A beleaguered seller can escape the millstone of "Don't Wantership" with the 3rd Party Trustee Co-Beneficiary Land Trust Conveyance. By placing the property into a land trust in its own name, and conveying a Beneficial and Leasehold interest in it to you, the investor, the seller's burden is gone; and you have acquired a surprisingly unique opportunity. Even though title doesn't transfer to you, your Co-Beneficiary/Lessee status with the trust gives you 100% of the incidents and benefits of ownership. You have tax write-off; privacy of ownership, equity, build-up, appreciation potential and full rights to any income to be derived from the property… the property is shielded from [each parties'] creditor judgements, tax liens, bankruptcies, marital disputes and probate issues. And…the lender's enigmatic "Due-on-Sale Clause" is not compromised.
How does this apply to "Low," "No," or "Negative" Equity properties?
For our model, envision a clean property with a FMV of, say, $115,000, a 7.5%, 10-year-old, a 30-year fixed-rate mortgage with a balance of $121,100 (original purchase price—$155,000, 10% down, and presently over-encumbered by $6,000). Now, consider these options—A) Buy on a Short-Sale for $115,000 (95% LTV at 8.5% interest); or B) Take the property with its over-encumbrance, As-Is, at $975 per-month.
OK, now whip out your HP (an abacus will do) and let's do some serious figger'n here. Then you tell me if either option looks any better or worse than the other:
Option A requiring Kryptonite credit, invokes a 30-year commitment at $840 per-month, with PMI of $67 per-month (for at least 5 years); $5,750 down payment and $1,725 in Closing Costs…plus a new property-tax assessment. Cash layout over term…$311,764, with $7,625 up front.
Option B requires a $135 per-month higher payment, but a short-term commitment; NO credit; NO loan qualifying; NO down payment and only $1,725 in closing costs. And neither is there any PMI or property tax reassessment. Total layout over term is $235,725, with only $1,725 up front.
Assume now (for some goofy reason) that you chose Option B, and are willing to hold for, say, five years…but only IF someone else pays the closing costs, makes the payments and handles all maintenance (i.e., in exchange for occupancy, equity build-up, appreciation, and tax write-off). The question then becomes—Could acquiring property in this manner prove profitable? Or… restated: Is NO down, NO bank qualifying, NO monthly payment, NO management, NO maintenance, NO PMI, and NO vacancies…a 'good thing'?
Um…maybe. But how is that done?
Well…
1. Find a Don't-Wanter. Put the property in a trust and become the (2nd) beneficiary
2. Say "Thank you"
3. Find a Wanter and make them a third beneficiary
In this scenario—in exchange for tax write-off, equity build-up, appreciation, and homeownership without a down payment or bank loan—your third co-beneficiary shares appreciation and principal reduction with you over the term of the agreement. Because of their possible past (questionable but rectified) credit problem; BK; divorce; self-employment; limited funds; new (or non-) citizenship, etc., these folks just happen to abound in profusion (so to speak). You need only explain that, if they have enough for closing costs (and perhaps a buck or two for you), the bungalow with the picket fence and the Apple Pie in the window is just around the corner.
Ok, but how do I access these multitudes?
Advertise:
NO BANK QUALIFYING
No Down
WHY RENT?
ENJOY THE BENEFITS OF HOMEOWNERSHIP NOW
As little as Clos. Costs & 3 Pmts move you in. 3+2 charmer. $130,000/$975 P.Mo+Tx & Ins. Trust Property. Call now.
And, when they call, what…?
Simply say:
"I have this property over there on Elm that's in a Land Trust; and basically, what I'm looking for is someone who can afford the Closing Costs and the payments, to just…'give it to' (pause as the 'Huh?' Factor kicks in)…the only thing I want out of it, is to have you either sell it or refinance it in, say, three years, and pay of the current loan at that time (Pause). And…if there's been any appreciation over that period of time—I'd like to split it with you."
Acquiring properties in this manner could afford someone a nice income stream in a few years (veritably dropping money on one… as Pabulum from Paradise… as it were). Bear in mind that a 3rd Party Land Trust Conveyance provides: profit at inception; a positive cash flow along the way; and/or a share in net profit at termination. Remember too that higher (immediately tangible) "rents" and elimination of vacancies, management and surprise expenses, far more than make up for anything given away in "Future (purely speculative) appreciation."
When a finger is pointed toward a star, it is the slow of wit that studies the finger. Chinese proverb.
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