eSigning Owner Financing Contract Made Easy

Esign owner financing contract

hey guys it's Cameron here with in Racine aspires every week I'll be the tools tactics strategies lessons aren't learning things company blow to sonic or a portfolio just a few years and now manage that portfolio today I've taken a question from Abdul Brooke quick guys if you guys want to reach out ask a question please don't be shy do it I'm get to them what I can I know sometimes I can immediately answer your question but I will get to it in time I put it on the list here so just because I didn't answer immediately or didn't get right back with you please still send the questions or comment below and I would get to it when I can and put you in the queue so appreciate this question from Abdul and his question was I am new to investing in wholesaling - I'm new to investing in wholesaling I wanted to know how to fill out a track contract for a subject to deal great question great strategy guys check out the other video I have on the load no money down strategies and using subject to successfully for several properties actually the first property I did was subject to so that brings up two contracts thankfully both of these are provided by track so there's the seller financing and dindim now we're going to add to our track contract and if you guys haven't seen another video check it out up here on where I walk through the trek contract and show you guys how to to fill that out or we have the loan assumption addendum so again these are both trek contracts I'll put the links below in the video or on here or somewhere I'll put both the links to these two these forms and you can download these for free there's no charge track the Texas Real Estate Commission provides these so what I'm going to do is I'm just going to walk through these really quickly and kind of give you a high level of of how to fill one of these out so if you guys get a chance print it out pause the video go print this out or download from the website and we'll walk through walk through each of these so the first one is going to be the seller financing a denim again this is a trek seller financing in them as of this time the one there you can download off the website is version 11 - 2 2015 so that is that's the one that we're going to talk about today so again seller financing did you first one address of property pretty straightforward letter a credit documentation so this is basically like it says here to establish the buyers creditworthiness you want to have documents we always always always want to submit it will help submit documents when we're putting out this contract to to get the seller to accept this we do want to provide proof of funds or some sort of credit report salaries something to show guys you're gonna finance me this property this is this is what I have so don't worry I'm gonna be able to make the payments because that's always the biggest fear that sellers have when they want to do with the seller finances they get they get scared that you're not gonna be able to make payments so you could put whatever you want here we always submit it or I Whisman everything I could to help them to do that buyers credit approval again that's just saying basically that they get allowed to terminate the contract if you don't give it to them in a timely manner the promissory note so this is actually what the seller is going to sell you the property for to put that total amount there you put the interest rate this is letter C and then how you want to do it so we always we always did monthly installments you can all you can do including interest or not you can do interest only monthly installments on number three so however you want to do it a number one would just be a balloon payment but number two is monthly payments with with interest or plus interest and they'll tell you that the beginning date and then thereafter for we always did three hundred and sixty months which is thirty-year a 30-year note you can do you know balloon it ten years or balloon at whatever actually makes sense what I would look at is what makes sense for what I'm gonna do with this property if you're going to turn on the flip it you know it really doesn't matter 20 years 30 years 25 years 15 years you're only gonna make payments for a year or so if you're gonna rent it I would get my payments as little as possible right because that is is gonna help your cash flow so I would take it out as long as I could 30 years I've even told people that I will finance it for them for 40 years if they're in their 50s and they think they're gonna live to be 90 hey all all finance would you finance that for me for 40 years and you will be able to to live well into your 60s with a payment coming in every single month so that's basically letter C paragraph C one is like I said the monthly installments were number three or excuse me number two is monthly installments number three is the interest only paragraph D is the deed of trust section so number one is property transfers right at the bottom of the page the property transfer we always signed as consent is not required so we would like to sell it and do it as we please sometimes the seller will not want to do that they might want payment for 30 years they don't want you to sell the property so that's something that can be negotiated but if you're if you want to remain flex we'll make it consent not required if if they're pretty Stern about getting something then you're probably gonna have to select letter B which is consent required and then the back page so this isn't very another very important piece number two the taxes taxes and escrow section paragraph we we would try to do escrow not required so that means that we get to keep more of our money and then we'll make the payments at the end of the year if you're somebody who has trouble keeping payments you might want to select escrow required and you were going to be paying them that month so again that that's more of a preference thing guys when we fill these out and that's it let me just understand that that's it then you saw done so it's two page addendum for the the seller financing addendum pretty straightforward I'm not an attorney I want to preface that I'm just strictly showing you what we do as I have done when filling this contract out but I'm not an attorney and don't play one on the internet so one thing I want to mention about these you have some flexibility here like I said on the taxes Ness insurance escrow or the property transfers when you guys do this we always made sure that we were going to fulfill in our promises we went in to talk to a seller and we said do you want payments for the next ten or fifteen years and for whatever reason that made sense we did not then turn around and flip the property and pay him in a year or six months we just don't do that I thought something that I sit well with or would really would really wish upon anybody so if if what you're doing is promising them