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rjb
Pilot/New Investor
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Assignment of Contract
Monday, July 02 2007 09:48 PM
I have a property in Madera, CA under contract for $287,000. The last appraisal was done in December at $440,000. There are some recent comps from $380-$400K. This will be my first deal and I have the jitters. I want to assign the contract but am unsure about how much to assign it for. The seller wants a proof of funds letter. I know I can get this from a conventional lender, but I want to keep my personal finances out. It is a 30 day closing and day 1 starts 7/3. What do you recommend? I have about ten investors that I have talked in the California area that I can try to assign it to, but it never hurts to have more. Just looking for some guidance. I'm an airline pilot so if you know anyone interested in my field, send them my way and I will be happy to help them in any way I can. Thanks for your help.
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Randy Hughes
SFH Master Advisor
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Re:Assignment of Contract
Monday, July 02 2007 10:09 PM
Pilot,
I have a property in Madera, CA under contract for $287,000. The last appraisal was done in December at $440,000. There are some recent comps from $380-$400K. This will be my first deal and I have the jitters. I DO NOT BLAME YOU FOR HAVING THE JITTERS. THIS IS A RATHER BIG TRANSACTION FOR YOUR FIRST. BE CAREFUL!
I want to assign the contract but am unsure about how much to assign it for. IF YOUR NUMBERS ABOVE ARE CORRECT, 50k IS NOT AN UNREASONABLE NUMBER TO ASK. THE KEY TO THIS DEAL IS TO GET IT DONE BEFORE YOU HAVE TO CLOSE. IT IS BEST TO LINE UP YOUR PROSPECTIVE CONTRACT BUYERS IN ADVANCE OF CLOSING YOUR DEALS, THEN YOU HAVE A READY POOL OF PROSPECTS TO GO TO IMMEDIATELY. HOWEVER, IF NONE OF YOUR PROSPECTS ARE INTERESTED, YOU MAY HAVE TO TAKE LESS JUST TO GET IT DONE QUICKLY. HAVE YOU STARTED ADVERTISING THIS DEAL TO THE PUBLIC? TRY GOING TO AN INVESTMENT CLUB MEETING IN YOUR AREA AND MAKE AN OFFER TO THE ATTENDEES.
The seller wants a proof of funds letter. YOU MAY HAVE TO PERFORM OR LOSE THIS DEAL. PUT AND ADVERTISEMENT IN THE PAPER, CALL LOCAL REALTORS THAT YOU KNOW, GO TO INVESTMENT CLUB MEETINGS, PUT UP FLYERS, ETC. (GET THE WORD OUT FAST THAT THIS IS A KILLER DEAL AND WILL NOT LAST LONG!)
I know I can get this from a conventional lender, but I want to keep my personal finances out. It is a 30 day closing and day 1 starts 7/3. What do you recommend? IF YOU DO HAVE TO PRODUCE A COMMITMENT, DO SO ONLY WITH AN EXTENSION OF THE CLOSING DATE TO BUY YOU SOME MORE TIME TO SELL THE CONTRACT.
I have about ten investors that I have talked in the California area that I can try to assign it to, but it never hurts to have more. Just looking for some guidance. I'm an airline pilot so if you know anyone interested in my field, send them my way and I will be happy to help them in any way I can. Thanks for your help. WHAT IS THE BEST WAY TO GET INTO FIRST CLASS WITH OUT PAYING FIRST CLASS PRICES? (OTHER THAN USING MY FREQUENT FLYER MILES) :)
GOOD LUCK,
Randy Hughes
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Randy Hughes
SFH Master Advisor
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Re:Assignment of Contract
Monday, July 02 2007 10:12 PM
RJB,
You should also look into putting your properties into Land Trusts. Please go to the following link to find out all the benefits of using Trusts to hold title to your investments:
http://www.realestateforprofit.com/landtrusts.aspx
Randy Hughes
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rjb
Pilot/New Investor
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Re:Re:Assignment of Contract
Tuesday, July 03 2007 05:49 AM
Thanks for the advice....oh and about first class, that is a dead horse....i can't even get up there anymore when i'm riding....sorry
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rjb
Pilot/New Investor
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Re:Re:Re:Assignment of Contract
Tuesday, July 03 2007 10:13 AM
Thanks for the replies Randy. I read through your land trusts basic book...a lot of new info...very good, I am going to read through it one more time to make things more clear....I think I have figured out what I am going to do with this house...I will be getting my pre-approval letter in just a bit...tell me if this sounds right...i can transfer the property over into the street name Residential Land Trust with me being the Trustee, and the original seller being the Beneficiary...I will sell the home to the trust for the $278,000...I will record the deed over to the land trust. I will have the beneficiary sign an assignment of beneficial interest and bring in an end buyer on the other end to purchase the house from the trust for $350,000 or so for a double closing...this way the chain of title is never broken, I can control the property, my name is out of it and it is protected from any future personal liens from the original seller....i have informed the original seller that I will make her next house payment if Escrow goes more than 30 days....so essentially, this gives me 60 to market and sell this property...I have a friend who is a realtor there that I will list the property with to help market and move...Any objections or things to consider? Thanks again. One last thing, when I record the deed, how do I prove to them that the original owner is still the beneficiary of the trust so they don't have to pay transfer taxes.
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Marty Couch
Investor
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Re:Re:Re:Re:Assignment of Contract
Tuesday, July 03 2007 12:32 PM
Hey RJB,
As far as using the land trust, a couple of things. Having the power of direction gives you the power, NOT BEING THE TRUSTEE. If you are the trustee, first your name may appear in the public record and second, you have a feduciary duty to do what you are instructed by the BENEFICIARY or person with the power of direction. If the beneficiary never assigns the beneficial interest, they still control the property.
As far as using a land trust to avoid the taxes, be careful. If this ever becomes known the the taxing body you could still owe back taxes. One of the counties here in Illinois is starting to audit exempt deeds and send bills to those they feel exempted the deed without just cause.
You also want to make sure you are not using a land trust to in any way defraud a lender. The definition of mortgage fraud is getting wider every day, so error on the side of caution.
Jim and Randy's courses on land trusts are the best I have attended and I have been in the real estate industry for 19 years. They have the most complete information I have found and everything is very easy to understand. If you are going to use land trusts as part of your investment stratagies (and you really should), do yourself a huge favor and get these home study courses. It is far better money than you would spend on all the "guru" stuff out there.
Also, if you don't have the service already, consider using PrePaid Legal to look over all the paperwork. They can give you a great deal of guidance about the documents you are starting to use and see. And they only charge $26.00 a month. I know I use them all the time.
Information for PrePaid Legal is at http://www.pplchicago.com
Hope this information helps.
Marty Couch
http://www.PPLChicago.com
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rjb
Pilot/New Investor
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Re:Re:Re:Re:Re:Assignment of Contract
Wednesday, July 04 2007 02:21 PM
Thanks Marty for all the advice...i will also check out the pre paid legal services site...take care
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