My First Deal:)))

[Akinwale 0]

Hey all. Happy New Year ALL... Havent been on here since last year. What a long time...

 

I closed my first deal!!!

Well just wanted to update the group on how my first deal was put together:

 

When I first signed the deal with the seller, my intentions were to perform a CA. I signed with the seller on November 26th, 2004. I figured that since it was just after Thanksgiving and that Christmas was just around the corner, I was going to have a tough time moving this property for at least 1 month. In additon, the home needed still a little updating (furnace and kitchen) so it was not attracting the possible TB's that were needed to move the home. I talked to about 80-85 people about the home and showed it to about 30 people. Had 4 applications filled out but neither of the applicants (TB's) wanted to move forward unless the option deposit amount was lower as well as the rent. The option amount and rent amount for a home in that area was very reasonble. I mean I was looking for $5,000, they were thinking $2,500 including the 1st months rent. That was crazy...At that time, I had an agreement with the owner to split the option deposit, so I would have received little to nothing. Those applicants weren't going to work out...

 

Started out as a CA and ended up as a consultation....

 

So I was patient...patient...and I finally talked to a gentleman who was in the process of a divorce in where they were going to sell their home. He liked the home a lot..so much I was able to have him place a $3,000 option deposit down on the property with the right to extend the option period for an additoinal $1,000 each time he would have to extend the option. The longer it takes to sell his house the more cash the owner will have coming in to start paying for his monthly expenses i.e. mortgage, utilities, etc. When he sells his home, he will pay an additional $20,000 option consideration on or before March, 5 2005. The TB wants to purchase the property either in 6 or 12 months. I would then create a lease agreement for him to rent the property for the period of 6-12 months and attach the option to the lease agreement. I drew up a consultation agreement with the owner in which they signed. I would recieve $3,000+20% of the $20,000 or more option consideration paid by the TB. So at least an additonal $4,000 for a total profit of $7.000 ($3,000+$4,000).

 

My questions about this deal and how I structured it:

 

1. Since I originally had a lease agreement and option to purchase agreement with the seller, but created a consultation agreement, what type of documentation do I need to give to him (just for legality purposes) to cancel out the lease agreement we originally had? I would assume its just a plain ole' "I am cancelling the lease agreement dated...." type of letter. Any helpful thoughs???

 

2. If the option to purchase contract expires on March 5, 2005 and he pays the remaining balance due on or before March 5, 2005, what would I have to do to change the option to purchase period in the agreement to extend out to the end of the lease agreement that I would be creating.

 

3. Would you as a courtesy tell the buyer to make sure he goes down to the Register of Deeds Office to file an Affidavit of Equitable Interest?

 

 

 

Here are the numbers and how it was all broke down:

 

1 Year Lease/Option

TB Strike Price: $154,900

Monthly Rent: $650 with a $20,000 additional option deposit - (I would determine the rent when the lease agreement is drawn up which would be at the time the remaining option deposit is paid.)

Monthly Rent Credit: 50%

Option Deposit: $23,000 ($3,000+$20,000)

 

My Profit:

 

I get the $3,000 paid up front and 20% of the $20,000 for a total of at least $7,000. The TB might place $25.000 down so that would even be better...

 

Things I would have done differently:

 

1. Advertised a lot more...

 

2. Plan all showings on 2 days out of the week instead of trying to fit all schedules. I was pretty good with this, but I sometimes made exceptions for people instead of just saying wait until the weekend when everyone else would be coming. Just be patient and schedule your showings for specific days out of the week and stick to it. The TBs will come if they are very interested in the property.

 

3. Let my voicemail pick up on all my calls:)

 

I know I rambled through all of this and I hope I made sense....it's 1:00 AM here and I am frantically trying to type this email so that I can get some rest. Please let me know if you have any questions.

 

I am working on another deal that should close by tomorrow. I have the lease with option signed already with the seller and have a TB already lined up from my advertising. The TB is a retired pastor and mortgage banker. The reason I mention this is that we are going to work on selling the seller's note so that he would be able to cash out right away while I make my profit and the TB gets the home. We are still working out the details on the selling of the note, but I will get back to the group to post..

 

Update on a few other things:

 

I made 3 calls to builders in my area and went to present the RTO solution to 1 of them. They seemed to be very interested in the idea. The president of the company was like, why didnt we think of something like this. They are more of a higher quality builder, i.e. they build a lot of homes in the high figure range for this state (WI) versus other builders in the state who build more of the starter homes, mid-range homes etc. The president felt that it wouldnt neccesarily work too well on the higher priced homes (I beg to differ though and will look to prove him wrong) but would work very well on the smaller priced homes. When he mentioned this, he stated that they just formed a smaller company, an offspring of their main company, that would be building some of the smaller scale homes and would think the the RTO solution would be a perfect fit. I also suggested to him that it might be a good idea to let me locate and structure an agreement with a TB to lease/option a home before it would be completed. I suggested I find some land in areas that offer affordable land (the president said anywhere from $50,000-$75,000 each lot would be the best) and have them build one of their smaller scale homes. While the home is being built, I would advertise, locate, screen and accept a TB that will be placed in the home prior to it being completed. I dont see why the builder would not love this.... ANy suggestions would really be appreciated... What do you think my next steps should be with this company? I want to contact another company next week that I can go visit and lay down the spiel..

 

Until Later...Happy Selling in 2005...Sorry about the long blab...

 

NO WAY SPELL CHECKER>>>I must have been gone for some time... Thanks for that update MC.........

[Kimberly 0]

Answers to Questions:

1. A short letter to cover yourself: "I am cancelling the Lease per paragraph 8." (You do have something else, Consultation Agreement, in writing with the seller, don't you?)

2. You could do an addendum to change the dates. Or it might be easier for you to just simply re-do the contracts.

3. In general -- no. However, is there something about the seller that makes you think he needs to do this?

 

Congratulations on the second deal Akin! I didn't realize it was so close to being completed.

[Doug Pretorius (ON) 9]

Woohoo, way to go Akin! You just encouraged me to call some more builders

[MichaelC 160]

Hey, Akin, I was wondering what happened to you. I noticed your absence and figured you closed shop and was pursuing the sex, drugs and rock and roll scene. Or, you were busy closing a deal. Sorry to hear it's the latter. I mean, uh, Congratulations, Akin!

As for your questions, what Kim said. If you have any more, or need additional clarification, please let me know.

NO WAY SPELL CHECKER>>>I must have been gone for some time...   Thanks for that update MC.........

What the heck. It was Christmas, I was feeling all sentimental, the eggnog was spiked hard...