Posted by BR on March 01, 2001 at 08:54:19:
You retain much more control over the deal. If you sell via wrap they are buying and if you sell via L/O they are leasing with an option to buy. You could sell it Contract For Deed aka Land Contract, which can be considered a wrap, get more down money and also make money on the interest however, I choose L/O because in my state you must judicially foreclose when doing CFD, as opposed to evicting when you L/O. In states such as Texas and Virginia you can evict buyers as if they were renters even using Land Contracts. This is not the case however in most states. Before you start selling via wraps you should check the statutes in your state to know what you are getting into should your tenant/buyer not perform. I have brought this up to one guru in particular and his responce was that there are usually provisions in the statutes that allows you to get around this, such as the ‘Power of Sale’ clause found in many promissory notes. That is true however, in my state there is also a provision to go aroung the ‘POS’ clause and force the lender(you) to use the judicial foreclosure route should the property be a homestead(they usually are). Wraps are a great tool but there are some caveats.