Today we discussed a couple of main topics that effect us as Real Estate investors.
Overview of Subject to:
This is an area that can be another fine tool to allow those that don’t have the means or credit to apply for a mortgage, to pick up a home legally without needing to qualify for a mortgage loan. The right situation can facilitate this type of transaction.
One can advertise to be able to buy homes. A seller that maybe is in financial troubles and is motivated could call you. You look over the home and find out the seller is determined to move out of the home and let it go to foreclosure. You asses the situation in relation to what is owed on the mortgage, what the home is worth, repairs needed and what the home could be sold for or rented out for. After doing your analysis you realize that if your intent in this case is to rent the home that what the sellers are paying on their mortgage now is lower than what rents you could collect etc. You determine that it can be a cash flowing property if you continued to make their mortgage payments for them.
You verify through a title company or the county records that it has just the mortgage and no other liens on the property. You verify the mortgage loan will not be changing in anyway in the future in regards to interest rate, etc.
You look at the fees to have a title company or RE attorney create a land trust and to transfer ownership from the home owners name to the land trust.
Write out a signed document that the homeowner knows that if you commit to continue their payments that technically the loan could still be called due by the bank to be paid off early but it is highly unlikely since they are happy with the continued mortgage payments.
Have the homeowner move out of the home. Then, transfer ownership to a land trust which could be in the last name of the homeowner. Your name is the trustee of the new trust. This paperwork is filed at the county records stating that the home is owned by the trust, that you are the trustee, and no mention of who owns the trust. The paperwork that states this is in your possession. It could be your name as the owner of the trust or better yet would be your llc that owns the trust.
Now you can rent out the property at a cash flow, you or your llc legally own the property, the homeowner does not ding their credit with a foreclosure, and you didn’t have to qualify for a mortgage loan.
A majority of Americans believe home ownership is not a good investment:
A recent article states the reality of the effect of the economy and how that relates to the perception about owning versus renting a home.
The great American Dream is dying. Even though many Americans still desire to own a home, they are losing faith in home ownership as a key to prosperity.
Nearly two-thirds of Americans, or 64%, believe they are less likely to build wealth by buying a home today than they were 20 or 30 years ago, according to a survey sponsored by non-profit MacArthur Foundation. And nearly 43% said buying a home is no longer a good long-term investment.
“Americans no longer see home ownership as a secure path to building equity and wealth,” said Geoff Garin president of Hart Research Associates, which conducted the survey of 1,355 adults.
“That has made them more willing to think fresh about their housing options,” he said.
A majority of respondents said they believe renting is more appealing than buying — and that renters are just as likely to be successful financially as someone who owns a home.
During the first quarter, the home ownership rate dipped to one of its lowest levels in almost two decades, according to the Census Bureau.
Historically, owning a home has been considered an essential part of achieving the American Dream.
However, the housing bust, with its explosion of foreclosures, changed all that.
“People believed if you reached the middle class, you didn’t have to make the difficult decision of renting or buying without falling behind on credit card payments or health care bills,” said Garin.
And even though many experts say the housing market is recovering, many Americans aren’t buying it.
The survey found that 70% of Americans still believe we are in the midst of the crisis and nearly 20% think the worst is yet to come.
That’s because many Americans were impacted directly by the economy and the housing bust and are still struggling to get by.
More than half of those surveyed said they had to take on an additional job or work extra hours, stop saving for retirement, accumulate credit card debt or cut back on health care in order to afford their housing payments at least once over the past three years.
“Concern about the housing market is very personal,” said Garin.
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