MichaelC

If they don't cut you some slack sue the bastards for discrimination, or walk by close when he/she is drinking a hot coffee and sue for pain, suffering, and disfigurement After you collect your out of court settlement, hire the same attorney to review your contracts. Ya gotta think outside the box, Joe!

The fee charged can vary widely. If you set an appointment with an attorney you don't know and don't have any prior relationship with, expect to pay "full retail". On the other hand, you can try one of those prepaid legal plans. I am not personally familiar with them, but I see they charge between $15 to $20 monthly for their services, which include contract review. Of course, do some research before going this route. Also, Joe, have you contacted one of your local REI groups? There is surely some member who can recommend an attorney from their personal experience. There are probably a number of attorneys who are members themselves, and who may offer discounts to other group members. Overall, with a little effort on your part it shouldn't be difficult to have a legal eye review any contracts at a reasonable and fair cost to you.

Joe, The Naked Investor was written in October, 2002. Up to date, to say the least. As for whether of not my Agreements are valid in all fifty states, I cannot say. They have been successfully used in NM, FL, AL, CO, TX, CA, WA, MD, VA, and Washington DC. There may be other states on that list which I am not aware. Generally, a good contract will cover most issues that arise during a typical transaction. On occasion, an existing paragraph may conflict with local or state law. When that happens, local or state law always prevails and, in fact, that is stated in my Agreements. Let me give you an example. While in NM, I had a lease agreement that stated a $15 per day late fee would be imposed for every day the rent was received after the due date. Well, this became an issue when I needed to bring an eviction against a tenant. In the court, the judge advised me that NM laws imposes a maximum allowable late penalty of ten percent of the monthly rent. I was awarded a late fee equal to that amount, rather than what was written into my Agreement. No big deal, and I am wiser for the experience. Also, Addendums are the form that fills in the missing pieces, so to speak. Whatever may be in your standard agreement, can readily be adapted to meet local or state requirements with the use of an Addendum. As for the specifics of using these Agreements in OH, I don't see it as a problem based on my experiences with other locations.

Hi, Andrew. I'm saying that a correctly prepared and worded contractual agreement between two parties will go a long way towards fending off a lawsuit. It does not guarantee that someone will try and sue you. Our society has become a litigation lotto, where anyone can sue anybody for anything. Yes, the overall message that I, Joe Kaiser, and others say is that preparing yourself fully and properly is the best defense. Overall, this business is not one where you should be tossing and turning at night, stressing over when the next lawsuit is coming down on you. That should be the rare exception, rather than the rule. Lastly, you are correct about banks not wanting to take back properties. That is their version of hell on earth. In fact, Federal regulators keep a watchful eye on lenders who take back properties. A bank that forecloses on properties as a routine matter is very carefully scrutinized by the government.

I, too, have seen Kaiser's document. Personally, I think it is overkill and might actually frighten away a homeowner who may be intimidated and confused by all of the paperwork we thrust upon them. However, if you have a rapport with the homeowner, (and you really need to, to succeed in this business), you should be able to make them understand it is simply a legal necessity, and then get it signed and the deal done. You are certainly covering your rear with it, too. Good luck, Joe.

Joe, no need to apologize. That's what this board is all about. Asking, answering, learning, and doing. I'm sure this thread has been helpful to others, too. First, I must start by saying I am not an attorney, and in this matter I am offering my opinions based on my experiences as an investor, not as legal counsel. Now, let's assume that the unusual occurs, and the lender takes a hard line and invokes the DOS. Let's further assume that the tenant/buyers are unable to qualify at this time, too. Where does that leave you? Well, can you qualify for financing? Obviously, one of the first things you would do is to see if that is possible. If so, you do and cash out the homeowner and your problem is solved. But, let's take a further doomsday approach and assume you can't get financing, either. Now it's all on the homeowner to go and refi their property. They won't like it, but it is in their best interest to do so because they have most to lose, don't they? Now, as for the homeowner coming after you because their lender took this action, in the real world I think they would have a tough argument to make. Again, it comes down in large part to what is and is not written in your agreement with them. For example, most every contract states something to the effect that the seller acknowledges they understand what they are signing, they agree with it, and that they have been advised to seek legal counsel prior to signing. I'm comfortable in these deals and with my contracts that I am not the responsible party should the DOS be invoked.

