Vacation Waterfront with Financing

Always dreamed of your own Puget Sound waterfront home to dock your fishing boat? Fractionalized ownership gives you 100% of the occupancy rights, and 65% of the equity, as the majority owner. Up to ten years - with no payments and no interest - to cash out the other equity partners.

3650 Steelhead Dr, Lagoon Point, Greenbank, Whidbey Island. $400,000 for 65% equity.

https://www.dropbox.com/s/cdkpwjgr1rag45s/Rocheford3650_HD_Final_MJ_2.mp4?dl=0

Here's the description of this home:
Spacious house, with 60' of waterfront on a well-protected canal for crabbing/boat moorage, just a stone's throw to open water of Admiralty Straits on Puget Sound, in a stunning island community. West-facing, spectacular sunsets. Moor your boat on your backyard shared dock, kayak the canals, or fish for salmon from some of the best shore fishing on Whidbey. Beachcomb at the community beach of coveted Lagoon Point.

Watch container ships and cruise ships sail by as you relax on your back deck. Watch the winter storms safely inside by the gas fire. 

Wildlife abounds here: deer, rabbits, ducks, hawks and eagles. Minutes from south Whidbey State Park & the Greenbank Farm, with miles of trails for both dogs & humans. Easy access to Coupeville, Ft. Casey, Freeland, Langley. Only 20 minutes to the ferry!

Buyer has the option of either 65% (at $400,000 purchase price) or 100% (at $525,000 purchase price) of equity ownership. Seller financing available to help with the down payment. Meet one of the owners at the Open House this weekend, tomorrow, Sunday September 3, 2-4p. 

Happy Investing!

Seller Financing Exemptions

Some of my most popular articles and blogs have to do with the rules and regulations around seller financing. Many notable changes occurred as a result of the passage of the Dodd Frank Act in 2010.

Financing the sale of residential real estate is regulated at both the state and federal levels. In Washington the Consumer Loan Act, chapter RCW 31.04(link is external) and chapter WAC 208-620(link is external), regulates the lending of money or extension of credit for family, personal, or household use. This includes financing residential mortgages. Regulation under the Consumer Loan Act begins with the licensing process. Licensing is twofold in that both companies and individual mortgage loan originators must license.

There are some exemptions from licensing at both the company and individual levels. The company level exemptions are found at RCW 31.04.025. The individual level exemptions are found at WAC 208-620-105(link is external).

A license waiver is available pursuant to RCW 31.04.025(3) for eligible transactions under the Consumer Loan Act. The State Department of Financial Institutions (DFI) will issue a license waiver for eligible seller-financed residential mortgage loan transactions. An eligible transaction is one in which the seller owns the property being sold, is selling to a buyer for their family, personal or household use, is carrying the financing taking an interest in the property, and who is not subject to the federal law that requires the licensing of mortgage loan originators.

You may qualify for an outright exemption from the Consumer Loan Act. If you sell the home that was your primary residence and carry the financing for the sale, you are exempt from the Consumer Loan Act. You do not need a license or a license waiver. Also, you do not need a license or license waiver to lend money, secured or unsecured, to an immediate family member. 

Additionally, you do not need a license waiver if you are carrying the financing on raw land, even if that raw land is zoned residential. 

 DFI provides forms for a license waiver,  and disclosure summary forms to provide to the buyer for the type of seller-financed loan (fixed or variable rate interest).

Steps to claim an exemption for Seller Financing are as follows: 

1. Print the License Waiver
2. Fill out the license waiver, including the declaratory portion at the bottom, and return it to the Department via email to Lucinda.Fazio@dfi.wa.gov, via fax to the attention of Cindy Fazio at 360-596-3868, or via hard copy to the Department to the attention of Cindy Fazio. You can now provide the completed License Waiver to the escrow or title company or attorney.
3. As to Item No. 1 in the License Waiver, print, fill out and provide the applicable disclosure summary to the borrower. That's it!

More details may be found on the DFI website at http://www.dfi.wa.gov/residential-seller-financing

Happy Investing! 

Why Notes? Why Now?

What you ask, do Notes have to do with Real Estate investing??

Great question!!

The Note or “Paper “business is the financial side of Real Estate.

Seller financing means that the seller financed the sale of their property when they sold it. Notes are held by individuals or private companies and secured by real estate, the collateral.

So what is a Note?

