Code § 1701j–3 - Preemption of due-on-sale prohibitionsSee the exceptions(d) Exemption of specified transfers or dispositions With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon— (1) the creation of a lien or other encumbrance subordinate to the lender’s security instrument which does not relate to a transfer of rights of occupancy in the property; (2) the creation of a purchase money security interest for household appliances; (3) a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety; (4) the granting of a leasehold interest of three years or less not containing an option to purchase; (5) a transfer to a relative resulting from the death of a borrower; (6) a transfer where the spouse or children of the borrower become an owner of the property; (7) a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property; (8) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or (9) any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board.

We have friends already in the business who are motivational,as well as instrumental in helping us get started.

@Logan Hicks... but at the end of the day, you've still planted a grass species in an aired, semi-desert environment to which it is unsuited and would never occur naturally.Ultimately, Mother Nature shall prevail ... 

I'd spend as much time as possible learning about personal finance, reading the BP blog and listening to podcasts and also check out these resources as they've been instrumental to me "righting the ship" (no affiliation):Mr.

I would think your private lender would have to be very foolish to not record a security instrument in order to secure his investment. 

My purchase contract states "title to the above described real estate to be conveyed by Warranty Deed or other customary instrument of transfer..."

Try never make it a permanent part of the public record because adobe photo-shop can be your worst enemy.Look up the laws of assignments, transfers and sale of negotiable instruments in your part of the world and also endorsements in accordance to the uniform commercial code.

They have been instrumental in whatever success I have had investing in real estate  . 

JUDGMENT AND LIEN INSTRUMENTS Document Type: Judgment Execution Date: 08/07/2000 Instrument No: U627719 Recorded Date: 09/18/2000 Amount: $14,525.66 Holder: STATE OF TEXAS ----------------------------------------------- Document Type: Judgment Execution Date: 09/13/2005 Instrument No: Z039170 Recorded Date: 01/20/2006 Amount: $14,570.70 Holder: DEPARTMENT OF THE TREASURY - INTERNAL REVENUE SERVICE ----------------------------------------------- Document Type: Judgment Execution Date: 08/31/2005 Instrument No: Z112380 Recorded Date: 02/24/2006 Amount: $1,172.00 Holder: THE STATE OF TEXAS ----------------------------------------------- Document Type: Judgment Execution Date: 05/04/2009 Instrument No: 20090564462 Recorded Date: 12/15/2009 Amount: $15,953.12 Holder: WACHOVIA DEALER SERVICES, INC.

This scenario could easily be reversed by comparing the tax rate on gain from trading (i.e. buying and selling) the debt instruments which would be lower against the tax rate on rental income from the real estate investment which would be taxed at a higher rate (i.e. ordinary income).It doesn't seem fair to say that a real estate investment is taxed less because its capital gain tax rate is lower than the ordinary income tax rate of a debt instrument.