Lease Option in Texas

General Real Estate Investing
1

I live in Texas and was thinking of selling my own house using a lease/option to increase the profits. However, after reading the posts concerning the new law, it apprears that’s not an option. Can anyone recommend other ways of moving property without an outright sell?

Any ideas would be appreciated.

Thanks
Greg

2

I owe 196K on the property. It’s a 2700sqft house with a pool. I have a first and second mortgage that are not assumable. Can I sell to someone by transferring the deed and financing on a two year arm promisary note to the buyers. The risk is that the mortgage is in my name but I would be able to sell the property at a premium and charge a higher interest rate than my notes thereby getting positive cash flow.

If this would work, how would it be viewed at closing? Would the title company allow me to transfer the deed when the first and second are secured against the property? Would I even need to go to closing or could I just record the deed and promisary note?

Thanks,
Greg

3

Put your property in a NARS land trust (there are different types of land trusts). It’s a simple process and will enable you to get much higher rents and free you from any legal responsibility. It will also afford you complete protection from creditor judgments, bankruptcies, etc. You also won’t have to worry about the DOSC. Good luck.

4
5

Good info Tony,

How would I handle the Insurance requirement from my mortgage company. Wouldn’t there be a problem when the insurance is under a different persons name thereby triggering the DOSC?

Thanks,
Greg

6

I think the best way for you to handle it is to put a landlord policy in place to protect the physical structure and require that your tenant provide proof of renters insurance before they move in or within a week of moving in.

7

OT: But if you own a house free and clear of any mortgage payments can you sell it using a lease option in Texas? Forgive me for my stuipidness but im confused about this new law.

8

Yes

9

The point is it would be a sell using a wrap. I will have no tenant. Now how do I handle the insurance issue?

Greg

10

Sorry Greg, I misread what you were asking for. Selling on a wrap requires the buyers to provide homeowners insurance and you provide nothing. Your title company will normally require proof of insurance so that they can contact the insurance company and get the premium information and properly bill they buyers at closing for xx amount of months worth of insurance. If for some odd reason they don’t then you need to get the proof of insurance before you allow the deal to close.

11

this is not a conventional close kids. u do not need a title co. not even an escrow agent u can do it urself. title co’s have issues if they cannot close like they are trained to do, and besides they want u to buy title insurance. u don’t need it

12

I agree, the buyer will have to purchase there own insurance. I also understand that I can close it myself. The real question is this: When my mortgage company asks for insurance, do I send them a copy of the insurance taken out by the tenant? I’m sure some guys here have done hundreds of these since it’s just a simple wrap. How did you handle the requirment to provide insurance to the sellers mortgage company since those mortages are still in place?

Sorry if I’m not explaining it good.
Thanks,
Greg

13

since this is ur residence that u r L/O u can leave the insurance in ur name, because it has to be in the name of the mortgage holder. that’s y on a typical sub 2 u convert the insurance pol to a landlord policy naming u (the investor) or ur company as the “property manager” that is authorized to make claims, get refunds, pay premiums etc. the tenant or ur buyer would need to get personal property insurance for their contents.

14

Alright, I know the title of this thread is misleading, but in my second post I state that I was thinking of selling using a wrap. This would be a sell not a lease option as L/O are illegal now in Texas from my understanding. I would then be the 3rd guy on the deed. I would finance to the buyer and still have to pay the 1st and 2nd I have on the property. Now, since I no longer own the house, why would I insure it. I would require the buyer to get insurance. This is where the problem comes in. My mortage company (not knowing that I’ve sold using a wrap) still requires me to provide proof of insurance.

Summary:

I owe 196K on house.
I sell to buyer providing owner financing (use a wrap).
Buyer owns house and pays payments to me.
I pay mortgage company.
Mortgage company says “Greg, we need proof of insurance on the house we have a mortage on”.

Can I say, here ya go. Here’s an insurance policy with someone elses name on it for this property?

Thanks,
Greg