All Forum Posts by: Troy Michaels

Lokesh W. I always try to work as simple as possible...it normally takes me all of 3 minutes to put the figures together for a seller. So..my first advice is to keep it simple...it either works, or it doesn't. I say that, only to let you know that you want to help the seller, but the seller has to be willing to be helped...(is that proper English?)
So, first...wipe the slate clean...let's start off here assuming this seller contacted me.
He says he wants $205k..Great..whatever. Let's me see if I think it will appraise. I look at price per sf in that area, listed houses that are not FC'd and I see that it is probably only worth $185k. I e-mail or cal the seller back. Sorry, I'd love to help, but the comps don't support what you need. Sorry, wish I could help..click...
No need to try to crunch major numbers that are totally made up and arbitrary anyway. If the house won't appraise, and you look to make it a 3 or 4 year deal, the odds are the buyer won't even purchase anyway. NOW, if the #'s were tight, and I felt like we just needed a little bit more than a standard 1 year deal, then I might be willing to look at whether a 2 year deal is worth it, but what I don't want to do is give the seller false hopes and screw the buyer into a house that will not appraise so I can make $4k just to support my crack habit.
But..let's assume I look at the #'s and the owner wants $205 and I think it should appraise for the $205-$210k range.. great..let's make it happen.
Here's what I do...
IF I feel I can do it, I raise the price the owner wants by approx. what I am going to make...which, I can't ALWAYS do, but I try if I feel there is room...but let's keep it simple....
Option Price: $210,900
- Assignment fee $7500
= $203,400
Rent $1695 a month (I might go up some if the owner's payments are more) Rent credit $300 a month x 12 months = $3600 (although in our docs it just shows a seller concession of $3600..no reference to a rent credit)
$203,400 - $3600 = $199,800 and I would usually give the owner part of the assignment fee..say..$1,000 or you may want to go $1500. Up to you. So add the $1k and he gets $200,800 plus whatever cash flow.
The buyer at finance will have $7500 down which actually is a hair above what FHA requires and will have $3600 towards closing costs.
I use my Seller Price Sheet to complete and send to the seller via e-mail so it's all laid out.
If the seller whines about wanting $5k down or something...well...I move on...I have too much going on to try to get $15k down or whatever on a $200k house so the seller can get a big down payment.
You want to help, and you can be willing to bend some, but if you start bending too much...well..you'll end up getting...bent over...HA!! WHEE!!!
I put a video together showing the seller price sheet a while back. It's on YouTube I think. Maybe it will help.

Very good response. I know this is a old post but it still relevant.

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thanx for the response. that clears that up............:)

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when buying subject to the existing mortgage, do you submit future payments to the bank using the name of the seller? how are investors doing that? im using a land trust to purchase a property subject to . thanx.

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couple questions. i know these are basic simple questions, but wanna make sure:

1. if you use a land trust to close on a subject to property, does the trustee sign on behalf of the trust on the deed you get from the seller? example: john doe, trustee for "whatever trust"?

2. a search of the property would show the name of the trust as the owner, and not the trustee, correct??

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Originally posted by @Bill Gulley:

Originally posted by @Michael Otranto:

I have never done a sub-2 with a VA loan. However, the correct way to do subject to deals is to have the owner quit claim the property into a land trust for "estate planning purposes". This is protected by the Garmin St. Germain Act. I have yet to be involved with a sub-to deal and have a bank call the loan on us.

Everything you said is incorrect. Spend some time research how we work here on BP, when you tell people the "proper way" of doing something you need to be correct on a national level. Most with real knowledge here don't follow guru stuff and will often pounce on any guru method as well, especially when such can cause problems.

VA loans can be assumable, the borrower is still on the hook, you may not need to do a Sub-2 at all, just buy it.

Never use a quit claim deed in any sale transaction, Sub=to deals are done with Special Warranty Deeds. You don't need any trust.

