Gotta sell my house soon and need help! - Posted by Michael (FL)

Posted by Brad Crouch on April 28, 1999 at 21:36:39:


Yes, I had the same thoughts. The PACTrust is kind of complicated to sell. But Bill teaches that you don’t sell the PACTrust at all. You just find a seller who doesn’t mind staying on the loan for a couple of years and let someone else come in and take over the payments and handle all the costs until they can refinance and put their own financing on the property . . . in say 3 or 4 years.

If it’s a rental property, you just say that you have someone who would be willing to pay quite a bit more than a regular lease payment, in order to get the tax write offs.

The PACTrust is not what you do, it’s the “way” you do what they want you to do.

As for VA loans, I’m afraid I can’t help. I would suggest that you ask JPiper or Bill Gatten. There are other folks on this site who know about those types of loans, too.

I don’t know what Bill Gatten is up to lately. I know he did a seminar on April 23rd in Corona, CA, but I haven’t seen him since. I hope he’s too busy to turn on his computer. You can call him at 1-800-207-4273.


Gotta sell my house soon and need help! - Posted by Michael (FL)

Posted by Michael (FL) on April 25, 1999 at 23:23:20:

To be quick: I’ve followed this page for several months and find it most stimulating and now I’m in a pickle. I bought my house last year for 97K (FMV 99K) and now I have found another job 1000 miles away starting mid-July. This was my first house purchase and it was with a VA loan (talk about hoops to go through). I’m willing to be creative but I’m not sure where to even start (i.e. what is the minimum I need to do to sell the house myself, what does a l/o offer, and so forth). Hiring a realtor could cost me way too much $$$ in commisions but is there as a last resort. Rent will run about even with all monthly payments (except homeowners ins.). I’ve combed over all my paperwork and couldn’t find anything yet prohibiting my owner-financing but I don’t know if it is mixed-up in legal wording.
ANY help is appreciated in advance. Thanks,
Michael (FL)

Re: Gotta sell my house soon and need help! - Posted by Dave T

Posted by Dave T on April 26, 1999 at 23:08:31:

Add $15K to your current loan balance and sell with 100% owner financing on a land contract at 9%. The buyer pays all closing costs. Market as a FSBO.

You are still responsible for the underlying mortgage. Your buyers will probably sell or refinance within 5 years and get you out of your VA loan.

You probably still have some VA eligibility left even though you have not paid off your VA loan. I believe that you can use your remaining eligibility to buy another home.

Re: Gotta sell my house soon and need help! - Posted by SandyFL

Posted by SandyFL on April 26, 1999 at 14:57:11:

Michael, I am in the Miami-Ft Lauderdale area if that helps you. If your house is outside of this area, I know several other Fla investors who would be willing to help you find a solution.

Good Luck,

Sandy Manuel

Where in FL? You could use a land trust to… - Posted by FJW

Posted by FJW on April 26, 1999 at 12:22:01:

protect yourself better than with a L/O alone. Plus, if you set it up right, you’ll be able to command more lease income because you can sell the tax write off to your buyer. They’ll be able to take the interest off of their income taxes and in the long run, it will actually cost them less even though their monthly payment will be higher. I’m not sure about this next item, but again, if set up right, you may be able to regain your VA eligibility since it is in a trust and therefore will not violate DOS clause and is in compliance with Garn-St. Germain. Like I said, not sure about that one. Check with Bill Gatten & use of PACTrust with VA mortgages.


Just a thought… - Posted by Russ Sims

Posted by Russ Sims on April 26, 1999 at 11:48:17:

I just L/O’d a home from a nice couple that is in a situation similar to yours: home bought 2 years ago with VA zero down. Now they must move out of state and have very little equity. I’ve got the house under contract for two years, but they told me the sooner it sells, the happier they’ll be due to the fact that their VA eligibility is tied up until the home sells. In other words, they can’t buy another house under VA terms until this original sells. You’ve probably already thought of this, and if you are planning on renting for a while, no big deal. I think this would be an issue even if selling for contract for deed, as the house would be viewed by the VA as still yours.If I’m wrong about this, someone please correct me! Just some considerations…

Re: Gotta sell my house soon and need help! - Posted by JohnBoy

Posted by JohnBoy on April 25, 1999 at 23:28:46:

What is your total monthly payment PITII?

Re: Gotta sell my house soon and need help! - Posted by JohnBoy

Posted by JohnBoy on April 27, 1999 at 02:24:56:

I disagree with 2 things here. One, I wouldn’t offer 100% financing if I’m carrying the note. I would want at least $5k down on a $100k home. I’d want the buyer to have something into the deal to help insure they will take better care of the property and have an incentive to pay the note on time every month. Although that doesn’t guarantee they will, it sure helps with limiting yourself to someone that has nothing to lose at all.

