having another tenant in the property, so this probably won't happen.  I have told the seller just to put it on the market.  Thanks for all the input.  Definitely learned a lot without making any mistakes.

Yes that is a problem I am trying to work through.  I'm discussing it with my attorney, but I've heard of people putting the insurance in a trust in the name of the original owner, and making the new owner a trustee.  I would also explain to any buyer that I don't have title to the property, but it will be transferred when the contract is fulfilled by the balloon payment.  I'm not trying to screw anyone over.  This guy actually really needs to sell so I am trying to figure out a way that makes sense for me.  He's in a tough spot. 

I have also explained the concern of the due on sale clause to the seller.  Surely there are people who have successfully sold a property with a mortgage through a contract for deed, or found a way to keep the bank from calling the loan due without assuming the mortgage.  Do I have any other options?  Any advice is appreciated.

we do a contract for deed and sell it to someone else contract for deed with terms that provide us cash flow and a balloon payment in 3 years that will turn is a small profit.

Yes.  With his mortgage payment at $859, the rent in that market isn't high enough after all my operating expenses to produce a cash flow.  If I sold it seller financed my operating expenses would pretty much disappear and I could structure it so I get some cash flow.   People are likely willing to pay a bit more for a property if the down payment is low and monthly payment is still below market rents, correct?  I would  either do this or a lease option.  

can I seller finance a property if I purchase it subject to? Does the loan go in my name at that point? I've got a call set up with my attorney tomorrow.  I'm counting on some good advice from him.  

Hello, I have a specific question and haven't been able to find the answer.

I have a very motivated seller who owes about $126,000 on his house, which is also what it's worth.  He is willing to repair the property and sell it to me through a contract for deed for no money down.  His monthly principal and interest payments are $859, taxes are $700/year, and insurance $763/year.  I buy the house seller financed for the balance of the mortgage.  He continues to pay his mortgage, and I pay him the monthly principal and interest payment, which I will structure be the same amount he pays.  He is no longer burdened by the property. My questions are:

1. So the seller would hold legal title to the property, but I would take possession and full responsibility for the property, correct?  How do we avoid triggering the due on sale clause with the mortgage?  I would have to insure the property in my name, and the mortgage company would see this.

2.  Do I just pay the taxes directly to the county and insurance to the provider, instead of through escrow?  The seller would have to change his escrow payment to remove taxes and insurance, correct?

3.  For my exit strategy, I would seller finance it to an owner occupied buyer.  Can I set the interest rate so that I generate cash flow off the note after I pay the seller my payment, or does this violate Dodd-Frank?  And I won't be able to structure a balloon payment with an existing mortgage on the property, because the new buyer won't be able to refinance.

I see a potential for everyone to win here-the seller is relieved from this property, my new owner-buyer gets a nice property for below rent payments, and I get a monthly cash flow from the note.   Thanks for the advice

I read that article, which is what confused me about the previous posts on this topic.  I'm looking at selling a property using seller financing, but I would need to use a 7% interest rate or so for it to work.  It's still a good deal for tenant buyers because it's below market rent (before taxes and insurance).  I just want to be sure everything I'm doing is legal.

Can you charge an above market interest rate if selling a property using seller financing?  I thought Dodd-Frank prevented this?  Or are all of the above references deals to investor buyers?