MichaelC

Hello, Dustin. All is well here on my end. How are you and where are you back from??

For a grand it isn't worth letting the deal die. Go for it and you just might get a $1K bonus down the road.

At various times in the distant past I have done deals where the tenant/buyer has agreed to pay the option consideration over time. Sadly, it has rarely worked out. There always seems to be an excuse why they are late or don't have the money. Ultimately, I decided I just won't agree to these types of deals anymore. However, if you want to give it a try, I say go for it. You may have better success at it than I did. In the CA Assignment Agreement I complete the form as usual but write in "See Addendum" where I would normally write the amount of option consideration being paid. Then I write a simple addendum stating the specifics: amount to be paid on what dates. You need to receive something upfront, mhmi. Consider any money you receive later on as an unexpected bonus. Also, keep in mind if the t/b doesn't comply and pay as agreed to, you have no leverage. You certainly can't evict them as you aren't the homeowner.

Are you the owner of this property, or are you working a Cooperative Assignment? I ask because my reply depends upon your position in the deal.

Steve, you know as well as anyone that you need to be dealing with a motivated seller, to some extent at least. I suspect you may be a victim of your own good deeds where these homeowners are concerned. You've treated 'em well, been honest and forthright, and lived up to your end of the deal. To the point where they figure if you want to meet their terms then, sure, they'll sell. But if you won't agree, they might just be thinking they'll have you do another sandwich deal because you've been so responsible in the past. All I can suggest at this time is to run past the sellers the usual advantages of seller financing: a higher net because there is no Realtor involved; a quick closing; and tax advantages.

Kyle, lots of good questions, but Craig's List has always been somewhat of a mystery to me, and many others from what I hear and see. At times it seems their "rules" are random. I'll be blocked for doing something that was specifically recommended by someone who has had no issues doing the very same thing. Go figure. As for running ads, I have tried previously but the results have been poor. Mostly scammers and weasels trying to extract money or gather emails to sell.

Kyle, track down Jonathan Rexford. He's a licensed Agent.

Yes, Postlets is good, (and free!). SellPoint does the same thing, but they claim to many more websites and they charge a monthly fee. Worth checking out, though.

For starters, a sign on the property is a must, unless that isn't possible for some reason. Followed by directional signs in the area. Signs are a very effective tool for generating inquiries.

mhmi, depending upon the type of deal you are doing, a CYA clause is already in place. For example, when doing a Cooperative Assignment, my agreements allow you to cancel at anytime prior to the lease start date without any penalty or problem. Can you give some specifics?

Hi, Jay. For me, consultations are an afterthought, offered only when the homeowner has minimal motivation but still some interest in the concept of a lease purchase. They need some missing pieces and a solid agreement to protect themselves in the deal. Since Dodd-Frank kicked in I have not done a consultation and so haven't given any thought to how this new law might affect this. Off the top of my head I am thinking the Consultation Agreement I use will suffice. I'm sure I'll look into it further when necessary. As for a guarantee, no, I don't offer one. I offer to share my knowledge, my agreement if they want to use it, and make myself available for their emails and calls.

Hello, Lynn. Indeed, as markets change so do homeowners. Two homeowners recently said they are open to a lease purchase but only if we build in appreciation to the option price. Both were convinced we are on the verge on another wild and crazy bull market with appreciation rates of at least 10% and probably more. I told them I can't predict the future and, in fact, I made what I think is a good argument for why prices will decline, (Bubble, v2.0 ). For me, it's emails and calls. I've been kicking around some mailing ideas, though, because the perception of this market may require a more aggressive approach.

I'd play it safe and not do the deal until I have proof the taxes have been paid. My thinking with any deal is that even if it's a deal I want, there's another one down the pike. So if the deal is shaky I'm going to pass. Remember, we're looking for motivated sellers. We should never be motivated buyers.

I'm always leery when a homeowner or t/b tell me they will have the money next week, next month, etc. More often than not it doesn't go according to plan. Waiting for a tax return is one of the standard replies I hear this time of year. I'd be cautious with this one.

I think it is risky for the t/b to make repairs since they aren't on title and if for some unexpected reason they don't exercise their option they've lost their money. But if they want to take that chance, get specifics in writing: what's to be done, by who, when, etc.

Sellers who are sitting in a strong position don't see any reward in a lease purchase. The homeowner who needs debt relief, he'll be more open minded. Our first priority is to find them. It's not easy, but it's what we do and it's well worth it. Keep the faith, Kyle.

