Real estate investors are in for a rude awakening on January 10th, 2014. The way you do business must change dramatically thanks for the US government and Dodd-Frank specifically.
There are 2400 pages of new rules and regulations in Dodd-Frank….enough to make your head spin. “This makes the SAFE Act look like kindergarten,” said attorney Bryan Dunklin during last week's Coaching Call.
Here are just a few examples of what it means to you:
When you sell with seller financing, you will not be able to charge more than 5% over the going interest rate (currently 3.2%) and you cannot discuss any of the terms of seller financing with the buyer… only certain certified mortgage brokers can do that.
There cannot be a balloon in the note and you must have a fixed interest rate for at least the first 5 years. The debt to income ratio must be 43%… but there 840 pages of other qualification rules too.
There are a lot of rules about what you can and cannot put in your advertisement on craigslist or your web site. Violate one… and you could be in big trouble.
My attorney says these rules apply to lease/options, contract for deed, and selling the beneficial interest of a trust too. Basically, any time a person is going to occupy the property (house or mobile home) as more than just a renter, you will be required to follow these new rules starting January 10th, 2014
Even if you “assign” a contract, you will be liable for the Dodd-Frank rules.
And you are limited to 3 transactions per year… maybe less… depending on where you live. Using different entities will not work because of the rules they put in to Dodd-Frank.
HERE’S THE REAL KICKER….
If, even after 3 years, your buyer claims that you did not properly vet their qualifications, they can sue you and get all the money back that they have paid you for 3 years, plus any money they have spent on improvements to the property AND their attorney fees.
Of course, you might prove in court that you did properly vet them, but you will still lose because you will likely have $10,000 or more in attorney fees to defend yourself.
You can be sure that as soon as a foreclosure notice is posted the urban terrorist… the contingent fee attorney… will be sending letters to the home owner suggesting a law suit to prove that it is all your fault that they are losing their home because you did not vet their qualifications.
If you invest in notes… think twice.…because these rules apply to you too. Anyone who assigns or buys the note is equally to blame if the seller of the note did more than 3 transactions in a year or if the owner occupant claims that they were not properly vetted.
THERE IS A SOLUTION….
These rules do NOT apply to an owner occupant who is selling their house PROVIDING that they only sell 1 house per year. The rules only apply to investors.
So, there are a variety of ways that OPTIONS can be used to control an owner/occupant property and you will not be in the line of fire with lawsuit.
WANT TO LEARN HOW?
Peter Fortunato’s is teaching a “Creative Options Strategies” course March 8 & 9th in Costa Mesa California. He will be discussing many different ways you can use Options in this new environment.
The fortunes of tomorrow will be built on the skills of those who have learned how to utilize options to create fantastic opportunities and profit. This seminar will provide you with the concepts, strategies and techniques to do just that. Make the decision today to learn how to supercharge your results in your quest for financial success.
SEE DETAILS HERE
Peter Fortunato is the most creative investor I know and he has almost FIFTY years of “in the field” experience … a unique combination which you just can't find anywhere else. The Creative Option Strategies you will learn at this seminar are NOT theory. They are “real deal” case studies which Peter has been personally involved in.
Best of Success… and Freedom,
Jackie
P.S. MISSED OPPORTUNITIES… If you've been intending to learn about and begin utilizing the power of Options, NOW IS THE TIME! The research that has gone into the material that will be presented in this Option class represents almost a half a century of research and practical application by Peter Fortunato.