A Note is a “tangible” asset with a physical piece of real estate attached to it.

When a Note investor purchases a loan there are generally two loan documents that are created. A Note (promissory note) and a security agreement (mortgage, deed of trust, trust deed etc.- depending on state customs).

The Note is evidence of a promise to pay a debt signed by the Borrower.


The security document (mortgage) is recorded at the County showing that the borrower pledges the property as Collateral against the loan.

Should the borrower default, the lender may exercise their rights that are spelled out in the mortgage document.

Trust deeds, deeds of trust and mortgages have similar wording, and have a few differences, but serve mainly the same purpose.

Today, 3 Major Market Trends have created the opportunity for the individual Note investor:

1) Stock market crash of 2008 – $91B lost out of the market in 2 days – massive exit

Stock market “refugees” with “dry cash” sit on the sidelines knowing that they have to do something with their $$$$ but not sure what!

REO’S: 68% “cash investor” sales. Today, REO’S & Short Sales in decline

January 2016 correction: 93% of investors lost $$$$.

$55B taken out of the market in the past 5 months and continued market volatility remains very worrying as many fear a correction

Passive note purchases solve their problem and allow them to sleep at night!!

2) Note inventory at historic levels and being liquidated by Banks, lenders. You have no doubt seen many sales of Note inventory over the past several months as these entities sell off these loans at a discount instead of putting them on the market as Short Sales or REO’s.

Fannie Mae to Market More NonPerforming Loans to Non-Profits Fannie Mae plans to market more deeply delinquent, non-performing loans (NPLs) to non-profits, smaller investors, and minority- and women-owned businesses.

According to a recent announcement from Fannie Mae, the GSE plans to sell its fourth Community Impact Pool, which is a smaller pool of geographically-focused, high occupancy loans marketed specifically for participation for the aforementioned groups. New Jersey Community Capital, a non-profit Community Development Financial Institution, has won all three previous Community Impact Pools.

The newest Community Impact Pool for sale contains approximately 90 loans focused in the Miami, Florida, area, totaling about $20.1 million in unpaid principal balance (UPB). It is one of three pools of NPLs Fannie Mae is offering for sale via auction. The two larger pools contain a combined total of about 3,300 single-family residential mortgage loans with about $526.1 million in UPB.

3) Banks & Government Entities – Fannie, Freddie & FHA are all restricted by Dodd Frank legislation and no longer write loans on low band assets under $125K, thus creating a wide segment of buyers who are not “bankable”. These working class buyers are who we serve. They may have a good down payment but “dented” credit and therefore need Seller financing.

Buying discounted notes is a powerful way to increase your passive cash flow (or “mail box” money) as we call it!!

Happy Investing!


Today's blog courtesy of Stuart and Tina Johnson:

We hope that you have been finding this information helpful & if you would like more feel free to contact us @ 888-422-9988 or email us @ stokehomes@gmail.com



Disclaimer.

This information is provided as a service only and we are not rendering legal, accounting or other professional advice. If legal advice or other professional assistance is required, the services of a competent professional person should be sought.

Master Lease Option

A Master Lease Option (MLO) may be a good way to purchase real estate. A MLO consists of a lease, usually 1-3 years to rent the property; and an option to purchase at a future date at an agreed-upon price.

Master Leases may be used for a variety of reasons, and most are legitimate. For instance, an owner may not want continue to operate a building day-to-day, but does not want to pay capital gains on a sale if they have a low basis. An option would be to lease the entire building to someone who is more willing to operate the building and take on the management. Presumably, the master lease rate will be lower than the market rent so the "operator" can make a profit and justify investment in upgrades and leasing costs for the building.

Capital gains would be paid by the Seller on the eventually sale of the property, but an MLO allows for the taxation to be deferred by controlling the date of sale.

Sometimes a master lease is used when there is a ground lease on the land. This would allow someone other than the fee owner to build a building and "sublease" it to a tenant. This structure is more frequently used for corporate clients who have good bankable credit but do not want to build, own or operate their own building.

A master lease is just another tool for managing control of real estate. Determine the motivation of the seller to ascertain whether a MLO is a good way to go. Finally, before you enter into a master lease, seek professional advice on how best to structure your deal.

Happy Investing!

Pro-Seller Option Form

Here is a form that might be used by a Seller planning to lease option a property they own. While I am not an attorney, this should not be construed as legal advice. Laws of each state vary, and it would be good to have this document reviewed by your attorney prior to use. But it may be a good template to begin discussion.

