Posted by JohnBoy on February 15, 2002 at 17:25:00:
Every state has different laws pertaining to contract for deeds. So I would recommend having an attorney in your state draw one up for you. It should only cost $300 - $400.
You can use the LLC as the buyer and then have the LLC assign the contract to the buyer you find to assign to.
Since you would be assigning this you could structure this to where the seller can make some cash flow and a back end profit by setting up the sale price as you would if you were holding and selling to a buyer, minus any down payment you would expect to get. Only instead of the seller getting a decent down payment you would get that as your assignment fee. The seller would get the cash flow and back end profit.
Then all you do is run an ad saying something like:
NO BANK QUALIFYING!
$5k Down and Take Over Payments!
Call XXX - XXXX
Then you take the $5k or whatever amount you get as your assignment fee and your buyer just assumes your contract you have with the seller from you! Get a signed release from the seller releasing you from the contract and you’re done! A quick profit minus your advertising expense!
I am talking with a seller who realizes he can no longer make his payments. He is still current and wants out. He is over encumbered on the property around 15%. He is willing to deed me his property subject to. I am thinking about assigning to a buyer for some quick cash. I would take ownership in a land trust. Do I need to assign intrest of the trust as well as assign the purchase contract? What is the best way to do this? What about the trustee?
Re: Assigning “subject to” Johnboy Help! - Posted by JohnBoy
Posted by JohnBoy on February 15, 2002 at 15:39:29:
I would not recommend assigning “subject to” deals. The problem is that once you do that it gives legal title to the buyer and if they default on the seller’s loan then the seller has no recourse to get the property back. That could create a real mess and lead to a potential lawsuit against you in the end.
Instead, either do the deal under a L/O or a contract for deed and then assign that to you buyer. That way the seller retains legal title until the buyer cashes him out and/or pays off the contract. The seller is in a much better secured position to protect his interest.
Just make sure you also get a signed release of libility from the seller before you finalize anything with your buyer.
Also, should the buyer under a L/O or contract for deed default, you could offer to have the seller assign his interest back over to you where you could step in and take care of getting the buyer out, then make another profit by getting another buyer in the property. That’s assuming the cost involved at the time would be worth it to get back involved with it again.
Johnboy,
Thank you for all your help. I really apprecite your time and knowledge. I have all the forms for a subject to and lease option, but which forms do I use for a contract for deed? Do I take possetion in a trust or just as my LLC? If trust who should be the trustee if assigning? Also, some state are mortgage states and some are deed states I believe, what is the difference if any?