I'm getting the deed! Now what? - Posted by Erik NV

Posted by Erik on January 23, 2002 at 12:30:13:

Thanks for the thoughtful response. I am new but
I have LeGrand’s courses that I have studied
extensively. I also have all documents and
examples on how to fill them out. I know this
means that I could still screw up. But it sounds like
as long as I get the legal description in there
perfect, I am ok. Also, I think I will be selling on
a L/O as well. I would rather evict than have to
foreclose. I don’t want to bring too many payments
out of my own pocket. Also, I think it will be easier
to find a buyer on a L/O as opposed to a land

Also, we will be putting the house into a trust…
I will be trustee to begin with. Therefore, I should
wait to record the warranty deed to trustee until
I know the title is clean; the balances are what he
sais they are; and the house is left in good
condition? If and only if all of this happens, should
I then record the deed that I have been signed
beneficial interest?

I’m getting the deed! Now what? - Posted by Erik NV

Posted by Erik NV on January 22, 2002 at 18:44:51:

A guy who needs out of his loan said he will give me the deed to his house if I can find a buyer. He even said he will make the payments for another 60 to 90 days if he has too. He is calling me tomorrow and I will go over there with a blank warranty deed. Here are the details… He has a 1st and 2nd mortgage totalling approximately $119,000 (he said he’d find out the exact amount). The FMV of the house is $122,000. His payments total $1200… the market rent is only $1000. I’m worried about the market rent being below his payments. The house is also full of twenty years full of junk. He said he could move as soon as he had a deal and he would clean the place up.
Therefore, if he will sign the deed to me, what should I do next and how should I try to get rid of the house? I know to get the title checked right away and wait to record the deed until I find a buyer. I also explained the “do on sale” to him and I will get a CYA letter to cover my rear about this. But other than that I could use some ideas!

Should I sell subject to? Should I sell on a L/O? Since this deal is so skinny and I am a newbie I want to keep my risk to a minimum, make some money upfront and be done with it.

Thanks for any help, Erik

Re: CAUTION - Posted by BrandonT(So.IL/St.Louis)

Posted by BrandonT(So.IL/St.Louis) on January 23, 2002 at 10:58:34:


Hold on a moment… First let me say, granted, I’m no veteran but I’ve now got a bit of experience and have been learning non-stop about Sub2 deals. You say you’re going over there with a blank warranty deed? Do you have a course on Subject2 deals? How do you plan on making out this deed?

I mean no offense but for your own protection I want to make sure you know exactly what’s going on if this is your first one. For example a newbie who reads this board might be under the impression that it’s ‘that simple’ from the posts he’s read where experience investors’ sum up their experience with a sub2 deal by saying ‘I got the deed’… And perhaps the newbie would think its as easy to do the deal as to simply have a seller deed their property right into the investors’ name, and the deals done.

Just want to make sure that for example

A. Deed format you plan to use is legal in your state.

B. Seller will be deeding property obviously into a trust and not into your name.

C. You’ve done your due diligence for the area and you are certain that his payments will be manageable to where you can cover it with a tenant/buyer.

Erik also, some investors advocate that you file the deed immediately ( after you are certain about the balance of the mortgages and sure you want to do the deal %100 )to make sure no more liens or encumbrances can possibly be placed against the home.

But especially in your case if this is your first one, in my opinion only I would wait until you were sure the prices were reasonable AND the guy truly moves out and leaves the home in good condition before you put your neck on the line. Assuming of course you researched the title and it is clean beyond the two mortgages.

As far as your exit plan, you never want to sell Subject2 because it gives you very little control, and that’s what being an investor is all about. “Own nothing, control everything” maybe that’s not the only way to invest but it’s better when you have the easy option, to take the path that leads to you having more control and protection. I would think that as ‘Oh-So-Many’ other investors do when they get Sub2 deals, you would want to Lease/Option the house. Not only can you get above market rent but also an above market final sales price, along with money up front in the form of the non-refundable option consideration that I’m sure you wouldn’t mind having in your pocket.

If you know the seller wouldn’t mind having the loan in his name for an extended period of time it would be possible you could consider selling the home on a Land Contract/Contract for Deed/Bond for Deed (whatever you call it there in NV).

One more thing I’d like to point out, if you look around at the experienced investors who have been doing sub2’s for years you’ll see the consistent fact that the Lease/Option is far and away the most common exit plan due to the demand in the market-place (perk being getting the home filled quickly and relatively easily) and the different advantages for the investor (money up front, money over time, money on the back end, ability to simply evict instead of forclose in worst case, the list goes on).

Again for all I know you’ve done a hundred deals and I have simply misinterpreted your post but I’m simply pointing out that you want to be sure what EXACTLY you are getting into if this is your first Sub2 (or deal whatsoever) and to make sure you have faith in the home and the area to be able to fill it quickly.

Perhaps post more details and continue to keep us posted,

Brandon Treat
Southern IL/St. Louis

Re: I’m getting the deed! Now what? - Posted by Peter Rzepka Vegas

Posted by Peter Rzepka Vegas on January 23, 2002 at 05:41:30:

What happens if the seller gets a judgment after you have done your title seach while you are waiting to record the deed? If you get the deed sub2, record it immediatly.