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Guest Guest_Lydia

Cooperative Assignment

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Guest Guest_Lydia

I'm still extremely fuzzy on CAs. Can I get a definition? Is this similar to a "partnership agreement" with the homeowner or "split-funding"?

 

I get the feeling this is something that can be another tool in my belt. I have lease/purchase options pretty much down pat, but CA seems to have some advantages to the seller.

 

Lydia

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I will try this one.

 

You talk with the seller and set up the best deal you think YOU could get (leave the option $ blank and use 2 forms i.e. seperate option). Find a t/b that the owner approves of and assign the contract to him for the amount of the option $ (which the owner agreed to).

 

The owner gets a better sale price and some good cash flow and you keep the option $.

 

3 contracts needed

1. lease

2. option

3. Assignment of agreement (assign to t/<_<

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Lydia, indeed the CA is one very powerful technique to have at your disposal, (love a woman who wears a tool belt, by the way <_< ). They are a way to get paid, and paid well, for sharing your specialized knowledge with the average homeowner.

If I can summarize: you will, in effect, find for the homeowner the very tenant/buyer you would be seeking for yourself, had you done a sandwich lease.

The terms you get for the homeowner are everything they could possibly want: top of the market purchase price, top of the market monthly rent, t/b is accepting the property as is and is responsible for all maintenance and repairs, there are neither Realtors fees nor closing costs for the seller, and the whole deal is subject to the homeowner's approval of the t/b. What are the chances the homeowner will find a better deal elsewhere?

For your smarts, you get to keep the option consideration. All of it, hopefully. But, certainly no less than half and usually somewhere in between. In addition, you may even get to keep some or all of the monthly cash flow.

Put the deal together, collect your cash, and you're out of the loop with no hassles, and no responsibilites. What a great way to profit without any of the usual hassles associated with real estate investing! And, in the process you'll find your number of closed deals goes way up as a result of cooperating with the seller, versus doing adversarial negotiations and trying to beat them down so you have some spread to profit from.

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MichaelC

 

I have your manual and I'm also a little fuzzy on CAs. The overall concept I understand - its the exact details that remains a problem.

 

Tony says, "leave the option $ blank and use 2 forms i.e. seperate option". Do you recommend we leave this blank on a signed contract? Is this how you do it?

 

I was thinking you sit down with the home seller and sign everything upfront. I'd write in zero option money to the seller (or as little as possible). I would upfront agree with the seller on what kind of assignment fee I'm looking for. Now I find a T/B and assign the contracts to them. In the assignment it says, "Any assignment fee paid shall be considered option consideration". Thus I'm covered and get paid, the end buyer's payment is considered option consideration (this benefits him over just paying for the contract).

 

Now if I wind up getting more option money or a larger cash flow from the T/B then I would see if I can split those extra monies also with the seller also.

 

This was my thinking on how to make a CA work. Is this a viable way of doing CAs or am I missing something?

 

Thanks

Todd

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Actually, Todd, you know more than you're giving yourself credit for. You explained it as well as I could have. That is, indeed, a viable way to make a CA work.

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So, you get the benefits of a lease/purchase option without long term entanglements--I'd be out of the loop once the first tenant/buyer jumps in.

 

Ron Legrand style lease/purchases assumes the person in the middle of the sandwich will take the responsibility for guaranteeing payments and repairs .

So, there is some risk.

 

I really like this CA idea and will probably have the opportunity to use it soon. A couple from my church is moving out of state at the end of the month. I talked to them today about helping them do a lease/op. I didn't see any money in it for me, but maybe so. They were willing to pay a 3% buyer's agent commission.

 

What happens if/when the Tenant/buyer doesn't exercise the option to buy?

 

I guess this explains the billboard "sell your house for more than retail" or whatever it was.

 

I do need to spend more time here!

 

Lydia

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So, you get the benefits of a lease/purchase option without long term entanglements--I'd be out of the loop once the first tenant/buyer jumps in.
Exactly! A cold beverage for Lydia!
Ron Legrand style lease/purchases assumes the person in the middle of the sandwich will take the responsibility for guaranteeing payments and repairs .

So, there is some risk.

Two for two! Another round for the lady.
I really like this CA idea and will probably have the opportunity to use it soon. A couple from my church is moving out of state at the end of the month. I talked to them today about helping them do a lease/op. I didn't see any money in it for me, but maybe so. They were willing to pay a 3% buyer's agent commission.
Knowing how to put the CA together, you'll find much use for it "out there". Share your know how, and be well paid for it!
What happens if/when the Tenant/buyer doesn't exercise the option to buy?
Hopefully, the homeowner will be so enamored of your job the first time around, they call you up and ask for your assistance once again!
I guess this explains the billboard "sell your house for more than retail" or whatever it was.
You're referring to this billboard and, yes, member Puls1234 is a big fan of CA's.
I do need to spend more time here!
Told you so! (Shameless plug: btw, are you participating in our free teleconference on June 15th?)

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Todd,

 

Glad to see of your interest in CA's. I have done a lot of them thus far and there is only 1 thing that you described that I would not do. You mentioned that you would set your fee beforehand with the seller. That is a no no. I never discuss this with the seller! If he asks how I get paid I tell him the tenant buyers pay my commission and that he doesn't pay a penny! Then I tell him that I am going to net him "Above Market Price"!!!! So I put To be Determined in the option money slot and I fill that in when I find a tenant buyer as to how much I get. As I see it its none of the homeowners business as to what I make as long as he is happy with what I am netting him after close!!!! Hope this makes sense!!!!

 

Pete

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Pete,

 

You mentioned that you would set your fee beforehand with the seller. That is a no no. I never discuss this with the seller! If he asks how I get paid I tell him the tenant buyers pay my commission and that he doesn't pay a penny! Then I tell him that I am going to net him "Above Market Price"!!!!

 

Hum......that one has got me thinkin.......

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Adam,

 

 

Pete,

 

 

QUOTE 

You mentioned that you would set your fee beforehand with the seller. That is a no no. I never discuss this with the seller! If he asks how I get paid I tell him the tenant buyers pay my commission and that he doesn't pay a penny! Then I tell him that I am going to net him "Above Market Price"!!!!

 

 

 

Hum......that one has got me thinkin.......

 

 

Ah, come on Adam. You know you want to <_<

 

 

Thanks Pete, for the conversation the other day.

The above quote smoothed things up for me.

As I thought that one be one of the "sticklers" in dealing with the sellers...no longer.

Learn something new everyday. :lol:

 

Jason

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About the call on the 15th....is that 6 p.m. central time? Got to get the time right!!!

 

Lydia

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I personally would not sign any contract with blank fields and would be uncomfortable telling the seller that we will fill the option field once I find a T/B'er.

 

The truth is, the bigger the assignment fee you keep will net the seller less (assuming the property price is fixed). I must disagree, "it is the homeowners business as to what I make".

 

Imagine telling the seller, "Hey Mr. Seller - I got a better deal than we initial expected. We got X dollars above what we thought we'd get and we also got Z dollars more in rent. Lets tear up that contract and and draw up a new one spliting all the additional profits". He nets more - you net more, and now he goes tell everyone what you did for him!

 

Todd

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Todd,

 

The point is that you don't want to split the upfront fee with the seller. You want it all for yourself. You only split it with the seller if he absolutely demands it. I have only had 1 homeowner that wanted some of the option money. All of the others realized that is how I am payed and were satisfied with the premium rent and premium net price.

 

Never ever ever volunteer to split the upfront money. Take what is due you!

 

Pete

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