I hear alot of the experienced investors say the dont like L/O’s. I understand it has a lack of control over the property and can be dangerous. But if the seller is in a bind but not so motivated to want to sell sub 2 and the deal is good, what about buying on a CFD? I dont hear much about that; What is the down side to that if you can get the same terms as on a sub 2?
Thanks, J
If you’re talking about ‘buying’ properties either thru a L/O or CFD, then neither is a preferred choice. The same problems that make L/O’s a bad method of controllings properties are still there with a CFD. The main problem being that you do not own the property, so the seller is still the one controlling the deal.
If the seller is not interested in selling via subject to, then why would they be interested in a CFD? A CFD is basically the same as a sub2 transaction except that title is transferred only after the terms of the contract or met. This is actually worse for the seller (and much worse for the buyer) because since they still hold title, they are still responsible for everything associated with being on title (insurance, taxes, etc.)
Also, sellers are motivated to sell or they are not. There really isn’t a “level” of motivation. If a seller has called you, then they want to sell, and they’ll accept any terms that are reasonable and most importantly, solve their problem. The only other thing that stops deals from being made is if the seller is not comfortable or doesn’t trust the investor. Building trust and confidence is THE most important part of deal making.
hope it helps,
Roger
CFD/LO is about the same. One thing you dont have to be responsible for taxes and Insurance. I work with a lot of L/O and most the time they get there own insurance and taxes. I have never came across a bad deal yet with an Investor L/O or CFD. Most the time after they have been there 12 months I re-finance them and pretty much they dont need down payment. Pretty easy deal. Now if your buyer you put in there has some credit issue’s that might prevent them from purchasing that’s not always a problem either. I do my best to get there credit established enough to qualify for financing. Any-thing you take a chance at. Hope this helps. 
I am considering selling with a L/O and I am thinking that if neg. credit a deal buster you close the door to most of the buyers. Good credit walks into the bank for money don’t they. If they have good income to debt ratio and down payment or down payment installments thats what I am looking for. Bad credit shuts the door for lots of people.If I give bad credit a 2nd chance deal, I can get more up front and back end money. If they walk or default I still win and get ready for the next person. I don’t think that selling is my real goal, but you have to agree to sell if your conditions are met.
Thats my view on it. It is absolutey not a good deal for buyer but it is better than out right renting and probably better than some high interest mortgage loans if you as a buyer can close sooner than later.
Seller gets cake and eats it too … I would buy extra insurance for damage control.
It’s all a risk. But In the long run I look at it like this You are making money off the deal your putting a credit challenged family in a home in wich there credit can be re-paired. It easier for them to qualify for a home loan already being in the home. I would rather know I am helping a family get into a home. What’s the American Dream Owning your own home. Think of it that away your helping someone and making money at it. 