How Do You Proceed In A Land Trust? Part II: Deciding Upon Your Exit Strategy

In part I we discussed the perfect home you were in the process of purchasing. At this point, you are making the decision of what to do with the home. We have discussed the strategy of keeping the home for an extended period of time to see if the property value increases. Another thing that you might want to do is go ahead and spend a little bit of money to do the carpet and paint and get it spruced up and get somebody moved in. Once they're in, you can refinance it, suck some money out of there, it is going to be tax-free, and hold onto it for a while. And then obviously there is always the tradition to go ahead and fix it up and put it on the market and try to sell it and cash out of it. I want to take a minute and talk about another issue that could come up. If you already filed the deed and you are waiting for the previous owner to move out, you really need to realize that you do own the house. But if you have bought the house subject to the existing mortgage, you need to make sure the amount that is owed is paid before the house is actually yours. . Take a look at your communication with the owner. Are they good? Do you have cordial communications? If so, talk with him or her about the amount still outstanding on the loan. That is what you need to remember. Once you have the purchase agreement you will have to come up with the outstanding amount. But it seems like you do have the potential to really make some money here, so it might be wise to come up with a plan B. Should you have to move this house fast, you need to be able to market this house. Bottom line-the owner needs to be out of there. That stuff needs to be out of there. You need to say to the owner still living there, “Look I'm delivering a dumpster over there tomorrow, it is going to be over there, and I’m going to have a crew over there. You tell them what to throw away and what not to throw away. Let's go ahead and get you out of there” Find out what the owner needs to do to get out. How much money he or she needs for a u-haul to get them out...that is your main priority right now is to get him or her out of that house. n