Meeting With Seller

[PokerNutter 0]

I'm meeting with a seller today. He's already agreed to the rent-to-own and terms. I'm only looking at the place today though. I think he's afraid it may not be 'up to par' so to speak. He said if I like the place then we can do a deal. If it has a roof and a door, i'm taking it. I just need this 1st deal out of the way. This is a LO at the point.

 

Should I bring him a short offer letter/ form? He said his business saavy buddy wants to look over the terms so he's not being duped, which is fine as long as he's no real estate agent.

 

I'm thinking go today, take pictures, give him offer on paper. He can have friend review it (sans real contract) and come back to me with alterations or appointment to sign.

 

Should I wear business attire? I look young so I don't want to go 'casual'. Any other suggestions are appreciated. I'm just trying to take things in stride. Thanks in advance.

[Doug Pretorius (ON) 9]

Rule #1: Never leave your contract with the seller.

Rule #2: Never allow anyone to "alter" your contract, besides it's already designed to protect the seller.

 

The chances of this guy's "business savvy buddy" having any clue how to successfully change your contract is nil. In fact most real estate lawyers with decades of experience couldn't write a better contract than is included in MC's manual.

[PokerNutter 0]

Rule #1: Never leave your contract with the seller.

Rule #2: Never allow anyone to "alter" your contract, besides it's already designed to protect the seller.

 

The chances of this guy's "business savvy buddy" having any clue how to successfully change your contract is nil. In fact most real estate lawyers with decades of experience couldn't write a better contract than is included in MC's manual.

<{POST_SNAPBACK}>

 

 

I think you misread a portion of my post. I wasn't referring to the contract, I was referring to the short offer form/letter. I was going to leave that with him because it isn't binding and it details the terms of the deal. Second, by alter, again I'm referring not to the contract but to the terms. (say if his friend suggests that he get money down or change the monthly payments) obviously we'd have to resolve that. Thanks for the info but my main concerns weren't addressed.

 

Should I bring the short offer forms/not and what should I wear? Thanks

[JerseyJeff 0]

I'm just a newbie myself, so take these for what they're worth...

 

Should I bring him a short offer letter/ form? He said his business saavy buddy wants to look over the terms so he's not being duped, which is fine as long as he's no real estate agent.

Not sure what you mean here. Do you mean a lower offer in case all the house has is 'a roof and a door?' If so, I would just bring some blank copies of the agreements to have if you feel the need to adjust lower. You could either make the offer right there and fill in the new terms, or tell him you will go home and draw up the agreements.

 

I'm thinking go today, take pictures, give him offer on paper. He can have friend review it (sans real contract) and come back to me with alterations or appointment to sign.

I'm thinking you should go there with every intention of leaving with a signed agreement. If his friend is there, you can all sit and review everything. If he wants to speak with his friend afterwards, well, then you have no choice but to leave without the agreement. Take the pictures and call back tomorrow.

 

Should I wear business attire? I look young so I don't want to go 'casual'. Any other suggestions are appreciated. I'm just trying to take things in stride.

 

I'd go business casual; dockers, three-button shirt, etc. You don't want them thinking you're some slickster who is about to take them with your agreement. You want to make them feel at ease; a double-breasted suit isn't going to do that.

 

Like I said in the beginning, I'm just a newbie myself, so take these for what they're worth...

[JerseyJeff 0]

Correction:

 

...then you have no choice but to leave WITH the agreement.

[JerseyJeff 0]

Correction 2:

 

Let me rephrase this. If he wants to speak with his buddy, then you'll have no choice but to leave without a signed agreement in hand and ready to market the property.

 

I agree with Doug, don't leave the contract with him.

 

Sorry for the confusion.

[Doug Pretorius (ON) 9]

Ahh I see, sorry for the confusion. Yes you can always leave a short offer form with him if you need too, but as Jeff suggests you should go there with the intention of getting a signed contract.

 

As for what to wear, in my experience is makes no difference. I've worn everything from shorts and flip-flops to a suit and tie. I think you should wear whatever makes you feel comfortable.

 

Normally I wear jeans or shorts depending on the weather.

[MichaelC 160]

PokerNutter, there's nothing wrong with leaving a Short Offer form. It hits the terms and the highlights. In and of itself, the form won't be putting anyone in business.

And as others have mentioned, go with the full set of documents, too. If you can leave with them signed, so much the better. But if you hear the ol' "I need to think about this" angle, leave the Short Form with a 24 hour deadline.

BTW, sandwich lease, or CA?

[PokerNutter 0]

Just an update. I went, took pictures, we talked. He agreed to go down on price of the place as well as monthly payments. I'm going to call him back and set up the last meeting (contract signing) this week.

 

Here are some of my concerns

 

1.This is a LO and he wants to be out of the place by Aug.1st. I doubt that is enough time for me to find people. What time should I start the lease? Sept1st?

 

2.I'm not sure what type of insurance he has now but should he have a certain type of insurance so that in the event of an accident, my interests and those of my buyer are protected?

 

3.The residential lease with option to purchase agreement, section 18."ESCROW" Is this necessary? What exactly is it referring to?

 

4.How many days I should i give myself as a right to cancel? Any suggestions are welcomed.

[MichaelC 160]

PokerNutter, so far, so good. But again, what type of lease purchase deal is this? I'm assuming a sandwich lease for the time being.

1.This is a LO and he wants to be out of the place by Aug.1st. I doubt that is enough time for me to find people. What time should I start the lease? Sept1st?

Seeing that it's already August 8, there is no way that a September 1 start up date is realistic. Even if you were to find someone tomorrow, most locales require a tenant to give thirty days notice before vacating. October 1 is more reasonable and, depending upon your market, possibly November 1. If this is a sandwich lease, you don't want to start out with a vacancy.