Hello, Bocky33, and welcome to The Naked Investor. I agree that getting that first deal done, and cashing the ensuing check that inevitably follows, gives a great sense of accomplishment and relief. I'm sure I'm not the first one to tell you that first deal will be your most difficult. In my experience, those who fail do so by giving up before ever doing that first deal. Those who succeed in this business do so by getting that first deal done, learning from that experience, and using it as a foundation and springboard for additional deals and success. As for this particular deal, let's take a look at it and get an offer into this woman's hands. First, you need to do your homework. That is, what is the realistic value of this property, and what will it rent for monthly? Critically important to have an accurate assessment of this info. Once done, you will know what you can offer the homeowner. If I understand you, the property is presently on the market at $99,900. Forget what her realtor supposedly said about it worth being more. I've never met a homeowner who has said otherwise. That's the nature of this business. It's been on the market since August so clearly it is not worth $106K, or even the present asking price. If it is, it would have sold already. You say you will offer $93,500 but I think that is too much. Let's say she receives an offer of $95,000. Not unreasonable, and probably acceptable considering her predicament and the amount of time this property has been on the market. This offer nets the homeowner between $87,000 and $88,000 once you factor in the realtors commission and the closing costs. I would offer the homeowner just that, $87K, net. Meaning there is no realtors fees involved and I'll pay all closing costs. Heck, maybe even $3000 to $4000 less. Why not? You're there today, ready to deal. She has nothing else happening, apparently. She can always counter your offer, and you can always increase yours. You can't lower your offer, of course, and if your first offer is ever accepted, don't congratulate yourself. You've just paid too much! The other thing I would not do is offer any type of option consideration. Most every deal we do is with nothing down. If the question about a "deposit" comes up, (surprisingly, it often doesn't), I explain the benefits of my offer, (The Lease Purchase Advantage I'm always talking about), and can usually wrap up another nothing down deal. So, your homework assignment is to comp this property to determine its value for both purchase price and rental market, and then get an offer in the homeowner's hands ASAP. Keep us posted, let us know how you did and if you need more help. That's what we're here for, Bocky33.

A young guy from Texas moves to California and goes to a big department store looking for a job. The manager says, "Do you have any sales experience?" The kid says, "Yeah, I was a salesman back home in Texas." Well, the boss liked the kid, so he gave him the job. "You start tomorrow. I'll come down after we close and see how you did." His first day on the job was rough but he got through it. After the store was locked up, the boss came down. “How many sales did you make today?" The kid says, "One." The boss says, "Just one? Our sales people average 20 or 30 sales a day. How much was the sale for?" Kid says, "$101,237.64." Boss says, "$101,237.64? What did you sell him?" Kid says, "First I sold him a small fish hook. Then I sold him a medium fish hook. Then I sold him a larger fish hook. Then I sold him a new fishing rod. Then I asked him where he was going fishing, and he said down at the coast, so I told him he was gonna need a boat, so we went down to the boat department, and I sold him that twin engine Chris Craft. Then he said he didn't think his Honda Civic would pull it, so I took him down to the automotive department and sold him that 4X4 Blazer." The boss said, "A guy came in here to buy a fish hook and you sold him a boat and a truck?" Kid says, "No, he came in here to buy a box of tampons for his wife, and I said, 'Well, since your weekend's shot, you might as well go fishing." HAHAHAHAHAHAHAHAHAHA!!!!!!!!!!!! Well, I thought it was funny.............

Joe, I've got to quickly run, but let me get in a few more words on all of this. I saw the thread you linked. I think the key word in all this is scam. What we do, as legitimate and honest business people and investors is not a scam. Run your business as a provider of a service, as a solution to a problem and, for the most part, you'll be rewarded financially and your reputation in the community will be a rich one, as well. On the other hand, if you are misleading the people you are claiming to be helping, you deserve the fates that fall upon you. Joe, you sound like an honest individual. Get to work, do your deals in a fair and honest manner, and you'll do well in this business. I'm here to help you in any way I can, as are the other folks on this board. Also, no, I do not get into the DOS in my book exactly for the reason you describe: it has never been an issue for me. And, no, I do not hit the homeowner over the head with horror stories about what might happen. Truth is, it never comes up in conversation with them. If it does come up, I would be completely honest with them, and answer all of their concerns based on my experiences. If they elect not to do the deal, that's fine. I only want their business if they're comfortable. There are other deals out there. Tricking and misleading homeowners and tenant/buyers is exactly how legal actions arise and problems begin. I receive enough aggravation from my in laws that I don't need them in my business, too .

