All Forum Posts by: Caleb Christopher

Yes it's possible. I most often see a private lender come in for that. They're risky though, if there's little equity to actually secure it.

A better risk for the private lender would be for you to borrow against your personal residence (if there's equity).

If they receive their equity in installments, generally they can elect to claim gains all upfront, or report it as/when received. And therefore, they'd be taxed either all upfront or as they receive the payment/benefit.

That's a great way to get into a property. Especially if you can find a distressed seller who'd be willing to leave their loan in place. You actually help the seller in multiple ways when you do that! You reinstate their loan (if it's in foreclosure), get payments back on track, and keep the now-performing loan open and in good standing. The age of a credit account is an important factor for credit scores, so by making his mortgage payments, you're helping his credit get and stay on track faster than it would have otherwise!

I just wrote a BP blog to explain the types of wraps: Wrap Mortgages Explained.

Quote from @Chris Ivy:

Hi Chris, thanks for the response.  William Tingle seems like a great resource.  Thanks for pointing me in his direction

There's mixed feedback (old): https://www.biggerpockets.com/forums/12/topics/411066-willia...

In response to your original question, getting it under contract is relatively easy. You do need additional disclosures to CYA, but starting a deal is way easier than doing a deal well and/or properly set up for the long term. There are a lot of considerations around your intended exit strategy that need to be factored into your entry paperwork (deal structuring).

Yes, you can find various contracts online, but like I said, getting into the deal is the easy part. You should find a JV partner or a consultant who's got plenty of experience doing the deals to help you avoid the common and not-so-common pitfalls.

Welcome and congratulations! Do you have the terms verbally negotiated already?

There are a lot of things with subto deals that are "dealer's choice" ... By that I mean, there are so many ways to get the deal done, you really need to be apprised of the implications of each fork in the road and make your own informed decisions.

1) Sources of paperwork for the deal: State real estate purchase contract wholesaler contracts, real estate attorney (I feel there's a false sense of security when using most attorneys for creative finance deals), JV partners, and consultants. I'm the latter, and I run 50+ deals per month.
With creative deals like this, it's important to understand your own exit strategy so you get the entry paperwork set correctly. And anyone on the loan must be fully onboard and be willing to sign a long set of disclosures declaring they understand their credit is still tied to the loan that you're now paying (and if you don't pay, it damages their credit).

2) Yes a Power of Attorney will be important, but for so many more reasons than the one you listed. However if you're thinking that's the solution to the due-on-sale, the deedback and CFD re-buy is not applicable in all states or circumstances. There are at least 8 strategies I've been able to count or come up with to handle due on sale. So just be aware that it's not like you can pick the resolution strategy now. You just don't know yet what will be required.

3) Are you talking about a performance deed? If so, beware! It's often promoted as a cure-all safety net for sellers, but it may well be unenforceable as a circumvention of due process of law... Search for a YouTube video called Is a Deed In Lieu of Foreclosure Illegal?

4) Either/or, but of the many attorneys, there aren't many who have a deep understanding of creative finance deals. I guess the same is true of consultants. What you're really looking for is someone who's got lots of reps doing creative deals, whether that's a JV partner, attorney, or a consultant.

5) Missing concerns? That depends on your deal structure / offer, what type of loan it is, whether there's down payment assistance on it, how old it is, if there are arrears to pay back, if it's having/had a loan modification done, whether the borrower on the mortgage is deceased or divorced or soon-to-be deceased, whether you want to buy in your own name or a trust or an LLC, whether you want to actually have title transfer on public record or not, whether you're ready to decide to pay 2 insurance policies or one, .... and so on. I digress.

If the person you're working with to help you on these deals isn't asking you all these questions and helping you make informed decisions, you're being disserviced.

I'm sure that if you've got verbal buy-in from all parties on this deal, you can have it under contract by end of day. Let me know if I can be of assistance.

@Account Closed any or all of that context would have been useful with your initial comment. That's the point of my prodding there.

I definitely DO concern myself with the risks, hence why I started a consulting company to help educate and guide people who would otherwise have practically no idea what they're doing.

No, there's no due-on-sale insurance, and Pace doesn't push it. There was a company he would mention from time to time, but they no longer exist. He opined to his students it was likely a poor use of funds.

Yes I'm aware of the larger issues, and the disclosures we use in my transactions literally have a highlighted portion regarding equity skimming. That can be pursued both civilly and criminally. It most certainly is a big deal.

Heck no I don't take responsibility if their deal blows up. Neither do the title company, closing attorneys, anybody else or their moms. Disclosures all around. It's a high risk transaction and the parties acknowledge the risk and their opportunity to seek legal counsel before proceeding.

Sued for 7 years...? That line lacks enough context to answer.

I'd love more context on the Alameda, CA situation. I do enjoy studying current events so I can better advise my clients and educate people in general on creative finance strategies and risks.

Overall, there's no light dismissal of risk by me or with my clients. Check my YouTube channel and you'll see plenty of warnings about pitfalls people should be aware of.

I've also recently assisted in handling 2 due-on-sale situations, and my clients are very happy with the results.

If you can verbally negotiate a deal, I'm happy to help you with all the docs and process. Hit me up at that time. I also have a YouTube channel packed with tips and tricks if you search for my name.

I'm a Subto Community Leader, and taught deal engineering and transaction management for a year inside the Subto mentorship.

This is a fantastic post. Great resource for those who are excited to do creative deals but unaware of what's ahead of them.

If you haven't made it a blog post on BP, I nominate it as a great candidate.

Quote from @Account Closed:

If you buy a property Subject To the existing loan and in 6 months the bank calls the Due on sale Clause or the crazy ex wife contacts the lender, what will you do?

@Account Closed What does fearmongering like this comment accomplish? Yes there are risks, but this is basically a thread hijack.

@Bryan Odom it what state you want the contract for?
For additional context, I'll tell you now that we use our own favorite contract nationwide, but I've had to make do with state contracts and other JV partners' own contracts all around the country for wraps, subtos, etc.

You don't need "the perfect contract" to get things going. A great contract is an asset for sure.

I'm not going to advocate you run fast-and-loose, because details matter... a lot. But a good contract does not a deal make.

If I can be of further assistance, hit me up directly.

You can JV or connect with someone who's already done plenty. We just ran one on the CAR state forms with addendums.

Contracts are just instructions to the closer. Think of them as the recipe you hand to a chef to cook up your order. 

It's easy to give incomplete or bad instructions to them, but the contract is the START of the deal, so even if you have a perfect contract, it doesn't make the deal go through successfully.

If I can be of assistance, connect with me directly, as we do dozens of these every month. We have our own favorite contracts, but whenever we have to use the state contract, we also get by just fine.