Is this a AITD? - Posted by Nate-WI

Posted by Nate-Wi on October 27, 2005 at 14:25:20:

Thanks for the reply David. I think I’m more confused now with his response. I e-mailed him your response and this is what he said…

Hello Nate and thanks for fowarding the e-mail to me.
I purchased the properties on a contract for deed, paid a small down payment and resold them in the same basis, as follows:
My part while purchasing:
Property assessed value: $30,400.00
Bought at $29900 with a $450 down payment at 9% for 180 monthly payments
$300.40 monthly payment
Made 1 payment so far.

I’m selling the same property like this…
Purchase price; $43900.00 at 10% for 30 years, the high bidder is willing to take it for 15 years
down payment will be approx $600-$700
monthly payment if 30 year mortgage: approx. $400.00 monthly.

After repairs and cosmetics, the next appraisal could be about $35000-$37000, not sure.
The properties are located in PA.
Again, I bought the property with an owner financing option and a contract for deed (land). The previous owner would just receive their payment, no matter i rent of live in the property. The bills for refuse, tax, insurance remain on the owner name and are fowarded to me, then i foward them to the next buyer, receive the payment and send everything back to the 1st (real) owner. The deed, insurance and tax are not on my name, until i pay off my mortgage, same i did with my buyer. If by any chance they pay off their mortgage to me, than i repay my own, get the deed and immidiately transfer it to the last buyer.
I would like to sell the note so that i pay off my own loan, and keep any balance. double closing???
Hope all this makes sense, please let me know.

Is this a AITD? - Posted by Nate-WI

Posted by Nate-WI on October 26, 2005 at 21:12:16:

I had the following message send to me buy a noteholder. It sounds like an AITD but I’m not to sure. Anyone care to take a stab at the following…

I feel like i didn’t ask this question before i started investing. I purchase properties in PA from a company that offers owner financing. I just pay the down payment and resell the properties on another owner financing basis. At this moment, i receive the monthly payments from my
buyers and i repay my sellers. Since i don’t actually (own) the properties, i don’t have the deed on them, just the sale agreement, same thing i providing to my buyers. Can i still sell the notes on these properties so that i can pay off my own mortgages?
Please let me know

You Tell Us! - Posted by David Butler

Posted by David Butler on October 27, 2005 at 13:40:04:

Hello Nate,

The reality is there is not enough information here to answer the question as to WHAT he may have - and absolutely nothing with respect to NOTE particulars to determine whether or not he can sell THIS NOTE to pay off the underlying mortgage.

As Brian noted, he may have done a land contract with the seller, and then resold the property either by doing a “wrap”, or by taking back and second position land contract sitting behind the senior contract. Wrapped contract more common, but that doesn’t mean this is what your fellow has here.

Or… the fellow may have given the seller a "seller financed carryback purchase money mortgage (or trust deed); and then resold the property by doing a “wrap” (AITD); or again, by simply passing on the senior seller financing to the new property buyer - and carrying back a 2nd position note of his own.

Only he can tell you that.

As to whether he can sell what he has - nobody can answer that until you are able to tell us EXACTLY what he has, including all relevant information regarding:

  1. the Note or “Contract” itself (rate, terms)

  2. the Collateral Property

  3. the Payor (down payment, credit history, employment history)

  4. details on the nature, extent, rate and terms of underlying financing.

Also… be aware that buyers for this note may or may not require pay-off on underlying mortgage from the proceeds of Subject Note sale, and will arrange to have that done directly from escrow. That is the general procedure. But… there are numerous exceptions to this rule, depending on the information above, as well as the investor’s own comfort zone - and what kind of additional “yield spread” may be on the table if the note or contract is wrapped.

Detailed Information is the key to any note sale.

Hope this helps you do what needs to be done here, and that you succeed and crafting a transaction out of your efforts! Best wishes… and Many Happy Returns! :slight_smile:

David P. Butler

Re: Is this a AITD? - Posted by Brian (UT)

Posted by Brian (UT) on October 27, 2005 at 09:52:04:


From the info this guy gave I don’t think we can answer anything until we find out who actually has the “deed to the ranch”. Almost sounds like this guy has a contract for deed from a seller and is selling a contract for deed to a buyer and doesn’t have a secured interest in the property at all, and is really not a true noteholder.