[Jordan McCoy]

Jordan McCoy

I bought a property last mont from seller at 30 year AM, 2% interest with balloon in 10 years.
Can I still sell this on a contract for deed and also input a shorter balloon?

Anything else I should be aware before selling it this way?
Someone mentioned if I were to give title (Dont really want to do this) I could get more money down and a higher interest rate?

Thoughts?

Thanks,

Jordan

[Bill Cook]

Bill Cook

Jordan,

First, I’d have another coffee with the seller who gave you owner financing – love the 2% & 30 year term. My one concern is a balloon, ANY balloon.

None of us can predict where the market will be one, ten, or thirty years from now. Because of this, I don’t mind agreeing to a balloon, BUT I want the right to extend the balloon a number of years by paying the note holder a bit of money that will be applied to the principal. The ability to do this will allow me to surf over a rough patch if the housing economy is in the dumpster 10 years from now.

That said, I tell the lender that if the economy is doing well, and I’m not having a problem rounding up new funding, then I’ll gladly pay the balloon in 10 years. The thing is, I want to have the right to extend the balloon if I need to.

If a seller won’t agree to a right to expend the balloon, and if it’s a marginal deal, Kim and I will find a different way to structure the deal – maybe a master lease with an option.

As to using a land contract, check your state’s laws. In Ohio, CFD (Contract For Deeds) are used often. In Georgia, CFD can be used, but because it’s a non-judicial fast foreclosure state with no right of redemption, Kim and I don’t have the need to do CFD transactions.

Another question: are you selling to an owner/occupant or to an investor. Dodd-Frank plays a part when selling to an owner/occupant.

Wether you do a CFD or seller with owner carry, you can get the same down and interest rate.

Find a seasoned investor in your state (maybe at your local REIA) and run your deal by him/her.

Remember: Whether selling via a deed or doing a land contract, YOUR state’s contract laws apply, and each state’s contract laws are different.

Hope this helps.

Bill Cook
770-815-8727

[Dillon Eversole]

Dillon Eversole

I recently sold 2 homes on CFD because I thought that I could “foreclose” faster that way than giving away the deed, especially in a judicial state. BUT, I think it was a mistake for 2 reasons. #1, it’s not universally recognized as any specific thing. It’s rare that someone will treat it as a full on note, they’ll view it as closer to a long term lease option than anything. #2, because it’s not treated as a note, you won’t be able to get loans against it which will create a form of “dead equity” for you. If it’s structured as a note, you could always get a line of credit or term loan off of it and continue doing deals while cash flowing the 2 notes.

[Jordan McCoy]

Jordan McCoy

Hey Bill,

I did already close on this property so the terms are kinda set.
I am unsure about whom I will be selling this to, but figured it would likely be an owner occupant.
Its here in FL and I didn’t want to particularly wrap it to keep more control I suppose.
Clearly GA has better laws and a wrap makes more sense there.
As far Dodd Frank, I figured since it already has a balloon and Dodd Frank doesn’t like those its not as likely
going to be qualified mortgage. But doesn’t mean I wont still look for a qualified buyer.

My Thoughts were to sell on CFD to end buyer around 320K with 30-35K down and a balloon in 8 to 9 years.
Im in it for 295K (20K assignment fee) and 10K to seller.
Underlying balance is 265K. If sold at 320 with 30K down, at 8%.
Payment to seller is $979.49 and to end buyer $2127.92.
One thing Im kicking myself for not doing was getting Substitution of Collateral within the mortgage but my mind
was thinking I would sell this for whatever reason. But I digress..

Thanks

Jordan