Home › Forums › General › EHTrust/EHT Topics and Creative Real Estate Financing › Buying and Immediately Putting it into PACTrust
April 22, 2005 at 10:25 pm #714
I have a guy who wants me to buy him a house using my credit and his money (down payment). The plan is for me to buy it first, then put it into PACTrust.
This is not in my immediate area.
I am not 100% sure about actual steps to take to accomplish this. The following is what I think I should do. But I would like to hear how you would do, especially if you have done something like this before. I wonder if there is a simpler way to do this. I simply didn?t want to trigger buying the house part, until he puts the 10% he is agreeing to contribute. Please give me your comment.
1. Tell him to show me the money (10% FMV). (bank statement, etc)
2. I tell him to go find a house on MLS.
3. Once he finds the house, I?ll tell him to contact the listing agent.
4. I sign him up for PAC trust for that property. Get his $500 deposit.
5. Visit the property and make an offer on the house.
6. Once the offer is accepted, then an escrow (escrow #1) will be open.
7. Then send the documents to NARS to open another escrow (escrow #2) at the same title company to hold my RB?s fund (10% of FMV). NARS prepares the docs.
8. Once I see the buyer?s fund in escrow #2, then I go ahead to finish inspection and deposit a down payment to the escrow #1 (my money).
9. When the escrow #1 is closed, I go ahead to close escrow #2 with RB.
Am I making it more complicated that it is?
One problem I already see is ?How do I know the actual figure to put in PACTrust before my loan is processed?? Maybe I should complete the buying part first, then move on to PACTrust part. The problem with that would be that I would not have signed PACTrust document before I close on escrow #1, so he might say that he doesn?t want to sign, AFTER I buy the house.
Thank you for your time in advance.
-whyKApril 26, 2005 at 1:16 pm #10827
Anyone has any advice on this, please? thanks.May 17, 2005 at 5:13 pm #10828
Did anyone ever spond to this? Did you do the deal?May 17, 2005 at 7:59 pm #10829
Consider using the locator fee agreement tailored to a specific property and price.May 17, 2005 at 8:48 pm #10830
TMR (sounds like motorcycle:-),
No response, until Jim. I didn’t do that deal, but I have one other realtor bringing something similar. I spoke to Gale and she suggested to just use the escrow#1 for both. Will see what happens.
That sounds like very simple solution to this situation. I’ll think about this more. The deal I was originally talking about had instant equity, but not the current one. It is at the market. The profit is only a bit of cash flow and potential of appreciation.May 21, 2005 at 10:56 pm #10831
In the equity share type deals I have seen usually the investor who gets a property in contract and then looks for another investor/buyer to provide the financing on the deal and the person providing the financing gets paid an upfront fee and or shared equity/appreciation buildup of the property when it sells in X years.These are usually lease or sandwich lease option deals.
You do not know if this guy will sign the PACtrust agreement.
He needs to show the down payment monies as well as the mortgage payment monies so you have the monies to pay for at least 6 months of payments to season the note should a lender require seasoning before you could refinance or sell outright if you needed to get out you have options.
Another question is how long will you be requried to carry the note..??
If he defaults in paying then of course your RB can provide the monies once that part is setup. Who will pay the trustee and other fees not you he needs to pay that if he wants the trust setup..
YOu should be very well compensated for providing the finanacing and having the specialized knowledge of setting up the trust and thus protecting all parties involved so I would retain most of the beneficiary interest in the trust and most all of the voting rights if I were you.
I would also request that he setup an equity account and put as stated at least 6 months of mortgage payments to cover the trustee fees, repair, utilities etc so you have security in the deal and if possible those account should be seasoned not floating monies.
I did two of the deals and it really is frustating when your have to ask your investor that you need money to pay a mortgage when the monies should have been there in the first place.
Get a good money committment from this individual or I would not do the deal!!
Just my opinion..
Good luckMay 23, 2005 at 2:08 pm #10832
Maybe I missed something here, was this guy wanting you to buy the house for him interested in a specific house and the current owner didn’t want to hold the financing?May 23, 2005 at 2:38 pm #10833
Resident to be wanted whyK to be the bank on some property he wanted to be named later.
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