Joe, I understand your concerns about the DOS. I really do. However, in my opinion, you are sweating needlessly. For starters, in maybe 150 lease purchase deals over all the years I have been involved in this business, I have not had one lender call a loan in because they discovered an option on the property. Does this mean it will never happen? Of course not. But the likelihood of it happening is remote. Certainly not enough of a concern to have you put your investing career on hold before it even begins! Yes, there are risks in everything we do. You need to be aware of them, have a Plan B in case the risk becomes reality, and then proceed with your plan. Don't let fear prevent you from pursuing your dream. Don't let the paralysis of analysis that is so common among newbies stand in your way of success! I cannot overstate this!! Think about it.........what is the likelihood of a lender discovering a property has an option on it? How would they discover it? And if they do and see that for the past two years the payments have been made on time, what benefit would they obtain by calling in the loan? It is a legal grey area that an option can trigger the DOS. Much depends upon the contracts themselves, what is written in and what is not written in. And much depends upon the underlying loan and contract involving that, too. Again, my opinion is you are putting obstacles in front of you that should not be an overriding concern at this point in your career.

Hello, Mack, and welcome aboard. The first thing I thought of was to see if the homeowner would agree to signing off on the deal now, but setting up the close five or six months from now. He has the time frame he needs to deal with his personal situation, and you have the property you want locked down. As for locking in your loan rate now, that's possible, also. But you need to check with various mortgage brokers, explain the situation, and see who can work out a deal that suits your needs. Don't forget, these guys want your business and a good one will go out of his/her way to get you as a customer. Maybe someone else will come along with some more possibilities. Best wishes, and visit frequently, Mack.

Howard, no need to apologize. When we meet you owe me one, though . If the tenant/buyers elect not to purchase the property, you now have that option available to you. As for the safest and most prudent way to set up that purchase, there is no one correct way. Your situation will determine what is specifically best for you. And, yes, there are mortgages available to do as you say. Your wisest move would be to begin shopping around for a competent and hard working mortgage broker. Forget the big banks, because they all tend to be quite conservative. What you're suggesting would be flat out rejected. On the other hand, this good mortgage broker will work your app through his connections and find you what you need. It's a matter of you finding this individual. Ask others for references, make phone calls, and interview a number of mortgage brokers until you find the one you want to work with. A good one is well worth a lunch every now and then, Howard.

OK, I understand you now, Joe. Let me try and help you to understand me....... As I have noted previously in your thread here, I don't consider there to be any difference between a lease option and a lease purchase agreement. Believing this, I do not have different contracts whereby one is a Lease with Option and another is a Lease Purchase Agreement. The agreement between myself and the homeowner is my Residential Lease with Option to Purchase Agreement. This specific agreement states that I have the option to purchase the property at any time during the lease agreement. Simple. That is, the right but not the obligation to purchase the property. This is clearly understood and differentiated. I can't say what another investor's agreements might say. I don't see any advantage to using a contract that would obligate you to purchase the property. Because to do that opens you up to a lawsuit should you not purchase it for any reason. In my way of thinking, an option is much more favorable than an obligation.

Actually, she'll never see that line, Kathy. I may be a fool, but I'm not stupid . And, yes, you are now designated a hatchling. I decided to change the User Titles figuring it might make you all feel young and free spirited. Wonder what you'll be called when you hit the 20 post mark??

I'm not sure this is what you are asking, Joe. But, to be perfectly clear, a seller can try and sue you for any reason they like. How successful they are is wholly dependent upon the language in the agreement betweeen the parties involved, the State and local laws that govern such matters, and the competence of the legal counsel representing those parties. Is that what you were asking?

