the info I was giving, again comes fom my broker. This is information she has given me so that I can cash out as quick as I WANT to. I have also been given this same direction from several note brokers. And that is document document document because alot of buyers will not. I am currently doing L/O on the selling end after holding the property for a while so we have to document for their sake. But the same direction has been given for where I am selling on CFD.
Is it our fault? No. But I made the promise to go a step above and these were ideas that were given to me by the people that will cash me out. So to answer your question “Would YOU accept that if YOU were lending YOUR money out?” must be yes.
One thought would also be if you are making the copies from the beginning you would not have the knowledge that you have a deadbeat tennant because you would be starting on a good note. They gave money they have not missed payments, you have thoroughly checked them out etc…
If my copies showed up in the middle of the term, well that might be fishy. On a deal that I did CFD the guy gave me $10k in CASH down. He has paid with cashier checks since then. This was my first CFD. after a few months I went to a couple of note brokers and they all said the same thing, “Where is your documentation on the deposits?” After setteling with one note person I am very comfortable with the direction given.
I have been told that it is very important to document all payments made during the term of a land contract. I guess this helps the buyer get financing and documents seasoning of the loan. Do I need to hold the down payment for the duration of the loan? What about extra principal or lump sum payments they make during the year? Can I use this money for other deals, or do I have to keep this money seperate to prove down payment has been made?
It’s not up to YOU to document the buyers payment history. In fact, you would probably have a hard time finding a lender that would accept your word on the buyers history of making payments! Remember, YOU are the SELLER! YOU would say just about ANYTHING the lender wants to hear so YOU can get your money out of the deal!
The BUYER needs to keep documented records of their payment history! Canceled checks, money order receipts, bank statements that document the payment amounts coming out of their account every month ON TIME, etc. These are the documents the lender is going to want to see from the BUYER! This is something you would have no control over. It’s the BUYER’S responsibility to keep proper records of this. The only thing YOU can do, is explain this to them and stress the importance of keeping documented records of their payment history because their lender WILL require proof of their payments being made every month, on time!
As far as down payment money, extra monthly cash flow from their payments…that’s YOUR money to do with as you see fit! If you want to go out and spend it all, it’s YOUR choice to do so!
One word of caution though. If you don’t have extra cash lying around I would think about holding on to a chunk of their money in case you were to run into any problems later on. What if they were to stop paying you??? You will NEED some cash to get them out of the property! Meanwhile, YOUR stuck with covering any mortgage payments YOU have on the property. YOUR stuck with paying attorney fees and court costs to get them out! YOUR stuck with paying to get the property repaired in good condition to get it rented again after you get them out! This ALL will cost you some cash to cover these expenses! So unless you have extra cash or a way to get the cash needed should this ever become a problem…SAVE A CHUNK OF THAT MONEY JUST IN CASE!!! Otherwise…YOU will end up becoming a motivated seller sitting with a property you can’t repair and/or possible cover the cost to evict your tenant should they decide to stop paying you! So be SMART and hold on to some of that money just in case. That way you can evict them and cover any repair costs with THEIR MONEY!!!
One thing you do have in your control is you can make copies of the checks used for the downpayment, monthly rent and any other payments they make. As well as deposit slips. Yes your buyer should do it but you are helping them as well as yourself.
My broker told me it is of the utmost importance to make the deposit as soon as you receive it because you do have proof to show it was received on or before the time it was due.
The broker also lookes at the credit and makes suggestions as to what htey may need to do to get funding. Like pay off debt or their bills. Find a good broker to help you out and it can make it go easier.
Would YOU accept that if YOU were lending YOUR money out?
Think about this:
Mr. Investor has a deadbeat tenant/buyer that never pays on time. “I” want to get MY money out of this deal and get this turkey refinanced ASAP!
So now that I know this dead beat isn’t going to be paying on time every month I say…Mr. Deadbeat…LOOK…you’re not going to be able to get a loan if you can’t make your payments on time. But being the nice guy I am, I don’t want to see you lose this house and all the money you’ve paid on it so far! So even though I’m going to keep collecting all those late fees every month…here’s what you should do for now since you can’t pay on time every month. You just go ahead and give me the check on the 1st every month and I’ll HOLD it until you can cover it next week.
Meanwhile, the investor makes his photo copies of the check…since he can’t deposit it right of way…he’ll just fill out a deposit slip for the amount of that check and deposit HIS own money into HIS own account and then take it back out.
Now he has a photo copy of the check…a deposit slip that was stamped by the bank for that same amount…and his bank statement on top of it to show what LOOKS like that check was paid and deposited into my account every month on time!
Would someone do something like this??? Don’t know, and it does seem like a lot of trouble to go through…but then again…how BAD does that investor want to get his money out of that property???
ME? If it were MY money that I was lending out…I’d want the documented proof to come from the BUYER, period! But that’s just my take on this.