can you wrap a bank financed house in texas?

I have the opportunity to purchase a friend’s new house by paying the interest on the construction loan and then the permanent loan at 5% will begin. The loan is with a local bank and not with a mortgage company. How can I protect myself and my friend?

Howdy Cautious:

This sounds like a one time close loan where the bank make the constructon loan and may even sell the loan to a mortgage company or other pool of investors once the construction is complete.

There are several ways to protect yourselfes. One is to hire you has a management company and send the bank a copy of the agreement if necessary when you let them know that the payments will be coming from you in the future.

Get your friend to put the house in a trust as suggested in John Locke’s course on Sub2. This is considered the bible of sub2 investing by many. I have not had the honor yet but am looking forward one day myself. I have heard a lot of great thing about him and have talked with him and have a copy of his birddog course which I have read several times.

Still keep in mind that the bank or new mortgage company is not out looking for ways to foreclosue on houses. If you make the payments you should be OK, BUT be cautious and be ready to refinance if necessary or give the house back to your friend. If the day ever comes and you get a notice please get your friend involved asap and try to work it out. The bank could also let you assume the loan even thougt it may not be assumable or just make you a new loan and pay off the old one. There are many options still available if they do call the note which is very unlikely.

Make a deal today


Thank you so much for the information. Is it absolutely necessary for him to put the house in a trust first? They are going through a divorce and the less papers the wife has to be involved in, the better. She is only rarely around.

I appreciate you taking the time to advise me.


howdy Cautious:

Like everything else there are good, better and best ways to do things. Good way is just to get the deed. Better way probably hirs you as manager and still get the deed, best way is to do a trust.


Thank you again for the reply. I will work on this deal and let you know how it comes out!!!