<Steve>

I look for a tenant/buyer that for whatever the reason they can't buy today, it can be taken care of in about a year or so. If they need to extend the lease into a second year, the rent credits stop; however, the credits they have received are not lost and carry over to any extended term. And as MC said, I always recommend the tenant/buyer contact a mortgage lender before or at the start of the lease. The lender can review the t/b's situation and let them know what they need to do during the lease term to be able to qualify and obtain financing to purchase. So when the t/b is ready to purchase there are no surprises and a lender is in place.

Can you broker (sale/buy) real estate within your property management business?

Wooo Got my First Listed SLO completed today! as a real estate broker Took some deal restructuring but got it done, no thanks to the mls or big brother. Still in the Game

I've always assign both.

You're absolutely right MC and thank you for the support over the years. I've got 18 months and I can license my investment firm and re-open it. I won't hold my breath, but by then maybe the country will shift back into a more pro-business mode and I will be in a better position.

So here is the latest: Let me first say much of this is brought on by me getting licensed, so don’t be discouraged as a Naked Investor. After going back and forth with the RE commission attorney. As a broker now, I have to play ball with the powers that be and I will need to comply or…I may not live to fight another day. And I will leave it at that for now. The good news I can still do Lease Purchase deals as a broker. I will not be doing lease options, but doing a lease purchase. For me the new definition of a lease-purchase will be a lease agreement with a sale contract attached to it. In these agreements, the property being leased by the tenant/buyer will have to be purchased by the end of the lease agreement or they will be in breach. Unlike the lease-option, the sale of the property is scheduled to occur by a written sales contract, instead of being available as an option to purchase it if the tenant/buyer so chooses. So the tenant/buyer is locked into buying; however, there is financing, appraisal and other possible contingencies involved in the sale contract for the tenant/buyer to not complete the purchase. Basically the paper work will be a little different and my position in the deal different, but my methodology, marketing and “The Street Smarts” the same. I am currently researching and working on updating my business model. I will have to close down my investment company for now. The simple fix is to come to an agreement with the commission so I can stay in the game. It comes down to picking your battles. If there is one thing better than winning the war, and that’s not having to fight it to begin with. I’m trying to find a happy medium and put this ordeal behind me.

LOL, remember the old MLS Book? The size of a phone book. And how golden it was to get an old version to use. Not to mention the stack of dated news paper classifieds sitting on the floor. Good times...

Looked it up in the NCRE Manual, lol, and it states: "As a separate agreement a tenant can contractually agree to make repairs to the premises" The tenant must be paid for making the repairs, and the tenant is obligated to make repairs as agreed. "It is valid and is legitimate...allows a very limited and rarely used "fix-up" exception. It sounds more like rehab type work. The payment as consideration, can be a rent discount (credit) or maybe it could be consideration for the option. But cannot be made to evade the landlord's obligations for major repairs. Now I'm not a lawyer either so it is always best to consider obtaining the legal assistance of a licensed attorney.

Hey Mike- I offer monthly credits. I do not have the tenant/buyer be responsible for repairs due to landlord/tenant law, but I will have the tenant/buyer be responsible for maintenance (mowing the lawn, furnace filters, plunging the toilet). Appliances, window treatments and special fixtures are not landlord provided, so I don’t repair them typically. Curious what the clause is in the landlord/tenant law you found?

Yes, of course I use the correct paper work. I've had real estate attorneys review what I do and the paper work. I also include signed disclosures that state who I am, who I am not, and what I do. I follow state laws and do everything correct. If I am doing something incorrectly I will modify my business model to follow the laws of the land. But they have to follow the laws too. And assigning my deal as a principal is not brokerage. To update, I have asked that they send me all evidence they claim to have and the formal consumer complaint which I have never received and should have. My feel is that they are still fishing.

RENT TO OWN! Coming Soon in July! $500 MONTHLY CREDITED TOWARDS THE PURCHASE PRICE! Beautiful House at Oliver’s Crossing! 3015 Canterbury Park Drive in Winston Salem 4 bed / 2 1/2 bath / 1,875 square feet / Bonus Room · family room / den, hard wood/carpet · open kitchen, breakfast area · oak cabinets, all appliances · vaulted master bed/bath, garden tub/sep. shower · large bed rooms, ceiling fans through out · back yard deck, 2 car garage, newer heat/air Rent: $1,200. per month Monthly Credit/Concession: $500. Price: $155,500. (before credits) Consideration: $4,000. down This is a beautiful four bed room house located in a family oriented subdivision at Oliver's Crossing in Winston Salem. This house has everything. Hardwood and carpeted floors. The entry opens to the stairway, and Living Room with fire place that leads to the Formal Dining Room. A Den/Family Room off the Kitchen with views to the back yard. The large open Kitchen has all the appliances, hardwood cabinets and a breakfast area that opens to the back yard deck. Other features include a vaulted Master bed/bath with walk in closet, garden tub and stand alone shower. This house includes a two car garage and a private back yard and deck. New heat/air. You've got to see this one! Rent-to-Own one of the Nicest Homes!

Hey Mike, that's good to know. More often now I will share my fee with the seller $500. to $1,000. as consideration paid to the seller. It just depends how important it is to the seller. Many times the consideration is not what is important, so it is not a strong point in negotiating the deal. If it is, I just add it on top of what I would expect to receive. If there is a law or regulation stating an amount required as consideration in a deal I will be the first to comply. I work hard in following state laws. There is no such law. In fact being licensed I have been taking commission accredited license courses that specifically teach the consideration paid in a lease option or any deal is whatever is agreed to. I directly asked the question in class, and there is no required amount.

