In today’s real estate investing environment it’s important to have many ways to get a deal done. The focus of this article will be on a financing technique known as “All Inclusive Deed of Trust” (AIDT) also called a wrap-around Loan. In the weeks to come I’ll also spend some time with other options too, like credit unions.
To put it simply an AIDT takes a preexisting loan and absorbs it into a new loan. The new loan is made by the seller of the property to the new owner.
Here is an example: I’m selling a property for a total of $300,000, and there is an existing mortgage on the property that has a balance of $250,000, with an interest rate of 6.5 percent. I’ve found a buyer who wants the property and is willing to put $30,000 down, but the buyer had a short sale three years ago and is having a hard time qualifying for a loan with a conventional lender. The buyer now has a good job, have proven they are credit worthy and can afford the property. So as the seller I decide to sell to them and use an AIDT to facilitate the financing. I create the AIDT for $270,000, with an interest rate of 7.5 percent. This means that the AIDT is wrapped around the existing mortgage of $250,000. The buyer now gives… Continue Reading