The exemptions under the Act mentioned are to trusts and transfers dealing in estate planning matters, not simply to any trust.

Search here on BP "Due on Sale" you'll find that there are total misconceptions made by investors. If any lender accelerates maturity under this aspect your recourse is to sue to stop foreclosure or pay it off in some manner.

Yes, I worked properties around Army posts, I used VAs. Get to know your post housing folks. :)

if you are not using a trust to do a subject to, then, are you using a llc or your own personal name?

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besides due on sale disclosures, and disclosing what your intent to do with a property is, what are some other disclosures a investor should give a seller in a subject to transaction?

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Originally posted by @Brian Gibbons:

Originally posted by @Manny Cirino:

It is just me or is everyone too worked up about the liabilty in owner financing. I always tend to see the cup as half full and always exam the risks in ever situation since in any situations there is a certain amount of risk to be aware of.
The first time I worked my RMLO I attempted to advise her of the terms I negotiated and asked her to keep the monthly low enough to cash flow. Since she is also and investor, note purchaser and servicer she understood what I was doing but made it clear that the terms had to be fair to the seller/lender and could not manipulate terms or under cut the seller. Her balance of ethics and investor knowledge presents good value and minimizes risk. Instead of trying to be DF/SA pros. surround your self with individuals who are.

I love this.

Do your marketing, find a problem, offer cash or terms, if terms use your RMLO, simple.

Manny u rock!

my bad, i thought the original poster was strictly talking about selling on terms, but he was speaking from both ends. i like the ability to buy on terms.

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Originally posted by @Manny Cirino:

good post and observation.

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Originally posted by @Account Closed:

@Troy Michaels,

That is why an MLO has insurance and E & O insurance, just in case they do something wrong you go after their insurance, and the MLO must check all paperwork to make sure it will pass the DF act. And at this time take everything someone say about the DF act with a grain of salt because it has not been tried and tested.

Joe Gore

i agree. thats why i would use a mlo if i ever had to finance a property for someone.

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Originally posted by @Bill Gulley:

And exactly why you most likely won't find a bank that will originate a loan for an owner or individual.
FDIC put the brakes on banks "assisting" customers like this back in the 80s as the bank was performing a service in a loan they had no interest in exposing them to liability. Since FDIC insures banks and has an interest in the business conducted and exposures to risks, such banks got spanked.
There are risks to lending that go far beyond the loss of money lent.
While, in reality, if the originator/underwriter really know what they are doing, risks are very minimal. Now, since this is a new source of business that could be paid for, RMLOs may engage in this activity, if they screw up they could lose a license or get fined or both. If a sponsoring bank (sponsor of that RMLO) allows him to originate they will want to be paid, probably handsomely for accepting that perceived risk. :)

i always wondered why mortgage brokers originated loans and not banks. this brings me back to my original post. if a mlo isnt liable, then WHY even have to go thru the middleman? if the fdic required banks to stop being the originator, and use a mlo, then the sole purpose of a mlo is to originate loans on behalf of their clients. thats why they are bonded. so, just like with any insurance, you would think any claims go against the insurance. if thats not true, ( i dont know how its been in practice in the past), thats like buying car insurance, you hit somebody, but your insurance company isnt liable and does not have to pay, you do.......

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All Forum Posts by: Troy Michaels

Troy Michaels has started 38 posts and replied 113 times.

Post: Lease Option: Any Limit for money applied towards Mortgage/ Down Payment???

Post: Subject to deals. do you submit payments in the name of the seller?

Post: Subject to deals. do you submit payments in the name of the seller?

Post: Subject to land trust questions

Post: SUB 2 with VA loans

Post: Disclosures to seller in subject to transaction

Post: How do you still owner finance with Dodd Frank?

Post: How do you still owner finance with Dodd Frank?

Post: How do you still owner finance with Dodd Frank?

Post: How do you still owner finance with Dodd Frank?