i am sure it’s a matter of time that they will do the same with a wrap and then all the TX investors will move to investing in other states, the foreclosure rate will go back up sky high, the property values will plummit, and the state will sit there and wonder why. idiots. complete overpaid idiots sponsoring bills.
You’re right. All they know is that the legislation makes them feel better about themselves, they’re helping the little guy after all. Uh huh. They don’t seem to realize that they’re hurting more than they’re helping. L/o was a great option for people that had money but poor credit. Of course, here in Texas, groups like ACORN are exempted from the legislation dontchaknow, oh, and government agencies can do it too, just not private investors.
It’s too bad what’s being done to investors and buyers here in Texas. We have traditionally been a strong, independent state yet we’re becoming more and more Socialist as time goes on. This legislation will have exactly the effect you are predicting.
austingal,
You folks across the border keep it up and I may have to get my crayons out and color you ‘blue’ on the map…like CA and NY…
LOL.
Keith
Thanks all the same Keith but I like Texas being a red state. ;D
me, too…and the 34 electoral votes. You gotta offset California and NY somehow and that’s a butt-ton of “money in the bank” blue votes!
Keith
Yes, it is nice to have those 34 ev’s. It’s also nice to know that Texas doesn’t truly need the rest of the country but they need us. We have what we need here to be self sufficient, always have.
A subject to transaction is not illegal under the new bill because title transfers at closing, unlike lease/options and contracts for deed.
i think u need to clarify that Drew. ur sentence doesn’t make much sense. the deed better always gets transferred at closing in a Sub To deal :o
Right, that’s what I meant… sorry if I confused anyone.
In a subject to situation, title does transfer at closing… so perfectly legal in Texas.
In a lease-option or contract for deed situation, title does NOT transfer at closing, so it is an “executory” contract, and now, only legal in Texas if the house is owned free and clear.
I am not an RE newbe but am just expanding into sub2s. I understand that one way to get around the Texas LO laws is to buy sub2 putting into a trust and assigning the beneficial interest to me, the buyer. If I understand the the next step I am then selling and assigning that interest to the buyer. The financing is created by doing a wrap mortgage at a higher interest rate. That brings me to my questions…Is the buyer then making the payments on the sub2 note and a 2nd to me or am I loaning the full amount (at a higher rate) while I continue making the sub2 payments? I am trying to figure out the technical aspects of this transaction.
Thank you,
Curtis
trusts are a lot of work but u can do them if u’d like. too many hoops to jum thru for me, just my preference not to do them. even though they are legal and the intentions are good, they can be interpreted as ur circumvention of the DOSC.
if u do a wrap, u hold a mort between u and ur buyer while u pay the orig mort from ur seller, therby making cash on the margin. the buyer pays one pmnt to u only
Tony,
They can be interpreted any way you want, but they are legal because any homeowner is allowed to place their property in trust under federal law. It does not give a list or reasons why or why not.
Chockler,
The seller retains a 10% interest and assigns you 90%. The property’s legal and equitable title is in your Trustee’s name, that’s why I prefer a non-profit corporation (for safety). Your Resident Beneficiary/Tenant is assigned an interest in the property and you can set it up as a triple net lease, or if you prefer, a wrap as you described.
Let’s say your payment is $750 and you have leased or wrapped it at $1000 to your tenant. He pays the rent to your Trustee who pays the mortgage and sends you a check for $250. Hope this helps.
yes, and wrap urself in plastic wrap too to for the fullest protection
i did not say they were not legal, i said they were not for me but by now gary, i do beleive u have completely educated all of reiclub.com on this issue.
Tony,
I believe I read somewhere that not all states recognize land trusts, so I will check and see how they got around federal law.
I will get back to you on this one.
John $Cash$ Locke
Cash,
Tennessee does not recognize the trust as personal property and taxes it as real property.
Louisiana is under old French law.
In the other 48 states they are completely legal.
Da Wiz
To Tony and Cash,
We are all attempting to educate, not indoctrinate; me with land trusts and you with subject to. The more things change the more they remain the same. Reminds me of something.
Does the statement, “We’ve always done it that way” ring any bells. It was made to me by a prospective client and got me to thinking (very dangerous):
JUST A QUESTION OF STANDARDS
The US standard railroad gauge (distance between the rails) is 4 feet, 8.5 inches. That’s an exceedingly odd number. Why was that gauge used?
Because that’s the way they built them in England, and English expatriates built the US Railroads.
Why did the English build them like that?
Because the first rail lines were built by the same people who built the pre-railroad tramways, and that’s the gauge they used.
Why did “they” use that gauge then?
