They Agreed To A Sub-To. Now What?
I found a motivated seller; they've agreed to a sub to.
I'll make up two payments and give them a grand to move with. Now, to get the propert in my name, what do I do next?
Do I create a trust and have them name me as the trustee? Then I can sell it to another person, making them the trustee?
Thanks,
OnTheWater
PS This'll be my first Sub-To. I know very little about it, but from what I've read, it seems to be a powerful tool.
You now get them to grant the deed over to:
LLC
Corp
You (Big Risk)
If you do a land trust, get an assignment of beneficial interest in the trust to you or your LLC. I would name someone other than yourself as the trustee. You could name yourself as the trustee, but that's a whole other topic and it's been spoken on already.
Record the deed.
[ Edited by nebulousd on Date 01/27/2004 ]
nebulousd, why is deeding it to an individual a big risk?
Also, do not make up any payments until you have the deed and they have moved out. They need to sign a CYA letter saying that they know they have deeded the house to you, but the mortgage is still in there name, you have not made any promises as to when the mortgage will be paid off, etc. You need a limited power of attorney for the property and a property management agreement. Have them change the insurance to landlord policy with the entity (the property manager) as insursed and them as additional insured.
Brenda
You are putting yourself at risk when you hold title in your name. Separate yourself from your assets. If I want to sue you, I'll look in public records to see if you own anything and if you got a couple of houses with deeds in your name, oh I'm a happy camper and your paying up big time.
Do I just write a letter saying, "you grant me the deed to your house," have'em sign it and then put that deed in my LLC? My LLC has our last name on it. IE: MyLastName, LLC. Does it matter?
No, I'll not make any payments 'til I get the deed; thanks for telling me that though.
Thanks,
OnTheWater
Neb,
That is simply a blanket statement and doesn't always hold true. Many have invested purely in their own name for years without any troubles at all. If the above is your opinion, you're entitled to it. No need to try scare tactics of possible lawsuits down the road just to try to convince people of your point of view, especially since it has nothing to with the question asked.
OnTheWater,
If you haven't done a subject to purchase, you might want to speed read up on what needs to be done.
At this stage, I would go thru the motions just like your normal rehab buys. That means setup your closing thru your attorney or closing agent and have them work out and verify the details of the deal.
Roger
Well, it's even movin' faster now. I just found a buyer! I stand to make 5k with about an hour of work so far.
Could you help me out with what I need to do, rajwarrior, to put this under contract, get it in my name and sell it to my buyer?
Thanks,
OnTheWater
You're stressin' too much, dude.
Sub-to is really no different than conventional buying. The seller is just becoming the bank, in essense.
Have them sign your normal purchase agreement, with the property "subject to" the existing mortgage. Fill in the numbers correctly, and take it to your normal closing agent, an attorney or title company (whatever is norm for your state). They should do the tilte search, recordings, etc as usual.
I suggest getting your own insurance as opposed to trying to get added to the seller's policy.
Leave closing, take $5k from buyer, rinse and repeat.
This is a simplified how to, but If you've done a RE closing before, this shouldn't be too difficult for you.
Roger
nebulousd -
I had to mention a few things about your comment above. Once title is transfered to a trust, the trust holds title--not the trustee. The transfer of beneficial interest is not Public Record. The trustee can only release the trustor under court order. Good luck doing a cursory search of public records. I suspect that you will first run into a trust, which will lead you to the trustee which will tell you to go for a swim. hope this helps.
My statement was not a scare tactic to convince people of my point of view, a question was asked asking for my opinion.
Asset Protection is what I am referring to. The reason why people get insurance....in case something happens. Lawsuit’s are everyday things and can happen. In case it were to happen, you would have hopefully taken the necessary steps to provide yourself with asset protection. Doing business in your name is not a good practice of asset protection
Quote:
On 2004-01-27 16:16, rajwarrior wrote:
Neb,
That is simply a blanket statement and doesn't always hold true. Many have invested purely in their own name for years without any troubles at all. If the above is your opinion, you're entitled to it. No need to try scare tactics of possible lawsuits down the road just to try to convince people of your point of view, especially since it has nothing to with the question asked.
OnTheWater,
If you haven't done a subject to purchase, you might want to speed read up on what needs to be done.
At this stage, I would go thru the motions just like your normal rehab buys. That means setup your closing thru your attorney or closing agent and have them work out and verify the details of the deal.
Roger
The prime purpose of the trust is to protect the privacy, then coms all other smaler benefits that are often neglected.
If you use your last name for the name of the LLC, that's not serving the purpose as would othervise be aimed to be. However, you can use the sellers name to name the trust or you can use the street address of the property your are puting under contract and that's even more common solution that just works fine since it helps you down the road know know which property is in placed in what trust. ( i recomend that each property goes in separate trusts then all the trust can be held by your leaving trust for estate planing purposes). Untill then, keep on making deals.
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That means setup your closing thru your attorney or closing agent and have them work out and verify the details of the deal.
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That is what I call a prudent advice! Find a deal and worry about how you'll do it later. One the push comes to a stop, one will always find the way to complete the transaction. -| [ Edited by omega1 on Date 01/28/2004 ]