Real Deal REInvestor Network

I think we've all heard stories of shady investors who take home sellers for a ride and leave the sellers worse off than they were before.  

One time, I got a call from a former homeowner in Colorado Springs who had signed the deed of his house to an investor and let the investor take over the payments on his mortgage.  All seemed well until the market started tanking and the investor stopped making payments on the gentleman's mortgage, even though he was still collecting rent from the tenant.  Then, the first investor "sold" the house to another investor.  The second investor also refused to make payments on the gentleman's mortgage, though he was collecting rent.  To make matters worse, the tenants  had trashed the property, going so far as to smash in the garage door.  Because the homeowner had signed over the deed to his property, he felt as if he had no recourse.  Oh!  I forgot to tell you that the second investor told the old man that he was going to wait until the bank took the house in foreclosure and buy it on the courthouse steps.  Nothing like adding insult to injury.  

There wasn't much I could do for the gentleman, besides listening to his story and offering this advice:  The people who had purchased his house, collected rent from tenants and not paid the rent to the mortgage company were committing something called Equity Skimming.  In the State of Colorado, Equity Skimming is a crime -- not just a misdemeanor either, it's a felony.  I suggested that he go to the D.A.s office and try to get the bank's attorneys to do the same thing.  

That unethical and unkind investor deserved to have charges filed against him.  No one should do business like that.  Not only does it give a bad name to all the ethical investors out there, it's flat out wrong.

And here is some advice that I can offer you if you need to sell your house, but can't do it through traditional channels.  
1.  It's okay to let an investor take over payments of your house if you have the right protections in place.
2.  Make sure that the deed to your house is placed in escrow and that if the investor defaults on the mortgage, the deed reverts back to you, the homeowner.
3.  Rather than letting someone take over your mortgage, do a lease with the option for them to purchase the house. 
4.  If the investor insists that you sign over the deed to your house without any real protection in place, show that person the door.  

Now that I've told you the bad side, let me share why letting an ethical investor take over your mortgage can be a very good thing.  
1.  It is a great relief financially and allows you to move on with your life.
2.  The ethical investor will ensure that your mortgage is paid in a timely manner.
3.  The house will be well-maintained because the right investor will have processes in place to ensure that it is.
4.  It will help your credit report to have the mortgage paid in a timely manner.
5.  Someone who loves and can afford your old house will be living there.
6.  Letting the investor take over your mortgage payments saves all sorts of closing costs, allowing the investor to pay you more for your house than they could if they had to pay all cash.

The ethical investor has a big stake in making sure that your mortgage payments are made and that the house is well maintained.  After all the house they just purchased from you is an investment in their future.  

I hope this article helps you to protect yourself as well as to help you understand why you can and should work with ethical real estate investors to sell your house.

Christy Mellott
www.mmmchallenge.com
www.realdealcolorado.com