Because the people who built the tramways used the same jigs and tools that they used for building wagons, which used that wheel spacing.
Okay! Why did the wagons have that particular odd wheel spacing?
Well, if they tried to use any other spacing, the wagon wheels would break on some of the old, long distance roads in England, because that’s the spacing of the wheel ruts.
So who built those old rutted roads?
Imperial Rome built the first long distance roads in Europe (and England) for their legions. The roads have been used ever since.
And the ruts in the roads?
Roman war chariots formed the initial ruts, which everyone else had to match for fear of destroying their wagon wheels. Since the chariots were made for Imperial Rome, they were all alike in the matter of wheel spacing.
The United States standard railroad gauge of 4 feet, 8.5 inches is derived from the original specifications for an Imperial Roman war chariot. And bureaucracies live forever.
So the next time you are handed a spec and told we have always done it that way and wonder what horse’s ass came up with that, you may be exactly right, because the Imperial Roman war chariots were made just wide enough to accommodate the back ends of two war horses.
Now the twist to the story…
When you see a Space Shuttle sitting on its launch pad, there are two big booster rockets attached to the sides of the main fuel tank. These are solid rocket boosters, or SRBs. The SRBs are made by Thiokol at their factory in Utah. The engineers who designed the SRBs would have preferred to make them a bit fatter, but the SRBs had to be shipped by train from the factory to the launch site.
The railroad line from the factory happens to run through a tunnel in the mountains. The SRBs had to fit through that tunnel. The tunnel is slightly wider than the railroad track, and the railroad track, as you now know, is about as wide as two horses’ behinds.
So, a major Space Shuttle design feature of what is arguably the world’s most advanced transportation system was determined over two thousand years ago by the width of a Horse’s ass.
And you thought being a horse’s ass wasn’t important ??
Peace.
Da Wiz
And remember, drugs lead nowhere but they take the Scenic Route.
Gary,
Good to know states can legislate laws to protect their citizens even though it is federal law.
There are currently more states looking to close the loop holes and also to stop “Equity Stripping” by the bad guys.
John $Cash$ Locke
NOTE* I am not basing the following on any experience. It is based on my basic philosophy of how I will run my business…which is the same way I live my life. I believe if all parties know exactly what is going on, and it is all legal, moral and ethical…and I am honest about everything, then everything will work out great for all parties. Also, I am in this to make a profit, and both buyer and seller will not have any doubt about that. DISCLAIMER FINISHED
Trust or no trust, I know when I take a property, I will take 100% of the ownership. I will not leave the seller a 10% interest for any reason. If there is a lot of equity, that can be addressed in a different way. If the deal has a lot of equity and warrants the seller capturing some of it, I would have no problem doing this. I am not going to do this business to rip off a seller. However, I will not leave them an interest in the property in any way. The terms of where the equity goes can be addressed without me giving them a percentage of the property. To me, 100% ownership means I am 100% in control. I won’t do it any other way. I will be in complete control of every deal I do, or I won’t do it.
With regards to the buyer, he is not getting any future appreciation. He will purchase the property for whatever value I think it will be worth at the time he cashes me out and the sellers loan is paid off. If he wants it at its current value, he has the option of getting a new loan. If he wants in without bank qualifying, and with me allowing him 2 years…or however long…to get a new loan…then he will be buying on my terms. My terms will be whatever I think the property will be worth when he gets the new loan.
When the time comes for my buyer to get a new loan, if I have to adjust the price down because it doesnt appreciate, or do something to allow him to pay the difference in small monthly payments, I will work with him. But unless he gets a new loan and lets me pay off the sellers loan, he isn’t getting appreciation. That is mine as owner of the property. When he gets a new loan and therefore the sellers loan is paid off…the price he buys it for will be fair. I am not in this to try to rip off buyers. I don’t think me not allowing a buyer to capture appreciation is wrong in any way. His benefit is getting into a home without having to immediately qualify…as well as moving in whenever he wants. That is a great benefit to him.
My life is built around simplicity. I live a very basic simple life. I believe in being honest, ethical, and making sure everything I do is legal. If I do the above, and can keep things simple, I will be successful. If laws or circumstances change, I can change with them if necessary.
I believe I understand the financing part of the transaction now. However, I am assuming that there is a downpayment up front and the actual deed is transferred from the trust to the buyer when doing a wrap mortgage. Is that correct?
Curtis
my uncle sat me down years ago and asked me a question that alone, changed my life: “If u had the chance to make $5 or $500 legally, morally and ethically, which would u choose?” I answered with the higher of the 2 becuz that is what i wanted, plain and simple. The moral of the story? I don’t care about railroads and chariots.