OPTION TO PURCHASE

THIS AGREEMENT made this day of , 20 between,

, Optionor, and

Optionee.

IN CONSIDERATION (which will be applied toward purchase price) of the sum of

paid by Optionee (the receipt of which is hereby acknowledged by Optionor) the Optionor gives to Optionee the exclusive option, right and privilege of purchasing certain Real property located in the

County of and State of , described as:

This option is subject to the following terms and conditions:

1) This option is not assignable by Optionee unless Optionor agrees separately and in writing.

2) There shall be additional option consideration of $ per month given to Optionee. The

monthly option consideration shall be credit toward the down payment/purchase price of the

property. The credit will only apply to months when the rent amount and any outstanding fees

owed (in the attached Rental Agreement) is paid on or before the due date and in full.

3) Optionor grants Optionee the right to exercise this option for a period commencing on

, 20 and terminating at midnight, , 20 . If not exercised, this

option shall expire midnight , 20 , and Optionor shall be released from all

obligations hereunder, legal or equitable. The obligation shall cease and the consideration here

above receipted for the Optionor, shall be retained by Optionor.

4) If Optionee elects to exercise this option the sale shall take place according to the terms of the

attached offer to purchase agreement, which have been signed by Optionee and Optionor

this same day.

5) Notice of election to Purchase shall be given by Optionee in writing, and by registered mail,

addressed to Optionor, at:

6) All provisions of the Rental Agreement between Optionor and Optionee pertaining to the

aforementioned property shall be performed by Optionee or this option may be withdrawn by

Optionor and Option consideration will be forfeited by Optionee.

7. OPTIONEE agrees to accept subject property in current “as is” condition. OPTIONEE agrees

to make all repairs major and minor to the above named property. Should OPTIONOR

be required to make repairs of any kind whatsoever to the property, the cost of such repairs

shall be added directly to the purchase price stated in the purchase agreement.

If there is a septic system, Optionee agrees to pay for and have the septic tank pumped out

on June 1st of each year this agreement covers.

If there is a pool Optionee agrees to open and close pool each year, and to maintain the pool.

8. OPTIONEE agrees to pay for any and all additional assessments incurred during occupancy

And prior to ownership (example but not limited to: water, sewer, sidewalks, or road paving)

9) The option consideration is for the sole purpose of granting the OPTIONEE the exclusive

right to purchase the subject property at the stated price and terms.

IN THE EVENT THAT OPTIONEE DOES NOT MEET THE TERMS AND CONDITIONS CONTAINED IN THIS AGREEMENT ALL OPTION CONSIDERATION PAID WILL BE FORFIETED BY OPTIONEE AND WILL BE KEPT BY OPTIONOR.

Initial ________

10) This option to purchase will be terminated and all option consideration forfeited, if payment

required on option agreement or any payment required on rental agreement is late for more

than ten days past the due date. Optionee understands that Optionor will be required to supply

their mortgage company with an accurate record of payment history including all instances of

late payments. Optionee understands such information could affect their ability to secure a

mortgage

11) This option to purchase shall apply to and bind the heirs, executors, and administrators

of the respective parties.

12) Optionor may be doing a 1031 exchange on this property and needs 30 days notice of closing

to work out the details with the title company and purchasing of another property.

13) If option money is forfeited by Optionee, for any reason, then the rental agreement will

automatically revert to a month to month agreement, so that Optionor may sell or re-lease the

property.

14. Optionee agrees that they will not record anything against the title, of said property, prior to

closing and owning this property.

15. Optionee understands that Optionor does not hold title (own) this property, but is transferring

their interest in the property. If Optionor can’t transfer title due to something out of their

control (ie.owner refuses to close or can’t transfer clear title). Optionor will reimburse Optionee the entire option consideration plus an additional A$500 for their inconvenience, as full and complete liquidated damages for Optionor not being able to close on this property.

15. EQUITABLE MORTGAGE: This Option to Purchase is not, and shall not be construed as, or

interpreted as any form of EQUITABLE MORTGAGE. It is hereby declared that it is not the intent of the parties to create a loan of any nature or to create a mortgage of any kind. In the event that the Optionee hereunder should ever raise such an issue in a court of law or otherwise this Option shall terminate immediately.

