Land trust ( Question )

[OKRICHLAND]

I have an investor who wants to sell me a one bedroom per side duplex.
At this time he has it in a land trust
with him as the beneficiary.
the property is only worth 39,000 but values are rising.
He says that he puts all of his properties into a separate land trust
when he buys then because it doesn't cost anything and so that he can remain somewhat hidden.

He has a 40,000 note that he is paying off to a mortgage company.

He wants 48,000 for the property.
I am to give him 8,000 up front in cash, then he will write the trust form, naming me as the new beneficiary (Trustee), and give
it to me to take down town and have it filed. (Don't we both have to be there in order to have it notarized).
I will then begin making payments to him personally as he will make the payments to his loan company. (This is his promise)

Is this the right way of doing a deal like this?
Will I then have enough interest in the property to feel comfortable putting 10 or 15,000 into it before I actually refinance it totally into my name?
One benefit to me is that this deal doesn't show up as debt ratio on my credit report.

Any other suggestions?
I will be putting over 10,000 worth of repairs into the property.
The contract will read that I will buy the property within two years.

I just want to make sure that I won't get burned when it comes time to refinance.

Thanks in advance for all of your advice.
OKRP.

[Aldo]

I'm no expert on this type of thing and I'm sure you'll get better advice than mine. My first thought is that, if you preceed with this, don't do it without a well-qualified attorney in your corner. I just don't like it, even though it was very generous of the seller to promise to make the mortgage payments. In addition to not liking it, I don't think it's a good deal.

The adage is "buy low, sell high". You're looking at "buy high, hope for higher" and I seriously doubt that will work. That promise of increased values expires very. very soon. Prices are much driven by mortage interest rates which have been rather stable. The fed announced that short-term interest rates will start being increased in 1/2 point increments rather than the earlier 1/4 point increases. It won't be long until long-term rates begin their predicted rise and I don't think I have to tell you what that will do to RE prices.

To pour a little gas on the fire, Greenspan is retiring (long overdue, in my opinion) and his designated replacement said he disagreed with Greenie's rate reductions a few years ago. That's wonderful news for investors, except those who believe prices will continue to rise.

IMHO, I'd be out looking for a better deal, but wish you well.

[Just Information]

You need to research the chain of title first.

If this property is placed in a just my first question would be whose name is the mortgage note in?

What are the terms of the note? Numbers of years, pre pay, interest, is it adjustable?

What are the average rents in the area for a duplex?

What is the average appreciation rate in the area?

You are loosing $9,000 upfront the day you do the deal, so are you just looking for positive cash flow?

I am not saying this is a bad deal yet, but you biggest caution signal is you will have $58,000 into a $39,000 property.

Need some more details

[OKRICHLAND]

No, these will be just fine.
I have called and rejected the deal.
Thanks for your advice.

[Just Information]

On to the next deal

I believe you made a wise decision!