Wrap Help Needed

New RE Investor trying to understand the puzzle…

I’m looking at purchasing an investment property in Texas. Instead of landlording the property, I’d like to offer a perspective buyer Owner Financing thru a wrap. For me to purchase the property, I’ll be financing it thru conventional means. The new buyer would have a balloon payment due at the end of 36months to cash me out.


  1. What are the documents needed to perform this transaction with the new buyer? (RE Contract, Deed of Trust, Mortgage Note for new buyer, what else?)

  2. What are the steps/mechanics for doing this after finding the perspective buyer?

  3. Do I file the change of deed at the courthouse? Or wait until I’m cashed out at the end of the balloon? (May not have used the correct terms here.)

  4. How is the insurance policy(s) handled? In the event something happens to the property, I want to ensure my loan is paid off. Do I pull out the policy to satisfy my lendor? Or does the new buyer pull out the policy with me as the benificiary? If the new buyer does, how do I satisfy my lendor that I have a policy or is that even necessary?

  5. I understand that my loan will have a “due on sale” clause, but the lendors rarely act on it as long as they are receiving payment. Does anyone have experience with this? Are there ways to lessen the liklihood of the lendor acting on this clause?

  6. Am I doing anything illegal? I understand Wrap Around Mortgages are legal in the state of Texas.

  7. Is there a better way to do this?

Thanks in advance.

My suggestion would be to find a good RE attorney to handle the first one (or maybe even the first 2-3) of these for you. Once you see how/what she/he does, you can do it yourself.