possible $100k profit, no simo allowed! - Posted by luke-NC

Posted by js-Indianapolis on October 25, 2003 at 18:42:20:

Specify in your contract that there will be a cancelation fee, if the owner sells it from under you. Then, record your P & S, or a memorandum of agreement, which just states that there is an agreement. Basically, you?re creating a cloud, legally. Then, the sellers does just that, cancels the agreement. You’ll get paid to go away, so the new owners can get clean title.

I’ve never had to do all this, but know many who do business this way. Seems to work pretty smooth. Keep in mind, those who write $500K loans, REALLY want to write $500K loans. If their own appraiser says it’s worth it, they’ll do it.

Good luck. Let us know how it turns out. BTW, get a new lawyer. Sounds like the guy didn’t want to think about it too hard for you. Stay away from the people who look at you like, “This is never going to work.”

possible $100k profit, no simo allowed! - Posted by luke-NC

Posted by luke-NC on October 25, 2003 at 18:11:52:

I have found a great deal!

I negotiated a $400k price on a $550k home.

I have until Monday to put under contract and deposit $4k in escrow.

I STILL cannot figure out a way to get my profit out of the deal.

No lender I have found is allowing simo closings, assignment fees, etc.

My attorney is stumped…

I even have buyer who is willing to buy at $500k and is bringing in their own financing, their lender won’t allow any simo close, no matter what…

Any suggestions???

Re: possible $100k profit, no simo allowed! - Posted by Dimpil

Posted by Dimpil on October 26, 2003 at 07:10:14:

Somone else just posted about a Land Trust and such. Have no clue how it works but it maybe something you can look into for future. I believe in have many tools in my box.

read a really great tip at http://www.legalwiz.com/articles/seasoning.htm
Here’s a quote:
SOLUTION: Create a land trust with the seller’s name on it (e.g., if the seller is John Smith, call it the “Smith Family Trust.”). Seller deeds the property to the trust before closing. If the lender checks the chain of title, they will see that the seller has been on title for years and recently transferred title to a trust.

At closing, the seller assigns his beneficial interest in the trust to the investor and resigns as trustee, making the investor the successor trustee (an assignment of beneficial interest in a land trust is a sale for tax purposes). The new trustee (investor) signs a deed from the Smith Trust to the buyer at closing.

Re: possible $100k profit, no simo allowed! - Posted by Todd_OH

Posted by Todd_OH on October 25, 2003 at 20:50:50:

If you ABSOLUTELY cannot do the deal without your “buyer” coming in to bring the money, then you can do the following:

  1. Be aware that you may have to take a smaller profit than $100K. Basically look at it as some profit is better than none. If you can’t close the deal with your buyer, then you will make nothing.

  2. As “js-indianapolis” (js) suggested, record a memorandum of agreement on the title. “js” also alluded to a “cancellation fee” which, in essence, gets to my point above that you may make a smaller profit than you intended but its better than nothing (i.e. I don’t think “js” expected you to collect a $100k cancellation fee :slight_smile:

  3. You SHOULD be able to pull off an assignment that doesn’t show on the HUD, as long as the title company will agree to it, irrespective of the lender.

The lender shouldn’t know anything about the assignment. Since its not a bank repo or HUD repo (is it?) the bank wouldn’t really have any say over assignments, since the bank is not in control of the purchase contract. In the case of bank/HUD repos, you are often using bank purchase contracts/addendums. Not the case in “normal” owner-occupant loans.

  1. To execute the assignment, simply figure out what you can get your buyer to accept as your profit without them backing out of the deal. Let’s say in a cloudy day scenario, that your buyer will go through with the deal if you “only” profit $20K. Let’s also assume (cloudy day case) that your buyer is strapped for cash, and can only come up with $10k immediately.

Have an assignement agreement that doesn’t show on the HUD, in which the Buyer pays you $10K in cashier’s check at closing, and a 2nd mortgage (make sure its recorded AFTER the bank loan mortgage) of $20k. This puts $10K in your pocket at closing (your $4K deposit should be refunded), and you will have a note/mortgage of $10K more to collect on later at a decent interest rate (at least 10%).

  1. The title company WILL need to see an assignment agreement, so you have one drawn up for them which DOES NOT show any dollar figures, or says something like “$10 and other valuable consideration” in exchange for the assignment rights. The phrase in quotes in very common in many areas of the country. If you check out some of the deeds in your area, you should see similar language.

Hope this helps…

FYI: I cannot access email messages right now, so if anyone wants to post a response/question to me and I don’t respond with 2 days, try to email me later in the week. I should be up and running by then…