contract for deed

[linzy42]

I want to find a house to buy contract for deed, but i dont know where to look. i live in faribault, MN. I just need a suggestion on where to look...

[dealmaker]

WHY would you ever want to BUY on a CFD? IMO (and that of many attorneys) is that it is the RISKIEST way to buy a ppty. I've posted my opinion on this many times and I've never had anyone point out a flaw in my logic.

Here's the way a CFD works: Seller and you sign a P&S agreement with a (far in the future) closing date. You make payments to seller for ?? number of months or years, at the future closing date you TAKE POSSESSION.

Here's the big flaw in it. Let's say the seller is shaky financially (why sell this way otherwise?), and sometime between contract and closing he runs afoul of the IRS (you know, the guys with the FULL FORCE OF THE FEDERAL GOVERNMENT backing them up). Being who they are, they decide to put FEDERAL TAX LIENS on all of the seller's ppty.

I know, I know, some guru told you that you have EQUITABLE TITLE to the place, so no one can step in front of you. Guess what, the IRS can and will! Ask your attorney HOW MUCH $ he'll charge you to enforce your rights in the SELLER'S (IRS tax liened) ppty. Trust me, the number he'll quote you is very high.

Only people who are so weak financially that they're one step away from payday loan stores should even consider CFDs.

Just my opinion. But I'm the world's greatest authority on it.

dealmaker

[SlumLordMike]

What is the difference between selling CFD and selling a lease option?

[Jim Johnson]

What is the difference between selling CFD and selling a lease option?

Mike,
There is not much difference in the way these programs work, except maybe in the tax laws for the buyer and how a default is handled. There is a much stronger argument for taking the full property deduction if your buying on contract for deed, and also the process for removing a non paying buyer is much the same as a foreclosure. I think there is still an argument for taking deductions if your in a LO, but I would not want to be a test case. That said, if you do not pay on your lease, poof your evicted.

I think there is a place for these if as a buyer your doing your homework right. If your going to buy on either of these programs, think about moving the home into an entity and them having the property managed by a attorney. You should be able to move the property far enough from the owner where it is deeded out of their names but they benefit from the payments that come in on its behalf. This is a great way for us to purchase property that is under performing or owned outright by a person and they want out without the tax hit. They can move the property into a trust and you buy it from the trust. have the trust run by a good law firm and your off to the races. In my market this happens quite a bit and the financing is normally non-qualifying assumable on the sale side. Just think of all the doors that opens! You get a contract for deed, you rent the property, then sell it on a wrap while you hold a second.

I best stop before I cant go to sleep..... I am getting all worked up now....