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MichaelC

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Everything posted by MichaelC

  1. When that happens, Bayroof, you know where to find me. I'll bring the warm Latinas from south Florida to provide a temporary thaw........
  2. That is one of my favorite movies. Pacino and Lemmon were terrific! Yeah, Rio Rancho, my old stomping grounds. BTW, David, where in Maine are you from? One of my favorite spots on the planet. I still have memories of lobster and dark brews on the Camden shoreline.........ahhh, Camden, ME........
  3. If you mean when you are first speaking with them, just for the purpose of collecting a database of tenant/buyers, just write down what they are telling you. Later on, when you have an actual property to deal, you start calling back all your prospects. At that time I would say something like, "Mr. Jones, when we spoke last month you mentioned you had $5,000 option money available for when you found the house that you and your wife liked. Well, I have this property now that seems to be exactly what you're looking for, but it will require $8,000 option money. Is this something that is possible for you? Listen to what they say. You just may get your asking amount. You may find out they definitely do not have any more than the $5,000 they quoted. Or perhaps you'll reach a happy medium and reach an understanding for $6,500 or thereabouts. In any event, throw the question in their laps and see what comes of it.
  4. Hi, CJ. For starters, I'd recommend you do some due diligence before you move too far forward. For example, what are the requirements for being a property manager in your State? Some States require a Realtor's license. Same thing with eviction laws. They vary from State to State. You will need to get that info from your State's Department of Housing Office. As for some good software you can use, maybe someone with more knowledge about that stuff than I can come along and provide you with some recommendations.
  5. I prefer to have originals for all parties involved. That only means one original for you and one for the homeowner when working out that end of the deal. Then an original for both you and the tenant/buyer when closing out that end of the deal.
  6. Hello, Marlene, and welcome to The Naked Investor. Hope to see you around frequently and I hope someone here buys your house tomorrow! Yeah, you do need to be careful these days with all the virii passing through cyberspace. I long for the good ol' days when the only virus you could get was from strange and friendly women .
  7. Joe, there is no set number. The amount will vary and depends upon several factors. The biggest of which is how much does the prospective assignee have. Most everyone who is seriously out house hunting has taken some time to review their budget. As such, they probably have a very good idea what they were planning to put down when they found the house they want. It's your job as an investor to try and get them to tell you what that amount is. I think if you can take a few minutes to review the sample telephone conversation in my manual you'll see how I advise to approach this topic. Look at Strategy Two/Assignments, and also at What to Say When the Tenant/Buyers Call. Also, motivation levels play a big part in determining that number, Joe. How anxious are you to unload the deal and move on? Is the assignee hot to trot for the property? Etc.......
  8. Joe, the LLC isn't only for long term holding of properties. If you do any kind of lease purchase deal, it is always better to do so under your LLC, rather than under Joe Lee the individual. In fact, depending upon how your individual State handles these matters, you'll find filing an LLC can be quick and possibly inexpensive. You may want to try this link for info in Ohio: Ohio Secretary of State When assigning the deal immediately, you collect an assignment fee only. Now, the assignee is a clone of you. He/she has available all of the options that you had available had you elected to hold the Agreement.
  9. I would not necessarily wait, Joe. Usually, when I do an assignment it is upfront, rather than waiting several months into the deal. If the deal is already set up as a sandwich lease, I will more than likely keep it that way since it is already on "auto pilot", so to speak. I've already received some option money, I'm probably receiving some monthly cash flow, and I have my anticipated back end profit, too. As for their "competence" to handle the deal, you need to determine that before they become your tenant/buyer, to avoid problem tenants. The best way to talk to a prospective tenant/buyer about assigning them the whole deal is discussed in my manual in the Assignments section, Joe. That might answer your question as to how I approach this type of situation. As for doing deals in your name, yes, you can. You are aware, of course, that doing so puts you personally at risk in the event something should go wrong. You are also aware of the advantages that doing business as an LLC offers you. The decision is yours, amigo.
  10. Michael, I assume you are referring to potential tenant/buyers calling you. Six is an excellent early indicator that there is a need for Rent to Own homes in your area. No matter what they say, you might want to get them to complete the Tenant/Buyer Profile, and begin to file and organize all these calls for when you have a property or properties to offer. As for how much option money is enough, review my manual on this matter. Let them talk first and tell you how much they have. How much option money you receive depends, in large part, upon the property in question. For example, if you are dealing with a $90,000 starter house with a $750 monthly payment, $2,000 might be adequate. On the other hand, a $350,000 property with a $2,800 monthly would certainly generate a much higher amount of option consideration. Remember, my general rule of thumb is the equivalent of three to six months rent for option consideration. Lastly, you'll find the tenant/buyers are the easier part of this equation. You will need to concentrate your efforts on the sellers/homeowners. You are absolutely right: you can do this. I know it, too!
