jcjohnson7

Now there's a problem. They seem to as plentiful as herds of unicorn right now. I tried refinancing a property last year and it took a full year to do it (closed March of this year) because they all seem to keep disappearing. Let alone trying to find one that actually knows what he/she is doing... *Still bitter*

How would this come back at me? I haven't attempted a deal with numbers like this so...

MC, Would it not affect offers we are currently sending out if it is definitely going into effect so soon? I wouldn't want to stick a t/b in a property that has no hope for financing and/or muck up the deal from the get go.

So are you guys saying that most lenders are now looking at the option consideration and the rent credits as seller concessions? And that, as of April 15th according to the new guidelines put forth by HUD, those together can not total more than 3% of the purchase price? Or am I missing something? Because if that is the case, it will certainly impact our business greatly I would think.

Ok, so I am set to send a Short Offer to a seller for a CA but he owes about $13,000 more than it's worth. Here are the details: Seller owes $153,000 He has it FSBO @ $149,000 Seller payments = $1,290/month After running comps, fair market value came to $138,000 County assessor has it appraised for $140,000----Not lookin' good for the seller... I originally had the offer structured like this: Offer to seller: $140,000 $1,300/month for 24 months (a little high but the house is really big for the area with pool, huge deck, etc.) 25% rent credit totaling $7,800 after 24 months $4000 option consideration Total $151,800 Now, he is motivated because he is in the Air Force and is being stationed in FL in 30 days. There is a good chance they will accept this offer. Do you guys ever do CAs where the seller is upside down like this in terms of equity or do you think doing a consulting job would make more sense in that he could get a little more for his house? I just don't know if maybe I should put it on the market for that price and see what response we get or if going straight to a consulting agreement would the proper move. What have you guys done with upside down deals like this? (There are a bunch out there ) I just want to make the best use of my time and his. He told me he had thought about doing a lease purchase but he doesn't really know where to start. Josh

Hi all, I spoke with a gentleman about doing a CA and he told me that he was going to list it with an agent and try to sell it the traditional way in 60 days. Now if we try to do this deal and he decided to go ahead and list it with an agent, do my obligations in the deal change or does it affect me at all? I have been avoiding the realtors for the most part since I'm just starting out, but was just wondering how you all would handle a situation like that. Thanks. Josh

I am meeting a seller tomorrow to complete the agreements for a CA and if his wife is not able to make it in town to meet me, how can I handle the signatures? In TN I have to get the signatures of him and his wife in order for the deal to be legally binding since the house is owned by both of them. Can I let him take the documents home, let her sign, then he fax them back to me? I won't have the original hard copies if that is the case and she may not sign. Same thing if we do it by e-mail. I would like to have an original hard copy with all signatures but was just wondering if a faxed copy would be legally binding as well? How do you guys handle the paperwork with out of town owners? Josh

Hi all, I got a seller to agree to my short offer and I am meeting with him tomorrow to take a look at the property. However, he owes about $4,000 more than what I offered him. Is there anything to be concerned with here? Once they decide to close, nothing can come back to bite me right? I am doing a CA and just wondered if I had no worries after all agreements are approved and I'm out of the deal. I know the seller will have to come up with the difference to pay off his outstanding balance. Do you guys ever take less than what you're selling it for on a L/O? Or is it a take it or leave it deal for the most part since the numbers work out already? I guess it would be up to the homeowner; if they are willing to take less for it. If not, then it may take a while to lease right? Anyone have a thought on this? Josh

Ok cool. We'll see what happens...Thanks for your help! You tha man MC

Yeah, yeah, I know... Just one more question though. Do I put the total purchase price on the short offer or the net price the seller is receiving? The expiration date on the short offer, what kind of time frame do we usually look at putting for that?

Ok good deal. Sorry, I just found that cancellation paragraph. My mind is moving too fast. By the way, am I supposed to put the total price (net price +rent credits + option consideration) on line 1c in the Option to Purchase Agreement? If I advertise the home for the total price and then a tenant/buyer has more to put down than the option consideration I had projected, how do I work that into the total price if I only have enough for the price I was planning on getting? Does that make sense? $76,500 has room for $70,000 + $4,500(rent credits) + $2,000(option consideration) Do I need to advertise my price high (maybe a couple thousand more?) to make room for that sort of thing? And if that is the case then the full purchase price might end up being lower than what I put on the option to purchase.

So should I not tell him that I'm selling it for more money to include the option consideration and the rent credits? All he needs to know is what he's getting for it? Does anyone ever question why you put such a low dollar figure on the short offer? I honestly don't know how long it will take to find a tenant/buyer. That's why I'm planning on marketing the thing like crazy. You said in your manual that we should always put a "right to cancel" in any agreement that we do. I didn't see one in any of the CA agreements that I have. Do I need to add one?

I was just set on 50% because you said in your manual that it will move the property much faster. So you have had good success with 25%? If I were to do that then I could offer the seller $70,000 List it @ $76,500 @ $750/month for 24 months 25% rent credits of $187.50/month totaling $4,500 after 24 months $2000 option consideration So when I fill out the Short Offer form, I should start the lease about 2 months from now? How much maintenance do you generally ask the tenant/buyer to be responsible for when filling out the short offer? The option period is the same length as the lease on a CA right? How much option consideration do I put on the short offer because that is going from me to the seller so it is basically saying I'm giving him option consideration right? Lots of questions, I know...

That makes sense. Well, what I could do is offer the seller $70,000 List the property for $76,500 @ $750/month for 12 months 50% rent credit totaling $4,500 after 12 months $2,000 option consideration Having a shorter lease makes it a better deal price-wise for the tenant/buyer and the seller as a whole but it's not as much time to get their credit up to par. Do you think shortening the lease period would be a better deal for everyone?