15. Optionor has advised the optionee to seek the advice of a mortgage lender and attorney prior to

signing this document.

18) Time is of the essence in this agreement.

The parties have executed this agreement on the date first above written.

Optionor(s): Optionee(s):

Witness: Witness:

Happy Investing!

Lease Option Vs Land Contract

Which formula is better? Lease option? or land contract?  It depends on the situation and your goals.

A lease option transaction is not a sale, so you will benefit from market appreciation if the tenant declines to exercise his option to purchase.

A contract for deed sale will allow you to get more a down payment from the buyer, since it feels more like a sale. In higher priced neighborhoods the rents may not command enough rent to cover your underlying mortgage payments.

A contract for deed (CFD) sale will allow you to collect interest payments, which are generally more than you could collect in rent. On the other hand, a property sold is already sold for tax purposes; thus, you cannot use a 1031 tax-deferred exchange on a property sold by contract for deed when the buyer pays off the debt balance. The entire balance paid on the contract will be due as a capital gain, which can be a huge tax liability if you have a low basis in the property. Furthermore, a defaulting buyer on a contract for deed is generally harder to get out of the property, particularly in a court proceeding.

Summary on the Pros and Cons of Each

In summary, the benefits of lease options are:

• Legal control of the property
• Ability to claim depreciation
• Ability to defer gains by 1031 exchange

The downside of lease options are:

• Less of an incoming payment
• Continued landlording responsibility

The upside of the CFD is:

• More money down
• Higher monthly income
• No landlording headache

The downside of the CFD is:

• Potential tax hit
• Transfer tax due at sale

You must decide on a deal by deal basis which transaction works best for you in terms of work involved, tax issues and, most importantly, cash flow. And, be flexible and know how to do both types of transactions; you can buy on a contract for deed, then resell on lease with option. You can buy on lease/option, sell on lease/option.

Brinnon Wilderness Retreat for Sale

The sweetest vacations take you back to the best memories: swimming holes, fresh pine air and campfires, curling up with a book.

Find old-fashioned bliss while living at this private, wooded retreat and shop with Hood Canal view, and over 5 acres of forested land, with a 4-bedroom septic system. This little corner of paradise, just two hours from Seattle, nestles you right on the distant side of Hood Canal to share the serenity with eagles,owls, elk and osprey. Or perhaps to explore the hiking trails of Olympic National Park at Duckabush and Dosewallips.

Whether you're celebrating a honeymoon, anniversary, or just each other's company, every day at this property will feel like a vacation -- just sit back and admire views from the sweeping forest to Hood Canal. Hold hands on your walk down to the wood-fired sauna to admire the snow-capped Olympic mountains, bathed by the smell of cedar and evergreen, then plunge into the spring-fed pool outside its door.

Be sure to walk the woodland trails winding the hillside or invite the children to swing on the rope swing over the fern grotto (www.youtube.com/watch?v=YXtUg-qCOUA). Property currently houses a main cabin with two sleeping areas and 1.5 bathrooms, a small detached studio cabin, a garden shed, sauna, two pump houses, and harvestable timber. The property is served by electricity and a spring-fed water system and cistern.

Owner financing available with $30,000 down and a 15-year term! NWMLS #962098

For more information, send a private email to HomeLandInvestment@gmail.com or call our recorded hotline 888-621-4999 to leave a message.

Happy Investing!

Negotiation Checklist

What are the creative finance terms you might offer to a seller willing to provide owner-financing?
Here is a checklist of various options an investor might present:

1.                   UNSECURED NOTE

A.     UNSECURED BY COLLATERAL

B.     LOW INTEREST RATE

C.     LONGEST TERM

D.     NO MONTHLY PAYMENTS

2.                   MORTGAGE ON ANOTHER PROPERTY

3.                   MORTGAGE ON SELLER'S PROPERTY

4.                   TRADE PLUS NOTE

5.                   TRADE PLUS MORTGAGE ON ANOTHER PROPERTY

6.                   TRADE PLUS MORTGAGE ON SELLER'S PROPERTY

7.                   TRADE

8.                   CASH PLUS NOTE

9.                   CASH PLUS MORTGAGE ON OTHER PROPERTY

10.               CASH PLUS MORTGAGE ON SELLER'S PROPERTY

11.               CASH PLUS TRADE

12.               CASH PLUS REFINANCE

13.               ALL CASH (PAYOFF SELLERS)

 Happy Investing!