  11. Tony, Jim is correct but I want to further clarify. When I do my deal with the homeowner my Pesidential Lease with Option to Purchase Agreement is one document. This is by design. When I do my deal with the tenant/buyer, I use two separate Agreements: my Residential Lease Agreement, and my Option to Purchase Agreement. This, too, is by design. Just as Jim noted, keeping the Agreements separate and distinct when doing a deal with the tenant/buyer puts them in a weaker position to claim they have equitable interest in the property. On the other hand, by having one Agreement with the homeowner, you are in a stronger position to make that claim should the need ever arise. Hope this helps....... MC
  12. Jim, the contracts and agreements you decide upon using is a personal matter. No one can say mine is the best one, or the only one to use. My variety of agreements were originally drawn up for me by an attorney, many years ago. Over the years, they have been refined and tweaked as situations arise and I realized that deleting or adding a particular sentence or clause would be to my benefit. You can go through a real estate attorney if you so chose. That might be pricey but, a bigger concern, is whether or not he is experienced in lease options and understands what you as an investor want and need in your contracts. Just a few days ago a new investor contacted me with this same question. He was picking up some the Lease Option Agreement his attorney had drawn up. He attached the copy to get my opinion. Honestly, I couldn't believe how deficient it was. I told him he is free to use it if he wants, but I would never go near a deal with that. He went back to this attorney who sheepishly admitted he was not familiar with lease options, and that this investor was better off looking elsewhere for an agreement that would provide more thorough protection. As for online forms, my experience is they are fairly generic. Maybe someone else could come along and say otherwise regarding downloadable agreements.
  13. Indeed it is, Michael. I'm holding a spot for you on the Real Deals page!
  14. Hi, Tony. I'm not sure I understand your question. Are you asking what the difference is between a lease purchase agreement and a lease with option to purchase agreement? If so, here is my take on this often asked and argued topic. Some will make the argument that a lease purchase obligates the tenant/buyer to purchase the property within the agreed to time frame. Whereas a lease with an option to purchase is just that: a tenant/buyer has the option but not the obligation to purchase the property. I use these terms, as well as Rent to Own, interchangeably. A homeowner is fooling himself if he thinks his house is any closer to being sold with a lease purchase than with a lease option. The property is either sold, and the title has changed hands, or it has not sold and the title remains the same. The fact that a tenant/buyer has obliged himself to purchase the property within a certain timeframe doesn't mean he will. What happens if he doesn't? Sure, the homeowner can take legal action. He'll probably win, too. Did you ever hear of a hollow victory? Well, this would be one example. The tenant/buyer is still not going to buy the house if he doesn't want to or cannot. Thus, to me the idea of a lease purchase is not realistic and practical, and you are misleading any homeowner if you are not clear that you are leasing with an option to purchase.
  15. Hello, Jim, and welcome to The Naked Investor. We're glad you joined our community, and I'm sure it will be a mutually rewarding experience. The paperwork you need will be determined in large part by the deal itself. For example, I'll assume you are setting up a sandwich lease type deal. You would need a Residential Lease with Option to Purchase Agreement for use between you and the homeowner. This Agreement, of course, would be appropriate to allow you to sublet and/or assign the deal to a tenant/buyer. This does not require notarization, though it can be if the parties involved prefer to do so. You would also want a Memorandum of Option to protect your interest in the deal. This document does require notarization in order to file with the County. In addition to the Memorandum, you might use an Affidavit of Equitable Interest, or a Performance Mortgage to protect your interest in the deal. These, too, need to be notarized to be recorded with the County and act as a cloud on the title. Those are the basic documents you would use to secure your deal, Jim. Depending upon the specifics of the deal, there may be another doc or two. Don't over think this stuff. Get out, market like a madman, make offers like one, too. Things will start to fall in place and you'll have a much clearer understanding of the process, once you actually do a deal from start to finish. There is no education like experience. Good luck! Stick around and let us help you.
  16. Ditto what Tony said. BTW, Tony, why not register and hang out awhile? It's clear you have info and insights to share.
  17. Joe, I took a look at the link you provided. If I'm understanding that thread you started, the opposition to assignments seems to be from an ethical standpoint, rather than the legal. Someone implied that if you go out and assign all your deals to "some loser" that you are asking for trouble from the disgruntled homeowners. This may be so, but one thing jumps to mind immediately. Why is it assumed that the assignee is "some loser"? If an assignee pays me, say, $3,500 assignment fee and is shrewd enough to know the marketplace and negotiate me out of the way so he can enjoy the benefits of the deal I originated, I wouldn't classify him as a loser. The other thing that strikes me is before anyone attracts the attention of the DA's office, the local Real Estate board, and the community in general, you would really need to be a mover and a shaker in the local real estate investment community. Joe, I've said it before but it bears repeating. Run your business honestly and ethically and your problems will be minimal. That certainly includes you doing assignments if that is your preference. On the other hand, if after all your analysis you are more comfortable by remaining in the middle of the deal, that's great, too. Then do that. But, what I definitely want you to do is to stop the Paralysis of Analysis I am sensing, and start marketing and making offers.
