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Posts posted by JvM

  1. Yeah, it's pretty standard to have the non-exclusive clause in there for assigning a lease option. I used Joe Crump's 1 page doc for a while with a simple clause saying it's non-exclusive (saying the seller has the right to keep looking for a tenant or a buyer or whatever) & if we can't find a T. buyer within 90 days, the contract is dead.


    That's the basic idea. I started adding a separate form later that I would have the seller sign saying any T buyers I bring through my efforts are mine & are exclusive to me & any they have are exclusive to them (so it's fair). I also put on that form the clause to keep all the buyers credit info confidential before I give that to the seller.


    That way everyone feels protected.



  2. I'm thinking about starting to target fsbo sellers for L.O. consulting.


    Is anyone doing that currently & have you added any disclaimers or disclosures about Dodd-Frank with the sellers you consult (even though the new law doesn't technically apply till if/when the buyer buys, are you going into it with them?)


    Just wondering what the liability is as a consultant with this new untested law.


    Also, do you offer any kind of guarantee for sellers? It seems like you'd need something like that, but I don't see how to guarantee it if they are the ones who have to do the work.


    Any other marketing ideas are welcome too.





  3. The trick with the CL addys is to only email about 15 per day per email account.


    I had a scraper software (no longer works) that scraped all the CL email addys & then I would email out 15 (1 at a time) from each different gmail account.



    • Like 1

  4. I've heard a bunch of people's take on it & the main takeaway for me is to not do rent credits & instead do a seller concession (if all payments are made on time, etc.) That way it's the same effect to the T buyer, but only happens if they buy & at that time.


    I'm also going to put a disclosure in there for buyers that explains it's not covered under Dodd-Frank because it's not a sale or any form of financing. They are simply leasing the property & have the option to purchase only if & when they decide to do so & at that time... (something like that).


    Basically this won't be policed by the gov, instead it will be by lawyers (ambulance chaser types) that will have ads like.... "Did you buy a home with owner financing after Jan 10th 2014? Well, I can get you up to 3 years of payments back!"


    Then it will be the courts that will decide & set the precedent as to what they interpret the law to mean in regards of lease options.


    My 3 cents,



    • Like 1

  5. It doesn't sound like an easy deal to me, low margin, huge down payment requirement, what is the property worth?


    Yeah, I'm working with a friend out of state on this who talked to the owner before I got involved. We went back to the owner & he wants to do a L.O. now instead & got him to take less down. It's different from how I wet up deals, but it's in a great school zone & area & will work with the new, reduced numbers.


    Thanks all!

  6. Another idea maybe to market a Lease Purchase with bank or owner financing. The lease/option term is set for one full year, as a kind of test run before committing to a contract for deed. If the tenant/buyer works out well for that year, then the offering of a longer term more permanent owner finance / Contract for Deed can be entered into with down payment. The seller & tenant/buyer can consult an attorney to put it together; maybe you can locate and suggest a good attorney. You may not get the 20K, but you can get option consideration. Or if comfortable, work as a consultant, receive a consultant fee down the road for the set up of the contract for deed.



    Jay, I agree with Steve. And this is one of those times when it might be the prudent thing to speak with an investor friendly attorney, (one who is a member of a local REIC?), and explain what you're trying to do. There's a potential for a nice payday and you don't want a paperwork technicality to screw things up.



    Good ideas, all. After researching more on CD deals, we are looking for a local mortgage broker to write up/originate the docs to comply with the SAFE act.


    Actually, on this deal I'm going to talk with the owner to go over the advantages of doing a lease purchase over a contract for deed. Even if we make less, it seems to me it's a way better (less risky) option for an owner.


    For any future owners who are dead set on a CD over a lease purchase, we will have the m. broker write it up for us.


    Thanks again.

    • Like 2

  7. If marketing for a retail buyer, I think I would set it up as a Contract for Deed with the right to assign; then market it like an Option to Purchase with Owner Financing & 10% down as your assignment fee. Assign to the buyer, then share part of your fee with the seller. Spend a couple late nights cramming to put together the CD agreements the $20K is worth it.


    Thanks Steve. Yeah, I was thinking along those lines. I was just thinking it would be best if I could do a simple owner finance flip without all the amortization stuff (the seller just wants his 2600 PITI payment covered till the balloon is due at the end).


    The whole amortization thing & what % applies over time is what confuses me on these kind of deals. That's why straight lease options are super easy in comparison.


    The other thing I found is some people who do contract for deed deals were posting that they always use a mortgage broker to originate the contracts because of the new S.A.F.E. act rules.


    Any thoughts on that?



  8. Jay, a Pure Option can be used when the homeowner is willing to deal with you but has no interest in any type of lease arrangement. You simply have an option to purchase for an agreed to price for an agreed to time frame.

    The simplest way to do this is to negotiate the lowest price you can for the longest period of time. I understand that some folks preach about assigning it back to the seller. I don't, and for the life of me I can't understand why anyone would. Let's look at an example of a Pure Option deal:

    You negotiate with the homeowner an option price of $200K, for 60 days. You're out a buck or five for that privilege. You agreed to that price because your homework has you convinced the fair market value is around $235K. That's $35K in potential equity. The question now becomes how much will someone be willing to pay you for that equity? Perhaps an investor comes along and decides your deal is worth $5K and agrees to pay you that as an assignment fee. You collect your fee, he replaces you in the deal, goes on to close with the homeowner, and in the meantime you are long gone and out of the loop. That's one example, and the most straightforward approach.



    Thanks Michael. With this one we will be marketing for the actual buyer who wants to live there. As I added in the updated numbers part above, we will be marketing it as an owner finance (contract for deed) deal for 400kk & 50k down for the buyer. We'll keep 20k of that & the other 30k goes to the owner.


    I'm just trying to figure out if there's a way to assign it without having to fill out an entire contract for deed contract first (like when I have to fill out the entire lease & option contracts with the seller to assign to the buyer when I do lease option flips).


    Maybe the contract for deed forms aren't that hard to get or figure out. I just wanted to see if there was a faster way (like stating just the contract for deed terms on the option so after the assignment the owner & buyer would then fill out the contract for deed between them, etc).


    Thanks again.

  9. Ok, so we have a seller who wants to sell on a land contract & my thoughts were we could sign it up like we do with a lease option but instead the terms would be the land contract terms & then pad our fee to the sale price (like with a lease option flip) & then assign our position to our buyer for our fee.


    Or we could get a straight option for the land contract terms & find the buyer, then release our interest with the seller for a fee from him (the seller).


    My question(s) are..


    1) Which way is the simplest/cleanest to do.

    2) I've never done a straight option assignment to a seller, so I'm not sure if it works the same way where we pad our fee into the sale price term (above the sellers price) which creates the money spread the seller would pay us for the release.

    3) If we do a straight option, do we just get the option with the sellers terms, & market for buyers with the higher sale price amount (I’m trying to figure out where we add our fee in so it make sense to the buyer in the paperwork).


    I know Adam King had a place in his lease option paperwork where you could just select a land contract instead of a lease option & simply fill in those terms. Then you would just pad the sale price by your fee amount like with a regular lease option assignment deal.


    I’ve heard about straight options a lot, but I’m not sure exactly if it’s the right instrument to use for this kind of deal (or what it is best for).


    Thanks for any help!





    I figured I'd put in the numbers to possibly make it easier. We can get the option to purchase for 380k with 30k down to the seller (the seller owes 300k, so he wants 30k upfront & will get his other 50k on the back end).


    We are going to market it for 400k with 50k down (30 will go to seller & 20 to us). This is also why we are talking land contract over lease option because of the large size of the money down from the buyer.


    The seller wants his monthly PITI payment of 2500 month covered, so we'll need to figure out what % that works out to over the term before the balloon is due (probably 3 yrs).


    Anyway, I'm leaning towards doing it like a lease option flip where I get a contract with the seller for his desired terms, then add in my fee above his sale price & assign our position to the buyer. I just wanted to check if there's something possibly easier like with a straight option.


    I'd rather just have an option & then release for a quick payday than have to fill out an entire contract for deed contract to assign over to a buyer (never did a contract for deed before).


