Posted by Chris in FL on May 08, 2006 at 24:40:00:
John,
Thanks. Point taken. I do have a FL re lawyer. He is an investor, too, and came recommended. However, I have done a little work with him in the past, and I am not real comfortable with his style.
I own one other mortgage; a discounted mortgage I bought at creation, to fund a purchase for another investor. It was created by the title company, and has worked out very well. However, I know that doesn’t mean it is a strong mortgage/note.
I have seen the deed thing done here before, but still not sure if it is okay or not. My lawyer is kind of loosey-goosey; he might take a chance on doing borderline legal things if he finds them effective. He sort of says legal is whatever the judge decides (and I have heard from some other investors that the judge here sometimes does what he wants, whether it is the law or not). Kind of scary!
My note will be on an old mobile home; not real easy to sell those, is it? Figured I would almost have to keep it to unless I was willing to take a huge discount. I know it is nearly impossible to finance it.
Thanks again. Best wishes!
Might owner finance; need tips… - Posted by Chris in FL
Posted by Chris in FL on May 06, 2006 at 14:23:25:
Ed Garcia, John Corey, or anyone with knowledge of owner financing, please help! I own a 1974 double-wide mobile home on land. Have for sale or lease/option. Potential buyer has $20k cash, and I am interested in owner financing balance of about $50k at 9% fixed (she balked at higher rate than that). I figured with that much down I am willing to hold mortgage as opposed to lease/opt, land contract, etc. I know some basics, such as make it not assumable/assignable and put in a balloon to protect myself. Can I say that, should she try to allow someone to assume the note, that they and she can both be held responsible for full amount due? Also, is there something extra I can do to gain leverage such that, in default, I am more likely get her to sign over deed to me as opposed to being forced to foreclose? I am hopeful that relationship and bargaining skills can protect me in that event, but wondered about any other possible leverage. Also, any other tips/pointers for someone green in regards to owner financing? Thanks to any with advice; I appreciate it! Best wishes!
-Chris in FL
Re: Might owner finance; need tips… - Posted by John Corey
Posted by John Corey on May 07, 2006 at 01:54:46:
Chris,
If you have done deals in FL before do you have a RE lawyer you are comfortable with?
I suggest strongly you have a FL lawyer write the note and the security agreement. What you can and can not do in FL is the issue.
You think you are going to hold the note. Assume that you will not and work on making sure it is a note someone will want to buy. I suggest you get over to the Cash Flow forum and have Michael M offer you some specific advice assuming he was going to buy the note out of escrow. You can then make a decision to hold or to sell. If you hold and then later need to sell you will be in a stronger position to sell having already made sure the note will have value in a note sale.
Caution. You might hear people suggest that you can have the borrower sign a a deed in advance so that if she defaults you can just record it. Check with a lawyer as I know this is not legal in some (maybe all) states.
You asked about ways to increase you leverage. You want a well worded note and security agreement. You also have to accept that the borrower does have some specific rights defined by FL law and by the contract that is signed. I would say there is no ‘magic’ or secret wording. Ask a lawyer who handles foreclosure what they want to see in the contract so there is no issues if a default happens.
Expect that this is not a 1 off deal and therefore you are paying this time around to be educated. Pay a fair price for legal advice specific to FL.
John Corey
Re: Might owner finance; need tips… - Posted by Chris in FL
Posted by Chris in FL on May 06, 2006 at 22:23:20:
Sorry, I should add that I plan to close with a title company, and have them draw up the mortgage/note, and I want to have them add in some extras to protect/strengthen my position. Also, plan to make sure they include late payment penalties. Thanks.