  18. Michael, let me clear the confusion for you, because this is important. As you noted, in my book I emphasize that we are not realtors and we should not drive all over town looking at pretty kitchens every time a homeowner suggests they might be interested in a lease purchase. If I am speaking with a homeowner who is seriously interested in doing a lease purchase, one of the main points of interest from both sides, would be the terms. Letting the seller talk first, he throws out some numbers at you: length of lease, purchase price, and monthly rent. (And, yes, we get a specific street address, too). Now, should we argue any of these numbers yet? Probably not because we haven't done a CMA yet. We then go and do our due diligence to determine property values for this property in this neighborhood. We call back the homeowner and make a counter offer, or we can do same via fax or email if you want to put it in writing at this point. Keep in mind this is an offer you are making, not a binding commitment. The offer you are presenting is sight unseen, and it is contingent upon your physical inspection and viewing of the property. So, we go back and forth and iron out a few minor differences and reach an agreement of terms. At this point we have a homeowner who has agreed to the concept and idea of a lease purchase, and who has agreed to the terms of same. Now, and only now does it make sense to go and view the property. You are not going there to sell the homeowner on lease purchasing or to negotiate terms. That's already been done. You are going to see if the property fits your needs. The house and homeowner need to sell you, not vice versa. You are the one in control here, Michael. Let's say you get to the property and, as you say, it's worth more than you thought. Great! Bite your tongue and get the Residential Lease with Option to Purchase Agreement signed. What if you discover it's worth less? The homeowner "forgot" to mention the landscaping was a dump yard and the roof was shot. No biggie. You politely point out these things and you renegotiate the terms to your satisfaction, or you walk. Hope this helps.
  19. Joe, who are "they", and what specific experience can they quote as to why assignments are so dangerous? I will repeat what we have already discussed about assignments. I am not an attorney. But my experience as an investor is that assignments are not any more problematic or dangerous than other real estate transactions you might find yourself in. This, of course, is assuming you have the correct and proper agreements in place to protect your position. You don't need to explain your justification to the seller for why you chose to assign your agreement. If you feel you want to, you can explain that there wasn't enough room for you to be in the middle of the deal, and the only way you could make it work was by assigning the contract and eliminating yourself as the middle man. I would further explain that all the terms remain the same, and that the only thing that has changed is the person who will be making the monthly payment to the homeowner.
  20. C'mon, BB, it's the Silver and Black all the way! Go Raiders!!
  21. Hello, Danny, and welcome to The Naked Investor. It's good and proper to be concerned about the homeowner. But you can't allow those concerns to paralyze you and prevent you from doing deals. I'd suggest you go out and find that motivated seller first. Put together and reach an agreement with a homeowner on a lease purchase deal. Then, begin your search for a tenant/buyer. A few things will happen. First, you will find that tenant/buyers are not a rare species. In fact, a well worded ad for a Rent to Own property in a desirable area with good terms will have your phone ringing off the hook. In other words, it is the exception rather than the norm that a tenant/buyer cannot be located for your deal. Also, as Joe has already pointed out, you give yourself enough of a period to market the property so you are not obligated to make payments and, in the worse case scenario, you have a cancellation clause which allows you to cancel your agreement in the event you are unable to find a tenant/buyer. You'll be fine, Danny, if you don't allow the dreaded Paralysis of Analysis to bog you down. Now, go out, talk to homeowners, and let us know how we can help you!
  22. My thoughts are you have a greater chance of winning the Powerball Lottery, twice, than you do of having the DA come after you for assigning a lease purchase agreement. First, you would have to assign a hell of a lot of deals to attract any kind of attention from the DA's office. Second, you would have to be extraordinarily unlucky to have a group of homeowners get together and march en masse down to the DA's office to vent about you. I don't mean to make light of your question, Joe, but there are always going to be those you talk with who will scream at you that the sky is falling. There will always be those you talk with who will be anxious to pass along their negative energy to you, if you let them. My advice is to run your business ethically and honestly and, by and large, the scenario you described is highly improbable, if not downright impossible.
  23. The dollar amount is whatever amount is agreeable to both parties. Ask around in your area and see what the going rate is. Maybe you can call someone who is looking for a bird dog, play the role, and see what he offers. Just a thought......... Generally, payment is made when you secure the deal with the homeowner, not when the property sells months down the road. If this is not financially feasible, find your first deals yourself, Michael, then you can get the assistance of others when you have some additional cash to do so.
  24. Yes, taxes are a part of the reality we must deal with. There are so many factors that affect every individual that I can't say what may happen to you as an individual, Michael. My best advice is to keep detailed and thorough records of all expenditures and income, and make a point of speaking with a qualified professional in this area, sooner rather than later. Truth is, Michael, I hope you pay a boatload of taxes. Means you're making three boatloads of moolah !
  25. You can if the homeowner agrees to a simple change of the lease start date. If the house is vacant, he/she will almost assuredly say yes. If for some reason it isn't possible to move the date up, the tenant/buyer needs to be more flexible. If that isn't possible, either, you'll need to find another tenant/buyer.
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