Essencially it is Fraud, I understand.
What other investors do is put in a land trust named after the credit investor’s name, if it were john putting up the credit, they would name the trust the “john family trust” this way it appears that title was changed into the borrower’s own land trust.
As long as the borrowed has at least a 10% beneficial interest in the trust there’s nothing the bank can do about, it doesn’t allow them to enforce the “due on sale” clause.
And yes I took understand that there is another way. Having the credit investor give you a triple net lease.
I heard it from a very successfull investor, named John Ross.
I just wanted to know if this is done by many, or only the few who are big risk takers.
I wonder if Ron Legran or any of those guy, secretly are doing it.
Re: Using Other peolple’s credit - Posted by John (OR)
Posted by John (OR) on October 07, 2004 at 09:00:03:
Smart?
The deal is a little messy (DOS, risks to the credit investor).
There are other structures that can work as well but be less messy.
Some deals will work better then others. If you are really just using them to get a loan, then it could be argued in court that both of you are committing loan fraud. If the credit investor stays on the title and you get an option or some other way to lock the equity then it would be harder to prove you were trying to deceive the lender.