2.I'm not sure what type of insurance he has now but should he have a certain type of insurance so that in the event of an accident, my interests and those of my buyer are protected?

The homeowner should switch his insurance to a Landlords Policy. This will cover the premises physically, and also include liability coverage in the event someone is hurt on the property and wants to sue. What do you mean when you say "in the event of an accident, my interests and those of my buyer are protected?"

3.The residential lease with option to purchase agreement, section 18."ESCROW" Is this necessary? What exactly is it referring to?

Necessary? No. But a good idea. This means you would make your payments to a third party, such as a title company, or an escrow company. They then make the payments to the lender, as per your instructions. You shouldn't take a chance making your payments directly to the homeowner. How can you be certain that money is going to the bank, and not to the slots at the local casino?

4.How many days I should i give myself as a right to cancel?

As many as you can get. More is better. We don't enter deals looking to back out, but we still need a safety net beneath us in case things don't go as planned.

[PokerNutter 0]

PokerNutter, so far, so good.  But again, what type of lease purchase deal is this?  I'm assuming a sandwich lease for the time being.

1.This is a LO and he wants to be out of the place by Aug.1st. I doubt that is enough time for me to find people. What time should I start the lease? Sept1st?

Seeing that it's already August 8, there is no way that a September 1 start up date is realistic. Even if you were to find someone tomorrow, most locales require a tenant to give thirty days notice before vacating. October 1 is more reasonable and, depending upon your market, possibly November 1. If this is a sandwich lease, you don't want to start out with a vacancy.

2.I'm not sure what type of insurance he has now but should he have a certain type of insurance so that in the event of an accident, my interests and those of my buyer are protected?

The homeowner should switch his insurance to a Landlords Policy. This will cover the premises physically, and also include liability coverage in the event someone is hurt on the property and wants to sue. What do you mean when you say "in the event of an accident, my interests and those of my buyer are protected?"

3.The residential lease with option to purchase agreement, section 18."ESCROW" Is this necessary? What exactly is it referring to?

Necessary? No. But a good idea. This means you would make your payments to a third party, such as a title company, or an escrow company. They then make the payments to the lender, as per your instructions. You shouldn't take a chance making your payments directly to the homeowner. How can you be certain that money is going to the bank, and not to the slots at the local casino?

4.How many days I should i give myself as a right to cancel?

As many as you can get. More is better. We don't enter deals looking to back out, but we still need a safety net beneath us in case things don't go as planned.

<{POST_SNAPBACK}>

 

Thanks for the reply. Yes, you're correct in your assumption. It is a SLO.

[PokerNutter 0]

Just an update. We're meeting this Thursday to 'consumate' the deal. This is a condo SLO btw.

 

So far the terms are

 

3br/2ba condo

4 year lease

1500/mth + utilities with 250 rent credit on purchase price.

160,000 purchase price.

 

Comps are currently low to mid 160's so not much of a deal on the current price.

 

From all indications, rent in this area is 1500-1800 inclusive. Appreciation is about 3-5% in this area.

 

I have no clue on how I should structure it for my t/b's. Also, should I keep this as a SLO or turn it into a CA? Your thoughts?

[MichaelC 160]

Four years is excellent. If you hold the property long term, you always have the possibility of reaping the appreciation. However, four years is also a long wait. So, how do you make money now with this deal?

First, are you putting down any option consideration? Assuming you aren't, then you'll make some cash upfront when you collect your option consideration from the t/b.

Your monthly payment is on the lower end of the fair rental market, you say. So there could possibly be two to three hundred dollars in cash flow for you each month.

As for the back end potential, hard to say what might be waiting for you. You'll have to study your market and determine just how high is the high end for this property when giving terms, such as we do with a Rent to Own. Is $175K realistic? $179K? That's a must for you to determine.

Also, should I keep this as a SLO or turn it into a CA?

I'm prepared to say CA because the spread I look for isn't there. However, that four years you have is a big plus. That opens up several possibilities. For example, you can simply play the role of landlord and straight up rent the property if it wil cash flow for you. Some cash every month, followed by four years to allow the property to appreciate, at which time you can turn around and buy it yourself, or sell it for whatever the then current market value is.

Another possibility is an assignment. Instead of remaining in the deal long term, sell or assign the contract. It has value to someone due to the fact that whoever takes possession has the same rights and benefits that you do. If a t/b comes along, for example, they wouldn't need to concern themselves with financing for four years. That's a big selling point for many folks, and something that someone would be willing to pay for.

But, first things first. Do your homework regarding a purchase price, and get the deal wrapped up officially. Then come back and let's see what we can do with.

Oh, and don't forget to take a picture for your soon to be burgeoning portfolio book!

[PokerNutter 0]

Sorry, forgot to sign in.

 

I've decided on a CA because the spread if it was a SLO isn't enough for the associated risk.

 

That being said the contracts I need and there associated questions are the:

 

Option to Purchase

1.Should I determine a number to put in section 3 for option consideration or leave it blank as I don't know exactly how much the market will support. Suppose I put a number but can only get less or are able to receive more?

2.Same section, what date should be filled in as receiving the option consideration?

 

CA Residential Lease Agreement

3.I can just leave the Occupants section blank right?

 

CA Assignment of Agreement

4.I haven't found my assignee so do I leave that blank as well and just get mine and the sellers signatures or come back with that when I have the t/b.

 

Also, the seller was willing to do a 4 year lease for a SLO. Any suggestions on how long I should make the term for a C/A? I'm thinking 1 or 2 years but also renewable.

[Guest Guest]

Nobody has any idea how to fill out these contracts?