HELP! ANY IDEAS HOW I CAN RESOLVE THIS MATTER - Posted by Junior

Posted by SedonaSam on January 08, 2010 at 07:15:23:

From my personal experiences, yes they tend to stay longer, and in all
cases but two they ended up buying. No as to the sizable down
payment. Here is the process:

IN THE BEGINNING

  1. A (title-holding) land trust is created in the name of the current
    owner (the settlor) who holds a 100% beneficiary interest . No one else
    is involved, only the owner and his/her trustee. In a land trust, unlike
    other trusts, full legal and equitable title is held by the Trustee, which
    is why I only use a professional, non-profit corporation that
    specializes in holding trusts.

  2. Escrow is opened to facilitate the assignment, in the existing land
    trust, of beneficiary interest to co-Beneficiary.

  3. A Beneficiary Agreement is created between beneficiaries wherein
    the property’s Mutually Agreed Value (MAV) is established in order to
    determine settlor beneficiary’s beginning Beneficiary Contribution
    (equity and/or any non-recurring closing costs, etc.). This
    documentation also reflects all co-beneficiary contributions (equity
    contribution and/or non-recurring costs).

  4. A Possession and Occupancy Agreement (triple net lease) is
    executed between the trust and the 2nd co-beneficiary (responsibility
    for collections and disbursement are then assigned to my Trustee).

AT THE END

  1. The property is either sold by the trustee at FMV, or purchased and
    refinanced by co-beneficiary who has first right of refusal at FMV.

  2. All loans are retired (out of the proceeds of the sale or refi).

  3. Costs of disposition are paid (e.g., escrow, re commissions, etc.).

  4. The settlor beneficiary then is refunded its beneficiary contribution
    (beginning equity and non-recurring startup costs).

  5. The co-beneficiaries are refunded their beneficiary contributions
    (non-recurring startup costs, equity contributions, escrow fees, any
    part of commissions paid at inception, etc.)

  6. ALL remaining (net) proceeds are distributed among beneficiaries in
    proportion to their respective percentage of interest held.

That’s it. Sounds complicated but it really isn’t and it has provided
solid and safe investments.

HELP! ANY IDEAS HOW I CAN RESOLVE THIS MATTER - Posted by Junior

Posted by Junior on January 06, 2010 at 19:56:46:

Hi,

I purchased a single family house in the city of Rochester, NY for $23K using my credit card line of credit. I currently have the house rented.

My game plan was to buy the house with my credit card line of credit and then refi and put a mortgage on the property in order to get my cash out and pay off my line of credit. However, given the credit crisis, I have been unable to find a lender to do this deal. They either tell me that the loan amount is too small or since I have more than four financed properties they are unwilling to do this deal as they cannot sell it in the secondary market to Fannie Mae.

The credit card charges are whippping me. So far I have made every payment but would love to get out from under this debt. I was wondering if anyone might have any suggestions or ideas to help. Thanks a lot!

Re: HELP! ANY IDEAS HOW I CAN RESOLVE THIS MATTER - Posted by john

Posted by john on January 06, 2010 at 21:02:38:

a house for 23K? get a second job and pay it off

Re: HELP! ANY IDEAS HOW I CAN RESOLVE THIS MATTER - Posted by Herbster

Posted by Herbster on January 06, 2010 at 20:55:41:

Not my area of expercease but buying with your CC didn’t help your Debt to Income ratio one bit. This may not be true anymore but I think Chase Home Finance holds their notes, or try a small local bank or credit union. Maybe holding under an LLC or Trust might work. Hopefully an expert here will chime in. Herbster

Re: HELP! ANY IDEAS HOW I CAN RESOLVE THIS MATTER - Posted by Henry Melair

Posted by Henry Melair on January 07, 2010 at 10:06:10:

You haven’t given us a lot of facts to work with so here are some generic ideas of the top of my head:

Call every local and regional bank in the area. Some will do smaller loans if you have the credit, income, and reserves some or all will require. Since they will have portfolio loans most will not care about your other mortgages (assuming you’re handling them well).

Get a credit line on your residence if you have equity there (perhaps with the rental as part of a blanket mortgage if necessary)

Get a cash partner and give him half the deal (or some mutually agreeable percentage) and you do all the management.

I can’t believe I’m saying this but, depending on the credit card interest rate, a hard money loan may be cheaper.

Sell some personal property that you don’t need.

Do one or more quick flips (real and/or personal property) and use the profits to pay some or all of the debt.

Try selling it to the tenant for a profit.

Re: HELP! ANY IDEAS HOW I CAN RESOLVE THIS MATTER - Posted by Junior

Posted by Junior on January 07, 2010 at 20:32:12:

Gentlemen:

Thank you for all of your suggestions. I will start contacting some credit unions and small local lenders about a mortgage or if that doesn’t work then I can consider a HELOC on my primary residence to get the monies to pay off the credit card. Also will investigate doing a flip of real estate to raise cash as well as sell some personal property.

The credit card on which I purchased the house has an interest rate of 12.99% so is not terribly exorbitant. I am current on all my other mortgages-no late payments. Buying with the credit card did hurt my overall credit utilization ratio. This CC debt shows up on the credit report as a high balance compared to my credit limit.

Re: HELP! ANY IDEAS HOW I CAN RESOLVE THIS MATTER - Posted by SedonaSam

Posted by SedonaSam on January 07, 2010 at 13:13:25:

Place your property in a land trust, then grant your tenant a beneficiary
interest and lease him the property in exchange for his making full
payment. This is a way to use the land trust as an equity sharing
device.

There is no predetermined option to buy, however, when the lease
expires or at any time in the process, he has the first right of refusal to
buy it at fair market value to be determined by an appraisal. As a co-
owner your tenant can writeoff the mortgage interest and property
taxes while you take the passive deductions such as depreciation and
expenses. Best of luck to you.

Re: HELP! ANY IDEAS HOW I CAN RESOLVE THIS MATTER - Posted by James

Posted by James on January 07, 2010 at 22:30:23:

Credit Lines should be only be used for properties you want to flip or wholesale especially in this market. Unless, you are 100% sure you can get it refinanced

Re: HELP! ANY IDEAS HOW I CAN RESOLVE THIS MATTER - Posted by -Steve-

Posted by -Steve- on January 07, 2010 at 21:32:53:

SedonaSam-
I think your land trust is cool stuff. Do you find that you hold properties for long periods (several years) before a beneficiary buys? Also, do you have the beneficiary pay a sizable down payment (if that is the correct terminology) before move-in?