Re: Discount Mortgages - Posted by Bill Gatten
Posted by Bill Gatten on March 03, 1999 at 14:41:06:
THE FOLLOWING IS NOT AN ADVERTISEMENT!!! Just good sense! You MAY try this at home! You don’t need to see dealer for details! Phew!!
Mark, consider placing the properties into two different land trusts in your own name and making the tenants co-beneficiaries in them with you. Then increase their rents to the level their payments and expenses would be if you carried paper (the lease needs to be a triple net lease): this gives them 100% of the same benefits any homeowner could have.
Set the trust and the respective leases to terminate in 2,3,4 or 5 (or more) years, at which time the “resident beneficiaries” are obligated to either–1) sell and pay you off or 2) re-finance in their own names and pay you off. In the meantime, you have positive cash-flow, whatever you can collect from them up front (if any) for their “equity contribution,” and 100% of the freedom from repairs, mtce, management, insurance, etc.: all paid by them in exchange for the interest and property tax write-off (equity build-up and appreciation).
Mark, in this scenario, you can contractually give them all or only part (e.g., 50%) of the Future Appreciation and Equity Build-up… it’s up to you). And you have not violated a Due-on-Sale clause or jeopardized the property’s title (liens, suits, judgement, BKS, martial deputes, etc… cannot attached to a co-beneficiary held land trust property). Further… it they don’t pay: you can kick them out as tenants, in lieu of having to resort to foreclosure, ejectment and Quite Title due to their claims of “equity.”
Hope this helps.