MichaelC
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Posts posted by MichaelC
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Hehe. No doubt Hill and Bill were the media's darlings, even went so far as to tip her off to questions during the debates. Shameful. With any luck those two will finally go away and we can look forward to what should be some interesting times in Washington.
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How 'bout that! Against all odds! A lying, corrupt Clinton supported by a lying corrupt media, and the power of the people still won out!
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No expiration date? Then unfortunately the contract isn't valid.
That said, if the homeowner is willing to honor your original purchase price, the first thing I suggest you do is get in writing the agreed to purchase price and the expiration date. Once those are in place we can look at your exit strategies. But without them you have no agreement of any kind.
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First, my apology for not replying sooner. I was out of town for a few days of R&R.
OK. If I understand correctly, you have a six year lease option? First question, when does your option to purchase expire?
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Hello, Dion! It sure has been awhile. Good to hear from you again.
I wouldn't consider renting to anyone without something in writing, even if it is just a room in my house. Heck, even if I knew the person. That opens up doors to all sorts of potential problems. And if there is a problem of any kind, a written agreement will go a long way toward eliminating that problem in a timely manner. Not having an agreement could potentially involve the legal system even more.
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Sometimes is better to make friends and make enemies.Agreed. Or, as Michael Corleone said, "Keep your friends close, and your enemies closer."
A helpful, knowledgeable Agent can be a key cog in your business.
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This is a unique property, to say the least. From your description it doesn't sound like a good fit, (literally: 6'4" vs a 5' ceiling. . .ouch). If the airstrip wasn't a part of this package, would you have any interest?
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Bill, keep me posted on how this plays out. You've piqued my curiosity.
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Bill, a poor credit rating ain't the albatross it used to be. Much like a divorce back in the day, a foreclosure on one's credit history was scandalous. Now, not so much. In fact, after the bubble burst in '07, sitting around the table with a few beers. foreclosure war stories became all the rage. So, my friend, all is not lost. Granted, you won't be buying traditionally. But it doesn't mean you can be buying creatively. It's a matter of finding the property you want and a willing homeowner.
This particular property has pushed your buttons, obviously. Not a bad thing, but don't show your hand. For starters, you need to determine how the owner arrived at their asking price. If you get confrontational and suggest they are way out of line, they dig in their heels and the deal is long gone. Instead, I like to take the humble, aw-shucks approach:
"Joe, it's probably me, but I haven't been able to find any sales data that supports your asking price. Can I ask you how you arrived at that figure? Can I see the sales data you used?"
Something along those lines isn't going to offend, and places the onus of justifying their price on the owner.
Regarding the sudden flush of homes for sale, indeed this needs to be looked into. Could be nothing more than coincidence, or something much bigger. Do your due diligence!
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Not sure what you mean about the forum being "one-dimensional". True, the focus here is about lease options. However, some of the underlying tenets of real estate investing apply. For example:
1) when looking for a deal we look for problem ownership, an owner who is motivated for one reason or another. Often that means they are in need of debt relief.
2) on the opposite side of that is that we try not to be the motivated buyer. We should keep our emotions under wraps when looking and negotiating. To do otherwise costs money.
Bill, if I'm the homeowner and I sense the gent in front of me wants to live in my house until he passes to the Great Beyond, how flexible do you think I'm going to be. No, my attitude becomes "take it, or leave it".
That said, if this is a property you want, make your lease purchase offer with terms that benefit you:
1) minimal option consideration
2) the longer the lease, the better
3) right to sublet and/or assign
4) a few weasel clauses to provide an out, if necessary
By the way, where do the owners stand with regards to a lease purchase? Are they open?
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Dream home? Be careful, Bill. We want motivated sellers. We don't want to be motivated buyers. Did you ask the seller how he arrived at his asking price? Let him know you are serious and interested, but that you haven't been able to find any sales data to support the asking price. Then be quiet and hear what he has to say.
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Hi, Bill, and welcome to The Naked Investor.
No cookie cutter, subdivision homes for you, eh? Unusual doesn't do this property justice.
1. The asking price is $300k (no appraisal, mind you). This is twice what the tax assessor valued the house at last year. There are other properties currently for sale at the airport, some vacant lots, some with a hangar only, and one with a mobile home. Nothing is over $150k. There are no recent sales within 40 miles, other than tiny lots with mobile home selling under $30k and giant farm estates over $500k.I never pay attention to values from the assessor's office. They are not a reliable indicator of FMV. In my experience they are typically well under value. . .which is a good thing as far as the tax bill is concerned.
2. There are no rentals within 40 miles. Not even on Craigslist. Not even apartments, rooms for rent, etc. This is farm country bordering wilderness. How am I supposed to determine market rent rate? Zillow suggests $1100/mo.Zillow is another source I ignore as far as values and rents. They are notorious for being inaccurate.
