Garn St Germain
I'm a new investor 9g cash avail. credit in toilet (580). Looking at property on first foreclose notice 4month behind= $3285. Loan balance 83000. fmv about 127000. Can I put this house into a land trust with me as benificiary. bring current and then flip it. I am also paying the security deposit(up to $800) and first months rent $700.00 and getting the owner out of foreclosure. When I flip it as the benificiary do I owe those guys anything, and where is the catch (other than getting them to agree) because it seems a little too easy!!!
yes I am getting them into a new house.
If they cant pay there mortgage Idon't need them as renters.
If you've got the seller willing to go forward you have yourself a deal! It really is that easy once you find a property worth purchasing.
GOOD LUCK
Hi PMScott!
Sounds like a good deal. However, you'll need to get me some more details + DO BE CAREFUL that you are NOT VIOLATING IDAHO statutes when it comes to equity-skimming, predatory lending etc.
How exactly will your trust be set up?
You mentioned that you'll 'FLIP' the property and also have a beneficiary interest too?
Are you using a land trust CREI program or just going by what's been posted here?
I am not certain of any degree of success you'll have unless I get an idea of your background preparation to properly achieve a good outcome.
Have you and the owners agreed to a deal that's Fair mkt Value..a lot of States are hammering CREIers over "un-fair dealings" & taking "un-Conscionable Advantage" of homeowners.
i generally set a price to START at 70% of Mkt then wind up credited for cost I pay into the deal(all written and accounted for) this way if I buy a $127K FMV Home for $89K less the expenses i may be OK should the homeowner cry or the State's AG (or a pvt ATTY) examine
my deal with $u$pect eyes!!!---Get my drift
Your #s look alright just be sure you are setting up the trust and deal-structure appropriately!
Let us know how it comes together!
Derrick Ali :-D
BTW - Why did you title this Post Garn-St. Germain???
pmscott,
Glad to meet you.
Getting past the scare tatics here I would recommend you check out William Bronchicks site.
He is an "Attorney" and would be able to guide you properly when it comes to Land Trusts should you desire to use one.
John $Cash$ Locke
The Landtrust is the vehicle of choice in the type of Preforeclosure transaction you describe.
As with all things that are tried and tested, there's a roadmap on how-tos that you must follow in order not to trigger the due-on-sale and avoid liability issues to yourself.
It is not overly complicated, but not quite as simple as you put it.
But make sure you do not make mistakes.
Having said all that, I would advise you to have the seller create the Trust with them as the initial beneficiary. There's some additional docs they will have to sign towards 3rd parties while being the beneficiaries of the Trust.
You then "acquire" the property by having them assign their beneficial ownership to you.
If this is your first time using a Trust, I'd recommend having an experienced Attorney guide you.
There's some additional stuff you need to have them sign in order to minimize their chance of succes in case they would like to crawl out from under the transaction when they get their remorse hiccups.
There's plenty info to be found here on TCI to get you off to a flying start, and there's some good courses and books on the subject.
Using the Trust you save on closing costs and taxes. You'll learn to love them.
Hope this helps.
[addsig]
derick,
it was the garn St germain act of 1987 that stated if a property in trust is sold the ever so popular due on sale clause is void.
Incidently, the banks stopped allowing mortgages to be assumed without qualifying a few years prior to this. So this could be another way to creatively finance with little money down.
PMSCOTT writes, "it was the garn St germain act of 1987 that stated if a property in trust is sold the ever so popular due on sale clause is void"
My research indicates that Garn states as exempt from DOS:
a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property;
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Short Sale Practitioners can't predict, or guarantee results... but can take steps to insure the likelihood for success....[ Edited by TheShortSalePro on Date 05/11/2004 ]