Hey, Kathy, glad you joined us here at the Forums. Hope you stick around and become a regular. Yeah, I remember the '85 Bears and the Super Bowl Shuffle. I remember it because Da Bears beat my Giants that year in the NFC Championship Game. ! Not to worry, though. '86 we finally got ours . And you're right about those old baseball fields in the middle of a city. Wrigley Field and Yankee Stadium are a throwback and should never be demolished. Out with the old and in with the new? That should only apply to wives................

Michael, doing a title search on every property you are considering doing a deal will become very expensive, very quickly. So, no, I don't do a title search as a matter of routine. Nor does anyone else that I know of. Personally, only once in all my years and deals did I have a homeowner go around me. She refinanced her house for about $5K more than her agreed to purchase price to me. We found out when my tenant/buyers elected to exercise their option. (The deal in question, by the way, is this one. To make a long story short, once her act was discovered, a few threatening words and she anted up the cash at closing. (To this day none of us could figure out how she was able to refi the property with a Memorandum of Option recorded it against it.) That exception noted, most deals will not present these sorts of problems, Michael. Always record that Memo of Option that I mentioned above. Usually, they are good protection against such problems. Listen to your gut, too. Is the homeowner someone who makes you feel warm and fuzzy? Or are you having some second thoughts and suspicions? Perhaps you should walk? Finally, don't sign any lease purchase agreement as an individual. Set up either an LLC, or a Corporation. In the event of any legal action, you can't be sued personally, and your personal assets are protected, also. No small matter. Keep in mind I am not an attorney, and am offering my opinions here on asset protection. You would be well advised to speak with a qualified professional regarding LLC's and Corporations, and which suits your personal situation better. One last thing: do not let the fear of what bad things might happen prevent you from succeeding. Be prepared, do your due diligence, ask questions, and achieve your goals of making this business your business.

Hello,Kurt, and welcome to The Naked Investor. You already know that the key to any successful business is to market, market, and market some more. It sounds as if you've begun to do so on a small scale. That's fine, but you need to diversify and figure out what your marketing budget allows you to do. In addition to what you are now doing, I suggest you also consider newspaper advertising, bandit signs, flyers, business cards, and networking. You need to also get into as many realtors offices as you can. Set appointments to speak with the office manager and let them know who you are, what you do, and why you are the one they should consider when a home inspector is required. Perhaps you can offer an incentive of some kind to get some initial business. Eventually, your efforts today will pay off down the road. There is nothing so good as when they are calling you. It will happen, Kurt, but you need to be persistent in your marketing efforts to get to that point. Best wishes to you!

Exactly, Joe.

Brian, thank you for this extensive info, also. Although I am not personally a tax lien investor, I understand there are others who are, or who desire to be. Your post will be most helpful to them.

Brian, I only now have had the chance to hit that link you provided. A quick look and I like what I see. I'm going to try and spend some more time there tomorrow, and see what help it may provide. Hopefully others will see this and benefit from this info as well. Thank you.

Thank you for sharing that helpful info, Chris.

What a way to lose!! And to the rival 49er's no less! I'd be cryin' in my beer, except this loss is going to require something stronger..................

Michael, in this age of high technology, being able to connect with me is almost never a problem. Office telephone, cell phone, fax, and emails.........I am always accessible, and I'm quick to return phone calls and faxes, and to reply to emails. I stake my reputation on it.

Hi, Jamie. One of the reasons for the lack of FSBO's in your newspaper is because of the Holiday season which has just left us. Not only for you, but for me and everyone else in this business. There is a noticeable drop off in advertising and activity in December. The historical numbers will bear this out. Conversely, you will now begin to see a return to normal levels of activity, and you should find more FSBO's to call on. As for realtors and lease purchasing, I don't see it as a very good fit. If you do the deal the way we do it typically, you won't be putting down any cash, or very little, anyway. That being so, your friendly realtor is going to want to know where his/her six percent commission is coming from. There are exceptions, of course, but for the most part your deals will come from working directly with homeowners. Finally, if houses are moving as quickly as you say, then clearly you are in a sellers market. (Like most of the country, I might add.) This doesn't mean the deals are nonexistent. There may be fewer deals, but they are out there. It's up to you to unearth them, by both calling homeowners and having them call you. In other words, market, market, and market some more!