What Am I Doing?

[frmtgrl 0]

Hi All,

 

My name is Lisa, I'm new and trying to put together an offer to a seller for a possible first deal.

 

Let me tell you what I've done up to this point. I found this person from a FRBO ad off of Craigslist. The rental market in this area is very bad. Apartments are dropping rents to fill them up and basically people trying to rent out their houses are screwed! This person used to rent his house for $2,500/mth, he is now willing to go as low as $1,850/mth just to get a warm body in there. I haven't seen the house but it is in an area where the houses are going for $700,000 - $800,000. This is not a luxury home, it was built in the early 1950's. The FMV is high because this is Silicon Valley, CA It's a 3bed/1bth <1000 sq ft. 5900 sq ft lot

 

He is interested in the L/O idea and I told him I would get back to him with some more concrete numbers after running comps. He is asking $850,000 for his house. Appreciation in the area has averaged 11% in the last 9mths. I'm not sure that I would even want to have to find a tenant buyer for this amount

 

What should I do? I don't want to just leave him hanging but I think this is just to big for my first deal.

 

Any advice would be appreciated.

 

Lisa

 

I think I'll go look at ads for ity-bity condos, they're only $400,000 ~ $500,000

[Dbuddha 0]

Lisa,

 

Being a newbie myself and please someone correct me if I'm wrong...But you can always go into contract with a "weasel clause". It's a clause that allows you an escape if you don't buy a T/B.

 

For example...agreement is subject to partners approval and inspection. (something to this effect).

 

Start marketing for T/B's also, this may help you to find the house that fits the need.

[Doug Pretorius (ON) 9]

Lisa, the more zeros the larger the profit, that is the ONLY difference in this case because you're talking about an ordinary ol' house.

 

Do you have MC's manual? If so, sign this puppy up on a CA and turn right back around and advertise it on craigslist. If it's legal, put up 20 signs that read: "Rent to Own / 50% rent credit! / phone number" all over the neighborhood. If you don't get at least 10 calls a day, double the number of signs. Use voicemail to screen the buyers, tell them how much they need to put down and how much per month.

 

If the house comps for $750k you shouldn't have any trouble getting $850k on a RTO, as long as you treat the callers as tenant/BUYERS, not TENANT/buyers. I can't stress this point enough. If you treat RTO as non-bank financing you will get far more for the property than if you treat it as a glorified rental.

 

Condos are ok but they're not as popular as houses, that's why houses are more expensive

[<Steve> 82]

Lisa-

 

Most definitely go for it. Take the deal as far as you can. If you are using the Naked Investor contracts, these agreements have you covered weather it's a 100K or a 900K property.

 

If things don't work out and the deal falls through, fine. Put the experience in your pocket and use it for the next deal.

 

Think what would happen if you did find a t/b.

 

<Steve>

[Craig 0]

What should I do?  I don't want to just leave him hanging but I think this is just to big for my first deal. 

 

Any advice would be appreciated.

 

Lisa

 

I think I'll go look at ads for ity-bity condos, they're only $400,000 ~ $500,000 

<{POST_SNAPBACK}>

 

Welcome Lisa, I am also a little green to this but have a little experience in the motions of putting the deal together.

 

Offer to work with the owner as a service to him by doing a CA, as Doug mentioned. Its experience putting the contract to the owner and getting it signed. The more you do the more experience you gain. You might have questions about the contracts, as I had. DO DO DO and don't look back.

 

I often question the dollar amount with my deals. Look at the COMPS then be realistic. If it does move it might be a unrealistic priced. I can't hurt to try, RIGHT?

 

Don't not let the owner walk without a signed contract. If he needs time to read and understand the contract thats fine meet with his lawyer for a review meeting. Also 3 copies all signed, separate contracts. One for you, one for the owner, one for the buyer. No Copies. Don't make this mistake. It can cost you time, a blown deal and given away good contracts to the world.

 

Good Luck you will do fine, just do it, over and over again.

[Brian - L.V. 0]

Don't not let the owner walk without a signed contract. If he needs time to read and understand the contract thats fine meet with his lawyer for a review meeting. Also 3 copies all signed, separate contracts. One for you, one for the owner, one for the buyer. No Copies. Don't make this mistake. It can cost you time, a blown deal and given away good contracts to the world.

 

When you sign your CA contracts with a homeowner, you should sign 3 copies? So when you assign your position to the t/b, you sign the assignment agreement and then give them the 3rd set of copies you signed with the homeowner, not a new set that has their name inserted instead of yours?

[JCannon 0]

When you sign your CA contracts with a homeowner, you should sign 3 copies? So when you assign your position to the t/b, you sign the assignment agreement and then give them the 3rd set of copies you signed with the homeowner, not a new set that has their name inserted instead of yours?

 

Three original CA copies

Three original Assignment Copies (make sure it's the CA Assignment of Agreement)

If you write up a new contract with the T/B's name on it in place of where your's originally was then you are Brokering the deal, and you need a licence for this.

 

I'm 99.5% sure this is the way it is done. I will find out for sure in the next couple of weeks when I find the right T/B for my first deal.

[frmtgrl 0]

Thanks for the advice everyone. I'll put something together and send it to the owner. He said another house in the area was just listed for $749,000.

 

If nothing else, I'll learn from the experience!

 

Lisa

[MichaelC 160]

Hi, Lisa. With the market you're in, a sandwich lease for this property is just transferring the homeowner's headache to you. Approach this as a CA. After running comps, you need to determine the top of the market price you can expect a t/b to pay for a one year option. Same with the rent. And you may have to go higher than 50% on the rent credits, also. I've done 75%, even 100% when the situation called for it.

Then, you'll need to sell the idea to the homeowner. Explain that the rent credits will fill the property much more quickly, and that he isn't paying Realtor's fees or closing costs. It beats a vacant property any day, and in the long run he will come out ahead financially. Get him an offer with the specifics and let's see what the response is, Lisa.