Posted by Kevin(TulsaOK) on May 09, 2004 at 20:30:01:
Thank you Mr. Bronchick. I guess I knew the answer to my own question, but I needed someone else to say it. Thanks again!
Kevin(TulsaOK)
Help! First Installment Land Contract… - Posted by Kevin(TulsaOK)
Posted by Kevin(TulsaOK) on May 08, 2004 at 12:49:40:
…or Contract for Deed here in OK… I am working with a nice elderly couple who have 17 properties. We have hashed out the details on a CFD. Here they are:
$74000.00 Sales Price (it comps at $79K)
$ 3000.00 Down
$71000.00 @ 8% for 5 Years
$ 520.97 P & I
$ 100.00 T & I
$ 620.97 PITI
$ 725.00 Market Rent
$ 104.03 Gross Cash Flow
Process:
1)Sales Contract?(Nothing has been mentioned about this)
2)Inspections
3)Preliminary Title Search or Full Title Search?
4)Proceed to Closing
What am I missing here?
CFD will be recorded, and the owners have agreed to add an addendum stating that they cannot further encumber the property. Here is the snag: This property has a blanket line of credit recorded on it for $230,000 which is spread out over several properties. The owners use this to pay all cash for existing properties and they build new properties as well. I am very concerned about this line of credit. Should I be? What possible pitfalls could occur? Let’s say they have this credit line maxed out, will they be able to seperate this property from the blanket mortgage when I buy it? Thanks for the help!
Kevin (TulsaOK)
Re: Help! First Installment Land Contract… - Posted by William Bronchick
Posted by William Bronchick on May 09, 2004 at 10:25:31:
The danger of the line of credit is that if they default, it puts you in jeopardy. Also, you need to make sure they have the ability to release this ONE property from the blanket lien when you pay them off.
My advice is to hire a local attorney to make sure this is done right.