them something for ten twenty thirty years make sure that you fill this contract out to fulfill that don't back yourself into a corner especially if you get into a jam but make sure you're filling this out too to fulfill them so the other option so really we use the seller finance and in them a lot if we're going to do a rap transaction or if they have the property paid off the other one we're going to do is the lowest option and in which we've also done so again depending upon which strategy you want to use sometimes they'll say that we use terminology and or changeably seller finance sub to loan assumption make sure that you're using the right addendum for that but yeah seller financing we've used if we're doing a rap mortgage or we've sold property so we've actually done a loan assumption which I'll cover here in a second we've done a lone assumption from a seller and then used the seller financing and denim to sell the property and sold it to an end buyer so it's basically like we've suck we suck - we don't her finance the sub - or seller finances up - that was very lucrative and was a great strategy for us but you guys can use these interchange not interchangeable I shouldn't say that but you guys can use these strategies together so be thinking about that second second piece here I'm going to go over the loan assumption addendum very very similar to the seller financing addendum you put the address of the property you got the credit documentation what you want to provide them credit approval basically says that you've got to provide that information in a certain time frame in here at 7 days the Assumption so the unfree the paragraph see the unpaid principal balance of the firstly note payable to whoever it is whatever institution that is which unpaid balance at closing will be X so that's whatever the the mortgage balance currently is the only prints the balance of the first lien promissory note payable - yeah whoever that is total current monthly payment including principal interest in any reserve deposits is blank whatever that is so that's the total monthly payment with everything what is that buyers initial payment will the first payment do after closing so if you closed on the fifth or will just say 20th then the 20th of May you're gonna need to pay on the June 1st so this is so the so one is for the first lien number two and paragraph C is the second secondary lien promissory note if the unpaid balance or maybe a sim loan as I'm closing it varies from the limbo stated weather so if you guys mark down an incorrect mortgage balance you guys can come cash payable at closing or just to say price so that's that's what the the bottom paragraph is saying undersea loan assumption terms so again here's something that you may be able to use when assuming that if you want to pay the buyer something payment of an assumption fee in excess of $50 $100 or seller declines to pay such excess blank and see when okay for c1 or c2 for c1 or c2 so which is it the primary or the the first lien or the second lien how much more are you going to be paying that the the seller an increased interest rate or any other modifications so again if you're gonna assume the loan are you gonna pay them something for that you can pay them some monthly are you gonna pay them some more interest what are you gonna do this is similar to using the seller financing and dindim depends on which one you want to do I would speak with an attorney on some of that on how you guys want to do that because each situation is different some loan documents are different some you know some things are written written differently and this contract might change so I don't know when you guys actually watch this video on what's gonna be legal and what's not so just double check with your broker if you are an agent if you're not an agent just have an attorney run past kind of lay out for him what's going on and see what they say eat consent by the note holder if the note holder holder fails to consent to the assumption of the loan either seller or buyer may terminate this contract by notice to the other party in the earnest money will be refunded to the buyer so this is a great protection here if you're going to buy the property and the seller you're gonna assume that the loan or doing a sub a sub 2 and the seller lender says no you're you're done well you get out of the contract and get your earnest money back seller liens basically that they don't have any liens they're gonna have all those on the property letter G paragraph G on the second page tax and insurance escrow if no hoarder maintains an escrow account for an item valorem taxes seller shall transfer the escrow to the bottom without deficiency that's basically saying any money that they have in an escrow account becomes becomes yours if the yeah so if the sellers have been paying on the because you guys make prorated when you purchase a property the taxes and insurance get programmed and right so you need to get if they're making monthly payments in escrow you need to get those payments you need to make sure you get that because let's say you buy a property halfway through the year well one June 1st or June 30th at the end of the year there you're gonna be due full taxes and if you already you usually pay insurance ahead of time so you paid for a whole insurance policy and you've got all the taxes due so if the taxes are due at the end of the year and you only have six months worth of escrow taxes you need to get that from the the seller does that make sense if not rewind and try to or Google that or maybe I'm not doing a great job of explaining that but you want to make sure whatever the seller has in escrow that you get that transferred over to you and the title company should help you out with that these are just then the other two paragraphs are just notices talking about the ability to pay and the release of liability so and then you saw it I mean it's pretty straightforward guys that that is that is basically the contract so again just to summarize these are two contracts with seller financing and in them and ilona substant addendum the prominent promulgated I think is how you pronounce it trap contracts that you guys can find on the one of the links below or around here I will put it on there for you pretty straightforward guys there they're two simple contracts that Abdul is now you're going to fill out a subject to contract make sure you know which one you're going to use again I've used both I cannot say they are interchangeable you can stack these like I mentioned on top of one another but definitely reach out to somebody whether you're an agent reach out to your broker or an attorney and just ask them which one you know they might charge you 100 bucks 200 bucks to to verify which one with them but I hope that was helpful if it was let me know if it wasn't let me know Abdul I hope I answered all your questions I hope this will help you land the subject to deal thanks guys see you next week