Advice please on providing financing for my renters...

[jbs]

I recently sold via lease option on a property, and I would like now to provide my renters/buyers with financing.  They want me to finance the property for them, and I am willing to do so.  The problem is that I don't own it free and clear.  I have a loan/mortgage form the bank.  I was thinking about doing a contract for deed, but that doesn't seem to be so bright from what I have read on this board.  Terry wrote on another topic:

I will sell on a note and deed of trust as well. The deed of trust is filed with the court house. The deed made out to them is kept in escrow, a nice filing cabkinet that lloks amazingly similar to one in my office.


Being a  REI newbie, can I do something similar to this? Do I need to own the property outright before doing this?

Thanks for any help,
jbs

[WilliamGA]

jbs,

Do you live in TX?

I sell on Land Contracts all the time. LOVE 'EM! Great cash flow and no landlording.

I do understand that the laws in TX make selling on CFD not a good thing although some still do them there.

I am not all that familiar with the TX law on this so I could not properly advise you.

I will tell you that you do not have to own the property free and clear to sell this way.

Hopefully the TX investors will offer their expertise here.

[jbs]

Thanks William, and yes the property in question is in Dallas, Texas.

[jbs]

Correct me if I am wrong, but a land contract and a contract for deed are the same thing more or less, neither being a very good option in Texas.  I believe that leaves selling on a note with a deed of trust.  

Being new to all of this, can I do a deed of trust and note, like Terry suggested on the previously mentioned post,  when a bank has a mortgage on the property?  Besides LC & CFD, do I have to own the property, free of mortgages, before I can do a deed of trust?

Thanks for any help,
jbs

[Admin]

JBS,
You don't have to own the property free and clear to resell it.  What you've described happens every day of the week.  Almost any attorney familiar with real estate transactions can help you set it up the way you wish.

One of the risks you run, albeit a small one, is the Due on Sale clause.  If you'd like to get a bit more informed, I'd suggest reading some of Bronchick's articles on it.  He has several here...

http://www.texasrealestateclub.com/authors.html#williambronchick

hope it helps...

[jbs]

Well, I don't want to just straight up sell it to them and collect all my money up front.  What I would like to do, perhaps I did not explain this too well, is create for myself a steady income stream off of this property by charging them one monthly rate, and pocketing the difference between this and what I pay the bank.  

I was trying to figure out how to do that if not by contract for deed or land contract.

I understand the due on sale clause.

Perhaps your answer is the same?  

Thanks,
jbs

[Admin]

jbs,
Yes, my answer is the same.  Having existing financing in place will not necessarily prevent you from any exit you choose.  It can be a lease, lease option, traditional sale, or various types of owner financing, including note and deed of trust or CFD.  So, my point, poorly made, is the existing lien doesn't really matter, regardless of your plans.

Sorry for the confusion and again, a decent attorney can assist with the required docs.   Hopefully, I was clearer this time.