How do I approach lender for Info when buying subject to? - Posted by Scott Hearne

Posted by Steve-Atl on December 16, 1999 at 10:30:55:

Sorry, I don’t know of the laws in tex. In ga, its easy and inexpensive to form a corp. Also, don’t know if a LLC is a good mgt entity.

The way I do it is have my corporation for flipper properties and management.

Maybe some other investors in your area have better advice. Do you have a local REI club?

Good luck

How do I approach lender for Info when buying subject to? - Posted by Scott Hearne

Posted by Scott Hearne on December 16, 1999 at 09:38:45:

I’m a newbie about to do a deal,

Here is the scenerio:(I’m sure everyone knows it very well)

I buy a property “subject to”, I create a land trust for the seller and have the seller sign a letter instructing all correspondence, etc. to be send to the trustee. I then transfer the beneficial interest from the trust to me (or my LLC).

My question is: If I want to get any information about the loan (or just want to confirm that things have been done correctly), how do I approach the lender (or the insurance company for that matter)? I couldn’t tell the lender that i’m the beneficiary and that I took ownership in the prop. They wouldn’t likely release any info. to me as a 3rd party unless I have an interest in the property - -and I’m not going to tell them what my interest is.

I guess I could get the trustee to get my questions answered - -is this the best way?(I’d much rather do it myself though)

Thanks for your help.

Scott Hearne

Re: How do I approach lender for Info when buying subject to? - Posted by Steve-Atl

Posted by Steve-Atl on December 16, 1999 at 09:54:03:

Easy. At the time you sign the trust docs, get the seller to sign a letter to the lender saying your management company has been hired to deal with all aspects of the property and loan. Don’t have a management company?..well create one. I did it in a corporation. I have no problem calling the lender as the designated manager of the property to get information.

Its also good to have a signed management agreement between the seller and your corp in case you ever need to prove it.

I’ve found its generally a good idea to not mention the trust in this letter. As far as the lender is concerned, the seller hired your company to manage the property, period.

Of course, in order to be truthful, the signing of the letter and management agreement should take place before the assignment of benefical interest in the trust.

Re: How do I approach lender for Info when buying subject to? - Posted by Scott Hearne

Posted by Scott Hearne on December 16, 1999 at 10:11:30:

Steve, thanks.

That sounds good (but makes me nervous)

Up to this point it’s been my intention to create a LLC to be beneficiary for transactions.

Do you know if I can create a LLC to and have that be my management company (or do I have to create a corporation) I don’t have a lot of $$$ and the thought of creating a corp brings up visions of lots of accountant and legal bills (plus having to jump through hoops at tax time)

Also, In order to create a management company, don’t I have to be licensed by the real estate commission to act as a prop. manager (think you have to be in Texas)?

Thanks soo much for your help!

Scott