Newbie in Need Of Advise!!!!!!!!!!!!!!

General Real Estate Investing
1

I’m selling rental property ARV 110k-130K. Asking price is 81K – I have an offer for my asking price but the conditions are unusual to me. Here’s the condition:

We agree to pay your full asking price of 81000. We ask only that you keep the existing financing in place and carry some, or all, of your equity. In consideration for leaving your equity in place, at the end of our agreement we will repay 100% of any existing equity PLUS a certain percentage of the property’s future appreciation (please see details below).

Our intent is to legally assume 100% responsibility for the current mortgage obligation, along with all maintenance and management of the property including covering all the costs of property tax and insurance.

If you accept this offer, there is no title transfer to us until we pay off your equity and the existing mortgage. We will pay to have the property held for you, in your name, in a title holding land trust (which is exactly the way the Disney Company holds all of its real estate). We do that so there is no need to transfer ownership of any kind. Also, it allows us to be able to take the tax deductions along the way and eventually refinance and buy the property with a new loan in a couple years.

Please give me some pros and cons to this type of sell.

Thank you!!

2

Howdy Infoseeker:

You are owner financing and giving their trust the title and keeping your existing mortgage in your name as well. If you get enough cash up front and they perform as contracted then everything should be great. In the past a great number of deals like this were scams where the sellers even paid money to the buyers or paid several mortgage payments after the sale. The buyer would rent them and never make a payment to the lenders. This could happen either by design or otherwise. Usually the seller did not even know of the default until several payments had been missed and the cost to cure the default was too great and the credit was severely damaged as well.

3

Thanks, Ted. I appreciate the info. I knew it sound to good to be true.