Well my broker-in-charge was contacted by the commission about a month ago that I was being investigated. She ask that with this new turn that I submit all the letters and paper work I have to the firms legal department. So, I might get some help, or I might be seen as a newbie realtor with baggage. I do think getting a license has surprised and maybe emboldened the commission as having more control of what I do. Anyway, thinking of my options and will just play it out for now. Thanks for letting me get it out.

That is how I really see it MC. Basically the complaint was from last year and the t/b in a CA decided not to purchase due to a job transfer and moved. The owner filed a complaint to RE Commission to see if the assignment fee was a deposit that they could obtain. The Commission has gone on to investigate if I was brokering without a license, which I am not. I have not received the formal complaint submitted by the owner, only letters of inquiry, and have not received any evidence that the Commission claims to have. I will be asking for it. Simply they said my $10. consideration paid to the seller was not enough skin in the game for a $229K house and my deal was a sham. That I am bring a seller and buyer together as a broker. These are their words. I pushed back hard and clear in my response to them and it has worked in the past, but they are not listening this time. My market has been slow the last couple of years and I just don't have the cash flow for an attorney. Their most recent comment is that yes I am licensed now, but my LLC is not. I will not be able to license my LLC until I work 2 years under a broker. Then I can go on my own. But that has nothing to do with being an investor only a broker. Sucks doesn't it.

Been ordered to a settlement conference by big brother. Looks like I’m going to be shut down, at least for now. I doubt there will be much negotiation.

next post...

Nice! Congrats Don

Well, to keep it simple and MC can correct me, my understanding is that a mortgage secures the note, and the Deed of Trust brings in a third party as a beneficiary should the mortgage default or until the note is paid off. The reality is the so called home owner paying the mortgage only owns the house for a couple of minutes between signing/recording the deed and then signing/recording the deed of trust, in that order. When the deed of trust is recorded the beneficiary in the trust really owns the property. A mortgage can secure the performance of many things like an option too. Anyway, the Naked Investor has a Performance Mortgage that can be used to secure the performance of the option with the seller. I haven't looked at it for a while until you brought it up. It is really good and I may start using it with SLOs, if anything to make sure that a General Warranty Deed can be delivered clean at close. Doesn't seem like a good idea to just change a word in another document and feel that your are good to go. With a Performance Mortgage you should not need to foreclose because the deed has not transferred. However, a recorded Quit Claim Deed maybe needed to extinguish any interest the investor has in the property. I am just going off memory at the moment and did not take the time to look all this up so don't hang on every word. But that is my gist.

When you say deed of trust are you meaning a Performance Mortgage? Definitely stronger with more protection than a memorandum, but I will typically just do a memorandum. Not a bad idea to use it, but as you say, I would combine with a memorandum to meet state regulations. Mike, where in NC are you located if you don't mind saying?

Hey Mike- SLOs are my favorite lease purchase technique. I like to offer a 3 year term with a SLO. I start with a 1 year term with the right to extend. I have properties that end up going longer, and I will take a 2 year if I have to. I like to have a 20% spread between what I pay the seller in rent and what I receive from the t/b. For price my minimum equity is being able to offer a 100% rent credit and still have some back end. For repairs I offer $250. per incident then it goes to the seller. This typically takes care of most repairs. I do not take on the responsibility if something big comes up, but everything is negotiable.

Hey all- I’ve had several people ask why I became licensed. What the heck is wrong with you! I just wanted to say over the last couple of years the FSBO market has dried up in my area. Any nice houses in good areas are all listed with licensed brokers. So, basically I am following the inventory, or what of it there is. Today in a meeting, my Broker-in-Charge confirmed the inventory shortage and that multiple competing offers are increasing for a single property. It is the basic supply and demand and it is sure to last a while as it takes home builders a while to get rolling, if they do at all in this economy. I am always a Naked Investor first and a licensed broker second (but don't tell the RE commission hehe). My Plug, with MC’s OK… So with the license comes the rules and regulations and the difficulty of being creative in deals. I have been speaking with some investors who need deals and would like access to MLS listed properties to make offers. I have decided to offer this service will all the benefits of using a Realtor who understands investors and the criteria they look for in deals. Another plus is being represented by a Realtor with over 20+ years of investing experience. There are regulations I have to follow, but the investor can be as creative as they want in any type of investment strategy. I can find the properties that meet the investor’s criteria. I’m in the Triad of NC, Contact me if interested. I am an Investor Friendly Realtor. Steve

All I can say is setting up a Lease Purchase correctly with good agreements that I can fall back on is 'muy-importante'

Hey Guys- I have a SLO that I’ve had for several years. Get along great with the seller and I take care of the house like it’s mine. Last week with the hot weather coming the central air conditioning went out. And there is nothing worse than a now mad tenant sitting in a hot house. The tenant also wailing about ants, and as tenants do, they exaggerate any repair issue. So I sprayed and found termite damage too. So with this, I had to bring in the Seller for the cost of repairs. Long story short after a long week the A/C repair $1,861. Termites $800. A Visa moment for the seller I’m sure. This week I am just getting over the tenant’s rants and the tenant calls and says the A/C is not working again. !@#$%^! So, I’m having the seller call back the service tech. Tenant calls me back and says he wants a face-to-face, 1-on-1 conversation in person. I ask what’s the issue(s) and he refuses to say, but still wants to talk in person. hmmm Should I stay or should I go?

If the option is exercised and the bike is included as personal property with the house a mortgage lender will most likely not finance the deal. Maybe best to keep them separate.

Mike, yes I have my RE license now and I am active with a firm. I will assign the deal if it is to tight to hold longer term. I may do a release with a SLO to stay in control thru closing. There are 10 ways to skin a cat, but the simplest is better.