I would definitely extend a t/b who is as reliable as you described above and, in fact, I have done just that. You can take several paths with this, but I choose the path of least resistance. I typically extend for six months, unless there is a pressing reason why the t/b needs another year. Rent credits cease after the original term. So now we have a t/b no longer receiving rent credits which should spark them to get financed. Speaking of financing, I inquire where they are with the mortgage process. Are they serious, or just not wanting to pack boxes and move? To make this legal, a straightforward addendum will do, spelling out the terms of the extension.

Kyle, I am always aware of not coming off as a salesman. My belief is that if I smooth talk a homeowner into doing a deal and a short time later they have regrets, it's nothing but aggravation for all parties. Time wasted, marketing dollars flushed, etc. I explain the deal and the advantages. If that's good enough we can move ahead. If not, I don't personalize it, wish the homeowner the best, and move on.

Remind him of the advantages of tenant/buyers vs tenants. Remind him he has final say over who moves into the house. He should see the light and give you the go ahead.

I am not comfortable with the lockbox system, giving access to a property to strangers, particularly if the house is the personal residence of the owner and contains their personal possessions. Same thing with placing an ad on Craig's List. Who knows who will respond to such an ad to gain access to properties. If the property is local you will have to work out showings within the framework of your schedule. Keep in mind the prospective tenant/buyers are also working full time and probably are going to want to see the house on weekends.

Well, that deal is dead. We call attorneys deal killers for a reason.

I give you credit for going the cold calling route. That's a lost art these days in the age of automated this and virtual that. It isn't very time efficient, either. But for the new guy such as yourself, Kyle, there isn't a better training ground for thickening one's skin and learning how to talk with homeowners. Stay the course and mix that in with other forms of marketing. What about the 3 homeowners who replied with a "Yes"?

Hi, Kyle, and welcome to The Naked Investor. It's been my experience that finding the deal with the homeowner is the more difficult part of the equation. Once you have that deal, if the terms are market friendly and your marketing is aggressive and effective, the tenant/buyers will come a-knockin'. So for me it'a always been to focus on homeowners first. PS: Adam King?? When did he get out of jail? . . .

No one strategy is going to fit every potential deal you come across. For example, a lease option is not a good fit with a homeowner who is upside down by a large margin, or who is in preforeclosure or has tax liens. You will find deals that are yours for the taking but aren't suitable. When this happens you need to take a different approach to make the deal work, or walk away. As far as fixers and lease options, I have found that to be a good fit, depending upon the numbers, of course. I have advertised fixers via Rent To Own and my phone has rang off the hook. I have taken control of fixers via a lease option, made some repairs, then sold for a profit. Every deal is a deal unto itself, and requires we do our due diligence as to how it will fit our plans.

I'm an experienced investor, 20 years or so, primarily using options and lease options as my investment strategy. I disagree wholeheartedly with the above sentiment for many reasons. For starters, you can easily and safely wholesale a property using a Pure Option. For example, you found a desperate homeowner, (and that's what it takes to wholesale), who is willing to sell his junker in a war zone, (and that's the typical wholesale property), for a huge discount. The traditional wholesaler makes his offer and may very well be required to put up $1K or so in earnest money deposit. Then you need to find your buyer. What if you can't and you are obligated to follow through on that purchase? You can back out of the deal, but you'll face possible legal repercussions, not to mention the damage to your reputation if this becomes your norm. With the Pure Option, I pay nonrefundable option consideration in the amount of $1. $5 if I'm in a generous mood. No risk to me. If I can find my buyer, great, I have my deal and pocket the difference in purchase price. If I can't find a buyer, the option expires and the deal is done. No harm, no foul. And by the way, the Pure Option can be non-exclusive, meaning the homeowner can still attempt to sell his property during the option period. Think that'll help you get the deal? It takes too long to accumulate wealth? Sounds to me like this other investor is selling a get-rich-quick scheme? Is he? Considering that in the example I just gave above I can wholesale a deal with the same numbers, how can one strategy be a wealth builder and the other not? If it's difficult for sellers to understand, then the investor doesn't know the product and is doing a poor job of explaining it to the homeowner. In addition, lease options offer a variety of types of strategies that fall under the lease option umbrella. So if one type of lease option doesn't work for the homeowner, we can utilize another. With wholesaling, you make your .35 on the dollar offer and if it isn't accepted you're done. I've said this many times and I'll say it again: wholesaling is great in theory but damn difficult in reality, particularly for the new investor. How many n00bs can negotiate a deal at a 65% discount? For most investors, particularly new investors, options and lease options are a much easier and safer path to getting started as an investor.