The other thing I wouldn’t do is carry the note with the hopes that they may refinance or sell within 5 years to get me out from under the mortgage. I would amortize the note over 30 years with a 3 year balloon. This way I know how long I’ll be responsible for that mortgage. If I needed to, or if I chose to, I could always extend the note for the buyer depending on their circumstances at that time and my circumstances also. This way I’m in control of this deal with limited time frames to get me cashed out and out from under the mortgage.

That’s just my opinion on how I would handle that.

Re: Where in FL? You could use a land trust to… - Posted by Brad Crouch

Posted by Brad Crouch on April 28, 1999 at 12:28:12:


It is IRC 163 H 4 (d) that allows your buyer to take active tax writeoffs (loan interest and property taxes), if certain other conditions are met.

I don’t have the section in question in front of me, but off the top of my head it requires the buyer to have the burdens and risks of ownership and a contractual obligation to make the loan payments.

And you’re right about higher payments actually being cheaper (in the long run - annually) sometimes. In order to pay $700 per month in rent, you have to earn about $1,050 because these “rental” dollars are “post tax”. With the tax deduction of a homeowner, you can actually afford to pay more and even give yourself a raise in income, in the process.

For the people working a “job” who say, “$700 per month is a stretch and I simply can’t afford $1,200 a month!”, all they have to do is have their employer take less taxes from their paycheck by modifying their W-4 withholding form.

A PACTrust is a good solution here.


Re: Gotta sell my house soon and need help! - Posted by Michael(FL)

Posted by Michael(FL) on April 25, 1999 at 23:42:51:

My monthly payment is $888 PITI on a loan with 7 7/8% interest rate. My rate is so high because I went with less money down in exchange for an overall higher rate. That was the only way I knew how to get in the house at the time–go with that loan or else not get in! By the way, rents for my area go for $950-1050 for a 1400s.f. pool home (3/2/1) and I’ve already had offers for $975-1000/month from two families but I’d prefer to sell (or l/o).

Yes, I think it would work well here. I’m starting… - Posted by FJW

Posted by FJW on April 28, 1999 at 16:15:29:

to think it’s the way to go everywhere…if you can manage to sell it. That seems to be the hard part.

But, do you happen to know anything on how it may affect the ‘restoration of eligibility’ for a VA loan? I’m guessing and hoping that with the proper written explanation, a VA borrower may be able to restore their eligibility for a VA loan, the same way a conventional borrower is able to restore their debt to income ratios after they have transfered their property(etc.) into the PACTrust. Any ideas?

BTW, where is Mr. Gatten anyway?

Thank you


Re: Gotta sell my house soon and need help! - Posted by JohnBoy

Posted by JohnBoy on April 26, 1999 at 24:16:13:

You can sell on contract for deed or Lease Option it. The main question is whether you want to have to deal with this later after moving out of state. If not, then I’m sure you could find several people from this site living in Florida that would be willing to take it over for you.

If you want to deal with it all yourself then you can get a decent price and a monthly cash flow off of it.

Run an ad in the paper under “homes for sale” and “homes for rent” in the classified section.

NICE 3bd/2ba House
Only $1200 Month
Call xxx-xxxx

When people call ASK them how much they can put down? Don’t tell them what you want down first. They may offer you more than you would take. You should be able to get at least $5k down on a $100k home. When selling on contract or a L/O you can get above market rents and price because of the terms your offering.

Sell for $115k with at least $5k down as “Non-refundable Option Consideration” at $1200 per month rent on a 1 - 2 year L/O.

Or sell on contract with at least $5k down at 10% interest amortized over 30 years with a 3 year balloon. Their monthly payment of principal and interest on $110k would be $965.33 plus taxes, insurance and whatever your mortgage insurance is. In 3 years they will have to get a new loan to pay you off which the balance owed to you in 3 years would be $107,966.78.

Your PI is probably around $697 per month. Your buyers PI would be $965.33 leaving you with a positive cash flow of about $268 per month.

$268 x 36 months = $9,648 + $5k down = $14,648. At the end of 3 years they still owe you $107,966 and your pay off will be around $93,200 (estimated) leaving you another profit of 14,766.00.

$14,648.00 + $14,766.00 = $29,414.00 total profit over 3 years!

Don’t even think about listing it with a realtor! You will take a loss at this point. If you don’t like the above examples I gave and don’t want to bother with this, e-mail me and I’ll go to work on just taking this off your hands for you if you want.

You can make out pretty good on this one if your willing to sell on terms. Why just give it away?? :slight_smile: