Caveman

As it pertains to the laws in Texas, this is obviously an old article that was written before the bill took its final form. So, I'm wondering what version of the bill he is refering to. The final version of the law states that Fee Simple Title Required “does NOT apply to a lien or encumbrance placed on the property by the seller prior to the execution of the contract in exchange for a loan used only to purchase the property” In fact, the new law clearly spells out what a Seller needs to do if he wants to LO his property that HAS an underlying lien or encumbrance, as long as the term is less than 3 years. As to the tax consequences, I am not clear. As to whether SLO is outlawed, I'm not clear on that either. Maybe Pilot can chime in with his opinion. Brad

The other reason, I forgot to mention, is for the additional exposure on the MLS. Sounded good to me... what do you think?

My main reason is so I can use the showing service (showings.com). The Realtor I’m dealing with uses this service and the service only works with Realtors, and not investors. He only pays $30 per listing and they show the house as often as needed. I thought it would be worth it to have a separate company showing the houses to potential TBs instead of me. I have found it not as difficult as I expected to find Sellers willing to do a CA. I have found it VERY time consuming showing the houses and talking to lots of potential TB’s/tire kickers. Having a company show the house instead of me sounded awesome! I’ve got a wife that desparately wants and desires me , and two children waiting to burst out the back door and come running to me when I drive in from work . What’s a guy to do?

Adam – In your experience, do you know if a realtor would have problem doing the following… After I get a CA under contract, I sign a listing agreement with the realtor to sell my option to a TB. I collect the option fee and the realtor gets half of first months rent, either paid by me, or paid by the home owner. If the TB buys within the option period, then the realtor gets commission at closing. Can a realtor do this directly with me since I have the option to buy the house, or would the realtor need to deal directly with the home owner? Brad

Thanks John. But what would you suggest for those still in the beginning stages as far as what contracts to use in Texas. I want to continue CA's, but feel uncomfortable trying to interpret these laws myself, and modify MC's contracts on my own.

Cool. Thanks pilot!

Here’s how I offer homes to T/Bs on CA deals: With $2,000 down, they get $150 rent credits for 12 months. With $3,000 down, they get 25% rent credit for 12 months. With $4,500 down, they get 50% rent credits for 12 months. This guy has gone with the $2,000 down. I’ll try to get him to agree to the $4,500 scenario by making monthly payments for the difference. I’m selling the house for $175,000. My focus is to move houses quickly. It can go very slowly around here if you wait for someone with $5,000 to put up.

I’ve got CA under contract with a home owner trying to move to Florida. I have family ready to move forward with some option money. The only problem is their credit is pretty bad. Of the 32K debt, they only make payments toward half of that. The other half they’re not paying and is in the hands of a collection agency. Their score is 503. I know that rent to own is for those with bad credit, but how bad is too bad?

I did and he did. Thanks MC.

Would anyone doing deals in Texas be willing to offer suggestions on modifications to Michael’s CA agreements to adhere to Texas law? Brad in Texas

Bandit signs primarily. I put out about 20-30 a week and get about 3-5 call a day... on average.

I’m in a soft market which has been making it pretty easy to find people that need help selling their home. I have little doubt that I could keep signing up deals without much problem. The problem I have is selling these homes. I’ve successfully completed 3 CA’s, but not without a struggle. I’m definitely not picking between interested potential TB’s based on their credit. Hey, I’m just trying to find someone that’s interested at all. I get a lot of calls and people driving by, but few call back. And it been that way on all 4 houses…(one deal I still have not closed). To get the 3 deals done that are now completed, I’ve had to lower the option money in each case, and accept less than the advised minimum option amount equivalent to 3 months rent. It’s taken between 6 and 8 weeks to move each one. The one remaining that I have not yet moved, I’ve been trying to CA for 2 months now. Again, I can get the phone to ring from my signs, but dangit it if 9 out of 10 won’t call me back after they’ve driven by the house. I’m lowering the rent, and lowering the requirements to get in. It’s a 138k house (that’s the tax appraised value). The house has been listed before at $138,000, so the price seems ok to me. After rent credits, the price is much less than that. And I’ve reduced the option fee to $3,000 and the rent to $1,250. The owner is accepting a neg cash flow of $40 a month with a rent of $1,250. I’ve raised the price and offered 50% rent credits for several weeks. Now I’m lowering the price and offering $200 rent credits. In certain pockets, especially in the older homes, there is some appreciation. But in the newer areas, which is where I’m concentrating, appreciation has been flat for the last 4 years and homes are selling below a dated tax appraised value. Does anyone have some advice that might be helpful on how to move this home?

Well, bossman didn’t loan him the money and also told him what he thought the current value of the house was. So the T/B made a new offer after all the paperwork on the original deal had already been signed. I worked it out between the owner and the T/B and lowered the price of the house as well as the rent credits. The end result…. I get $2,000 as the option fee and the T/B’s move in on the 1st of May. I could have said, “no deal”, kept the $500 the T/B’s put down under the original signed agreements, but decided, instead, to work it out and make some sure-money now instead of maybe-money later. Next!

Thanks for the replies Mike, Tony, Doug... T/B’s with money don’t seem to grow on trees around here. Either that or maybe they have too many choices or options available to them… I’m not sure yet. I put 30 signs out per week and it’s taken me over a month to find a serious T/B. In light of this, my goal was to try and keep this deal together. Regardless of what I said to the bossman, it probably wouldn’t make any difference. The deal is either dead because of him, or the employee/TB has overcome and will make his own decision with or without his bosses money or approval. We’ll see what happens soon. I’ll post an update when I have one.

I found a T/B. We signed the papers on Sunday. They are very excited about the house. He’s put $500 down and agreed to pay the balance of $4,500 before they move in next week. He’s got $1,000 in the bank and thought it would be no problem to borrow the balance of $3,500 from his boss. Well… his boss called me today. He happens to have his broker’s license and proceeded to grill me on the contracts. It looked “fishy” to him. He was afraid his employee was being taken advantage of by some “Carleton Sheets grad”… his words. He was confused as to why my name had to be on the Rental agreement as a tenant. I explained to him that I had to be a principle in the transaction in order for this to be legal and that his employee would simply be filling my shoes in this transaction as explained in the Assignment of Agreement. I tried my best to be as forthcoming as possible concerning his general questions about things “just not looking right”. I could tell by the tone in his voice he wouldn’t trust me as far as he could slobber. But I was nice and professional, I think. I also told him to feel free to pass this paperwork by a lawyer if he felt it was necessary. He had some questions on the value of the house as well. I deferred to the owner here, saying any negotiation of the price would have to have the owner’s approval. I gave him the owners number so he could talk to him. Then I quickly called the owner and gave him the heads up on everything that was happening. He seemed to be put out by this guy as well. That’s where things stand right now. I’m sure that my T/B’s loyalties reside more with his boss that with me, so I’m doing my best to handle everything in the right way. Even so, this one may fall through.