Missing the first step! - Posted by Tom

Posted by Dave on June 15, 2000 at 11:46:49:

I am just a rookie at all this, but here is a suggestion. Would it make sense to do a L/O on this property? Would that not eliminate the bank from executing the sell clause until the buy part of the L/O contract was also executed, therefore creating the needed funds to pay the bank? Just wondering and learning at the same time…

Missing the first step! - Posted by Tom

Posted by Tom on June 14, 2000 at 13:42:52:

I am looking to purchase a property here in Cinci. about $15000 below FMV. The purchase price is $85000 and the FMV (with a new paint job) is $100,000. I have money to put down to purchase the property ($10,000).
The step I am missing is how do I finance this purchase? Preferably I would like to refinance the house to a buyer once I purchase the home (I don’t want to be a landlord). The issue I am running into is the due on sale clause from the bank! What are my other options here? Do I need to find an alternative note source?
Any and all help is MUCH appreciated.


Re: Missing the first step! - Posted by Steve-Atl

Posted by Steve-Atl on June 16, 2000 at 10:48:21:

Banks will huff and puff about the due on sale clause, but in reality they only want to be paid as agreed. Faced with taking the house back or getting payments as agreed, they typically take the payments. If you handle it properly, there’s little real worry about the dreaded due on sale clause.

Here’s what I do in similar situations. I buy the property and place a loan on it. Then, I deed the property to my own trust. I can do that and the bank CANNOT call it due.

Then, I offer to sell the property with owner financing and use an agreement for deed or land contract. My trust keeps the title but the buyers have an interest in the property. I don’t record anything related to the agreement for deed unless I have to do it to satisfy the buyer. I collect a payment from my buyer each month and I send my payment to my lender, keeping the difference.

I get a good down payment from my buyer, a monthly cash flow, and a back-end profit when they refinance or sell. It doesn’t get any better. You just have to learn how to deal with the due on sale clause.

Good Luck!