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Purchase at Half Price then Option Back is it Better Than Making a Loan?

lease option instead of a private loan

When you don’t feel comfortable making a loan, can you structure the deal a different way? One of the topics we covered in Property & Paper Live this week was someone who didn’t want to make a loan against land, so instead she bought it at 50% of the value, giving the seller (would-be-borrower) an option to buy it back for the same price plus $1,000. What do you think of that?

I love thinking outside the box, and we just have to realize that if the borrower were to hire an aggressive attorney, they can unwind and punish a ‘disgused loan’ with usurious interest rate, and also unwind a ‘disguised sale’, such as a lease option, rent to own, contract for deed, etc.

Buyers on these types of installment plans can be considered to have ‘equitable interest’ and you will have to foreclose (instead of evict) if they go into default, EVEN IF they are NOT on title!! In some instances you need to use a Title Holding Trust in a particular way to get around that, and even then… who knows? The powers that be are coming after asset owners and middle class America HARD.

Here are the show notes from this month’s Saturday Property & Paper Live call:

  • 01:12 – Invest in yourself.
  • 01:59 – Stay connected to Dawn.
  • 03:02 – Note Deal follow-up: Win-win solution?
  • 04:46 – Foreclosure snag – On title with unwanted property!
  • 09:35 – Disguised mortgage strategy concerns.
  • 19:22 – Asset climate: Dicey?
  • 24:51 – Lender vs. landlord debate.
  • 25:30 – Banks recovering unloaned money.
  • 27:33 – Are mom and pop investors safe carrying paper on their properties?
  • 30:09 – Why isn’t owner financing more common?
  • 32:27 – Choosing a good servicing company.
  • 38:55 – Avoid note investing pitfalls – Trust Deed vs. Mortgage states
  • 40:50 – Judicial truncation for vacant properties?
  • 41:41 – Illinois contract for deed – convert to owner financing?
  • 51:35 – Closing reminders for seller financing.

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