3. The property is deeded as a Life Estate (the owner is elderly and it's set up to pass to his son). I don't know anything about life estates, but from what I recently read, they seem simple enough. Will this have any bearing on the situation?Good question, as these things can always become more layered than expected. In simple terms, it means that the son is now an owner while the parent(s) are life tenants. To be safe you would want your lease option agreement to include both parties.
Clearly, this is a property where the best determining factor for price and rent value will be the market itself. You take your best shot at values, put it out on the marketplace, and listen. The market will tell you if you're assessment is correct. Your safety net, Bill, is that the agreement you use will, (should), include an out in case you are unable to find a tenant/buyer for such a unique property. So if you're approaching this longer term, as in a sandwich lease, be sure your agreement allows you time to find a t/b and an out in case you can't.
Or, if your risk aversion is such, approach it as an assignment. Either way, there should be close to zero risk for you if done correctly.
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I've always said marketing is a function of one's time and financial budgets. At the lower end of the spectrum you have email marketing. It takes but minutes to send emails to FSBOs who are advertising online. At the other end would be direct mailings. More time consuming, more expensive, but more targeted, as well. Dropping $1,500 on a campaign might sound expensive, but getting even but one deal as a result will pay for that ten times over.
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I've never been a fan of bandit signs, either. But I know guys who use them as their primary marketing strategy and they do quite well.
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If it were me, I'd take a month off and drink a bit. . .but that's me.
As for what you should do, I'd suggest you market to both areas. Doing deals at a distance isn't the hurdle that many who haven't done so believe it to be. All it takes is someone on the ground with access to the property to handle the showings. That could be the homeowner if they are still in the property or in the area. If not, they probably have someone in place already: a neighbor, a friend, or a relative. Do your marketing, find the deals, then you can worry about the showings.
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Facebook is nuts because it's filled with nuts. I understand the appeal of social media. But I truly detest it. I find it ironic that we call it social media when it has contributed to our culture becoming more anti-social than ever. Too early to vent.
Off to the gym I go. . . 
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Everything is online these days. The print media is a dying industry. Most every homeowner will advertise their house for sale and/or rent on various websites. A quick search reveals Craig's List, Backpage, Ebay Classifieds, Postlets, Zillow, Trulia, FSBO, etc. . .
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I wanted to see what's your plans for Summer 2016 !!!Besides laying on the beach with a cold alcoholic beverage!!
Well, there's that. . .
What kind of marketing strategies are you using now?I still like blasting out emails. Fast, free, you can use a program like Cubix Solutions to do so, or hire a VA.
Personally, I've never been a fan of bandit signs. They don't seem to last very long in my area.
Tried flyers a few times. . .with zero results.
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First, Rex. Now, Erik. This is a stroll down Memory Lane!
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Rexy, how are you?? Good to hear from you. All is well on my end.
The site was long overdue for a makeover. Finally got around to it and I love the results, too. Still a few tweaks that need to be done, but just some minor fixes.
How have you been, Jon?
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Thanks, Daniel. Appreciate your help with this.
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What is the protocall for a pure option when i find a buyer? I am guessing it is the Assignment agreement where i am assigning my interest to the buyer for 5k and he also gets my Pure option agreement i have with the seller? So i get something in writing? I have nothing in writing so no one is obligated? Good Grief......You're correct. You have an Option Agreement between yourself and the homeowner. Said agreement gives you the right to assign. You found an interested party to assign the deal for $5K. You fill out an Assignment Agreement, collect your assignment fee at that time, and the assignee steps in for you and deals direct with the homeowner. That is the usual protocol.
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OK. A cooperative assignment. Typically, at least the way I have always done these deals, is that the option consideration/assignment fee is credited in full towards the purchase price. So in your example above, if the homeowner is to net $200K, then whatever portion of that option consideration I keep needs to be added on top of that $200K. $5K option money, all mine? Then the purchase price is $205K, (plus any rent credits).
At that point I am out of the deal and the t/b and homeowner are dealing direct with each other. I have no further financial or legal interest in the deal. How the purchase and financing proceed from there is between the t/b and their chosen lender. Usually, option money will be considered a part of the down payment, while rent credits are a credit towards the purchase price. One is a hard cash transaction, while the other is a paper transaction with no exchange of cash. That how most lenders see it. Ideally, the t/b begins the process early enough so they can shop for a lender who meets their needs and can get the financing they want.
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Depending upon the specifics of the bankruptcy, there are several ways the tenant and the deal could be affected. The trustee has the option to allow the lease to continue as agreed, or he can terminate the lease. If the latter, the tenant or tenant/buyer has the right to file a claim for financial compensation for losses incurred as a result of being forced to move. They can also remain in the premises and fight the trustee's decision.
Bottom line: it's a legal dust up and the t/b would be wise to prepare for all possibilities by speaking with an attorney.
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Have you tried offering the homeowner a lease option offer? It could be the perfect solution as it gives you the needed time to get your financing in place, while securing the house you want at the agreed to price.