    • Like 1

  10. Hi, Jay. I see no advantage of any kind in assigning the deal back to the seller. In fact, I see it as nothing more than a gimmick to sell crap. That said, I'm sure there are exceptions when a deal needs to be transacted this way. But for our typical, run-of-the-mill Cooperative Assignment, it's unnecessary. Keep it simple; if it ain't broke, don't fix it.



    Yeah, I was interested as to why some people prefer to do it that way (assign to the seller) & can't really seem to find any great reason for it, over assigning to the buyer (which is what I've always done). It looks like it's the same exact steps/process, only one assigns one way & the other to the other.

  11. Lol.. good one, MC.


    I've still been using the one page L.O. memo with the seller (that spells out their terms) upfront.


    Now I'm wondering since that does give us a principal interest with the seller, if I can just then create

    the lease & option between us & our end buyer & assign back to the seller. Seems like I should be able to,

    unless it needs to spell out in the 1 page memo that I will be assigning my buyer over to the seller upfront.


    Up till now I've been assigning to the tenant/buyer, but it looks like it would be the same number of steps

    needed no matter who I assign it to?


    1) I get the 1 page L.O. memo signed between me & the seller with the terms they need.

    2) I create the lease & an option contract between me & the seller (with the new numbers to include my fee).

    3) I find & assign to the tenant buyer.


    If I assigned to the seller, it would be the exact same process, except the lease & option contracts would be between

    me & the tenant buyer. So it seems like the same exact number of steps.


    I'm just going to keep assigning to the tenant buyers unless I see some new benefit.





  12. Dee...lol! I remember saying the same thing to my partner. I was thinking,

    2k to just show up & show the property for tenant buyers I marketed for &

    set up the time with...


    Obviously it's not always that simple, but we started moving more in a flat

    fee arrangement. $______ amount to just show the property to the tenant

    buyers we find (& we try to set them up for group showings to save the

    agent time). Or, if the agent finds a tenant buyer & they end up taking it,

    we double the agent's fee.



  13. I hear what you guys are saying. My point is, the agents agree up front

    & are fine with everything, then I get the turn around. I tell them up front

    it's ok to tell me if it's not good enough for you, etc.


    Plus, most leasing agents are making less than 1 months rent & then

    they still have to split that with their broker.



  14. You might want to look up a guy by the name of Mitch Ribak. He's a broker and wrote a book called 100MPH Marketing for Real Estate (don't have it and therefore can't endorse it). I read a bunch of his commentary somewhere, I think it might have been a blog on activerain. Anyway...he talked quite a bit about the impossibility of motivating most agents to do anything. People either want it or they don't. So he put together a system to support the ones who do and fired everybody else LOL :D


    BTW hi everybody, long time no see!


    Cool, thanks Doug!



  15. Yeah, it depends on the market. We just closed one in Diamond Bar, CA for a little over 500k

    & that was fairly median price range for that area.


    One of my partners got contacted by an investor in Tampa, FL with a 2m property & a 6k month

    payment. Not sure if we're going to go after that one (kinda a specialty item). Plus, on that size

    of a sale price, it's almost guaranteed that the seller will need to do some kind of wrap & at least

    partially finance it (not like it's goin FHA..lol).



  16. Well Judge, I was kind-a in a lease option with the seller, but not really. Well, I guess I was bringing a buyer to the seller without a license, yea but, I know the seller was paying me a Fee-for Service, but I didn’t want to disclose it to the buyer. Nor did I want the seller to know the full terms of the deal they were getting into.


    Lol! No, it's not like that at all. Everything is disclosed to all parties; it's just assigning it one way instead of the other.


    Besides, I really doubt Adam King would be doing it this way if it weren't completely on the up & up.



  17. Ah, I see what you're saying.


    To me, it's like with most sales. It's way easier to get your foot in the door with a small,

    "no-brainer" sale & then get the rest of what you need than going in with a 10 page

    option & lease (the whole enchilada).


    I know some say that you weed out the sellers who aren't as serious with the big package

    up front, but I believe that people are inherently lazy (even motivated sellers). So I prefer to

    use the simple 1 page, no-brainer to get what I need to market the property up front. Then

    I can always get more.



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