I feel like the dog that caught the bus. Ok, so here's the deal. I spoke with a seller last night and he wants to go ahead and see what we can work out. I told him I would send him an e-mail with the short offer attached for him to look over and agree to, then we can schedule a time to meet at the property. However, I'm starting to question whether or not this is a doable deal or not. Here are the details--let me know what you guys think. Listed FSBO @ $78000 (It's in a neighborhood with a mix of owners/renters) Currently rented until Friday @ $800/month His payments are just under $700/month to cover everything Comps: Yr. Built Sale Date Sq. Feet Sale Amt. Parking Material Total Comp 1 1957 08/03/09 966 71,034 carport brick 71,534 Comp 2 1961 08/03/09 1,092 68,000 drive brick 68,000 Comp 3 1954 06/02/09 1,266 31,150 carport shingle 31,150 Comp 4 1952 08/11/09 1,027 60,000 drive brick 60,000 Comp 5 1957 08/05/09 1,302 74,691 garage brick 76,691 Comp 6 Subject 1956 06/24/09 1,344 NA drive NA brick NA 51,229 Today's Date 09/22/09 942 $ per Sq. Ft. 54.37 After Repair Value 73,078 So I came up with 73000 for the market value (assuming the tenants haven't destroyed it) He has someone coming out Saturday to clean the place up he said. He's also an out of town owner who had to rent it so he is motivated. The rents for that neighborhood are between $650-750/month for a 3 bedroom (which his is). He has it rented for $800. Now, I figured I might be able to get it leased with a 50% rent credit if we keep it at the 800/month. BUT that is $9600 over 24 months which has to be added to the price. I figured $2000 for the option consideration because 3 months rent is $2400 and 3% of price is $2190. Maybe it's too low, I'm not sure. So either I offer $84600-85000, which is too high for that neighborhood. OR I offer $61000 to 61400, which is way below what he is asking for it, but it is closer to the other comps in the neighborhood. He bought it for 77k. (Foreclosures killed that area) I was thinking of listing it @ $73000 @ $750/month for 24 months. $2400 option consideration. 50% rent credits totaling $9000 after 24 months. Offer to seller would be $61000 Does this make sense? Let me know what you guys think. Josh P.S. I have a lot more questions but I just want to know what you all think.

I have a seller who is interested in working with me but he wants to know how long my leases generally run. Is there any specific time frame you all use on CA's? To be honest, I don't know if I should do one year, two years, or does it even really matter? I just ask because he e-mailed me wanting to know and I can't seem to find that specific answer in the manual or on here so there ya go. Any answers are appreciated. Josh

That was my reasoning as well. Thanks again MC.

Quick question. I did some e-mail marketing today on a few web sites contacting some FSBO's and I got two interested people. My initial e-mail simply said that I was wondering if they would be interested in selling via lease purchase and one replied back giving me his phone number and the other replied back asking for mine to discuss the matter. I was just wondering, when you guys get a response like that do you then reply with another e-mail explaining exactly what you intend to do and how you can assist them with selling their home or do you go ahead and do all of that explaining over the phone after they reply to your first e-mail? I went ahead and sent a second e-mail explaining to them what I do and how I could help them as well as get a family into a home and sent them the Lease Purchase Advantage sheet. I thought it would be better for them to know my intentions before we speak on the phone so that we can get down to business, so to speak, once we talk to one another. Did I handle that right? I just want to keep their interest but at the same time weed out the ones who aren't motivated. Josh

Thanks jhanson, that helps me out a lot. So you don't think there is really any reason for insurance if I am doing CA's? Am I technically an investor or am I providing a service? I guess that is where the gray area lies with me because if I am seen as a service provider then I would imagine I would have more legal vulnerability than being an investor....if that makes sense. I just want to do it right. I'm not afraid of doing deals as I've done direct sales all my life; I'm just afraid of lawyers and the IRS. (Probably BECAUSE of the precautions we take to protect ourselves and our employers) They are my boogymen. I'm just interested in self-preservation because I've seen some crazy stuff out there first hand. And then of course the tax issue is another discussion all together... I'm sure you can understand my excessive forethought on the matter. Thanks again. Josh

Quick question. Before I start signing contracts and actually putting deals in the books, do I need to form some sort of business entity or at least get a business license for a sole proprietorship with some liability insurance? Like I said in my initial post on the Lease Purchase forum, I am focusing solely on CA's at the moment. I know this kind of thing has been picked over in the past and I have actually already started contacting FSBO's, but I just want to know if there are any "formalities" that I should be getting out of the way at the moment in order to be ready to do a deal once I hunt one down. Thanks for any help. Josh.

Thanks for the warm welcome guys. Hey Bill, Bristol is great. That track is so small you could spit on the guy across from you!

Hello everyone. Just wanted to make a new post to introduce myself and warn you folks that I'll probably be asking a lot of questions around here. I ordered MC's course about a month ago and have read it twice and have followed along here on the forum soaking up as much as I can recently. I'm from the great state of Tennessee, so if there is anyone out there who is also from the Volunteer State; is there anything wacky I should know about TN laws before getting started? Just so you guys know, I seem to be very much an analyzer by nature these days (college and careers ruined me ) so I usually want my ducks to be lined up in a perfectly linear arrangement with no chance of one getting out of line before I make a decision and act on it. I need to re-train my brain to remember how to ready, fire, aim so I may need a kick in the butt here and there but I am dying to get started doing something. My plan at the moment is to (like many of you) focus on Cooperative Assignments since they seem a little less "involved" than a sandwich lease and because I have the energy and attention span of a three-year-old. This forum seems to have a lot of support so I'm looking forward to talking more with you guys. Josh P.S. Michael, great course my man--straight and to the point. I like it.