CA Questions

[kah5683 0]

Hello All!

 

I found this forum yesterday, and since then I have spent hours looking through postings. I have learned a lot. Thank you!

 

I originally purchased a LO program from MC's mentor a few years ago, but have been sidetracked since then. (as you can see from my name, I have been busy going thru ministerial training) I am now ready to move forward to allow me the financial backing to continue what I have been doing (hey, it's expensive to send 3 kids to college)

 

I believe I never got going because of my concern with SLO and the possibility of having to pay if a t/b doesn't. After reading thru a lot of the postings here, I finally see the beauty of the CA. When you are finished, so is your financial liability. I can now sleep better at night. A good way to start off.

 

I emailed MC about mentoring with him at some point, however, I feel it is important to get the first one under my belt (since I invested a lot with the first mentorship – and my wife will kill me if I spend any more before doing anything first.)

 

SO...

 

I am hoping that I can get some help with a few question I have about the CA process:

 

The course I have has all the investor protections in the contract for a SLO, but not for the t/b with the CA.

 

1.I see no mention of a memorandum of option filed (what about seasoning for the t/b?)

2.Do we still check the title or possibly set up an escrow account?

3.Do we check out the seller to make sure financially stable so no problems with title later?

4.In the course, the SLO has the option and lease contracts separate for t/b, but for the CA, it is all together, and then assigned to t/b?

 

Maybe, reading between the lines, the author was more concerned with us as the investor and that when you put the buyer and t/b together in a CA, they need to take care themselves???

 

When you do a CA, do you use the CA LO contract with the seller, and then use the one page assignment agreement with the t/b?

 

Do you do a token option consideration with the seller just to make things legal with the contract, knowing they'll get theirs when you get a t/b?

 

Does the seller still expect a deposit also (not even talking about the OC – which is ours, of course)? If so then it is first month + deposit + option consideration? (that adds up quickly!)

 

The program I have has the t/b taking care of the first $100 of maintenance. What do you guys do?

 

In your negotiations with seller, are you having the seller credit OC and rent credit against sales price, or do you add on top of the sales price with the t/b?

 

 

I realize these are lots of questions. I had a whole page of them and condensed them down. Fortunately, lots and lots of questions were answered in this forum the last two days.

 

Thanks in advance for all the help. Take a crack at some of these, even if not all, and perhaps if a few chime in, we can get it done!

 

Thanks again,

 

Kevin

[Doug Pretorius (ON) 9]

Whoa! Ok, I'll take a crack at it...

 

1. No need to file a memorandum since you'll only be in the deal for a short time. The T/B can file one after you've assigned your position to them though. Seasoning wouldn't be an issue since the T/B is buying directly from the seller.

2. I don't bother.

3. I don't bother with that either.

4. The lease and option are still separate in a CA.

5. Of course. MC"s manual is for investors so it focuses on protecting yourself. Once you assign your position you really have no right to get involved. However, I tell both buyer and seller that I'm available anytime if they have questions or need a referral to a mortgage broker or attorney.

6. Yes. You use the assignment agreement to transfer all of the privileges and responsibilities of the L/O contracts to the T/B.

7. Yeah I give them $1, my lawyer laughes with glee everytime because I'm the only guy he knows that buys houses with $1 deposit

8. That depends on how you want to do business. You may get more business if you offer the seller part of the OC. Typically there's no "deposit" except for the OC.

9. I make T/Bs responsible for ALL maintenance.

10. Take it off the price.

 

Whew...!

[MichaelC 160]

I found this forum yesterday, and since then I have spent hours looking through postings. I have learned a lot. Thank you!

You're welcome, Rev! Good to have you aboard. Many here can benefit from someone in touch with a Higher Authority.

I believe I never got going because of my concern with SLO and the possibility of having to pay if a t/b doesn't. After reading thru a lot of the postings here, I finally see the beauty of the CA. When you are finished, so is your financial liability. I can now sleep better at night. A good way to start off.

Indeed. CA's are the simplest and least risky way to get your hands dirty in real estate.

1.I see no mention of a memorandum of option filed (what about seasoning for the t/b?)

As Doug said.

2.Do we still check the title or possibly set up an escrow account?

The advantages of a CA. You're not in the deal long term. Checking the title, escrow accounts, etc., are the concerns of the end buyer. We're putting the deal together and then assigning it. Our interest in the deal ends at that point.

3.Do we check out the seller to make sure financially stable so no problems with title later?

See number 2 above.

4.In the course, the SLO has the option and lease contracts separate for t/b, but for the CA, it is all together, and then assigned to t/b?

My CA contracts are somewhat different. There are separate lease agreements and option to purchase agreements. Then, the CA is finalized when the Assignment Agreement is signed by all three parties: homeowner, you, and the t/b.

Rev, let's keep things simple. Concentrate on finding a willing and ready homeowner. Once you have that, then we can concern ourselves with the necessary and proper paperwork. I'll provide you with mine, gratis. And I'll walk you through the deal. So don't sweat the small stuff.

(Hey, you never know when I'll need to call on someone with a direct line to a greater power than the Admin of The Naked Investor)

Do you do a token option consideration with the seller just to make things legal with the contract. . .

Yes. A buck or five ought to do it.

Does the seller still expect a deposit also (not even talking about the OC – which is ours, of course)? If so then it is first month + deposit + option consideration? (that adds up quickly!)

This is where we need to take control. The homeowner needs to understand early on that they will be receiving monthly payments. Nothing more. If you're dealing with a motivated seller, this will usually fly. Each deal is a separate entity, so you'll learn to think on your feet and be able to put the deal together even after a few unexpected twists and turns.

The program I have has the t/b taking care of the first $100 of maintenance. What do you guys do?

My agreements state that the t/b is responsible for all maintenance and repairs.

In your negotiations with seller, are you having the seller credit OC and rent credit against sales price, or do you add on top of the sales price with the t/b?

Option consideration and rent credits are listed as a credit towards the purchase price. Nothing is said about either being part of the down payment. That's between the t/b and their chosen lender. Your local market will determine how much you can build into the purchase price and how flexible a homeowner needs to be to get the property filled.

Hope this helped, Rev.

[kah5683 0]

Doug and Michael:

 

Thanks for your responses...things are clearer.

 

Being in the field I am in, I was looking out for seller and t/b, but I understand they also have a responsibility in this, too.

 

I was confused on why the CA contracts I have had the lease and option in one form that is signed with the seller and me, and then the assignment form, when it was said to have it in 2 agreements, so it makes sense you made that modification, Michael. Thanks for the offer of the forms.

 

I am looking forward to letting you all know of my progress.

 

As far as having a new link to a Higher Power

 

I know that this Higher Power is at work right now through MichaelC, this forum and all who participate. That all who are drawn here to this forum and this business are blessed, prospered and provided in every way. Every question is answered, all support is provided, and everyone takes from this experience Love, Joy, Wisdom, and Prosperity. Each one of us who chooses to move forward with this business attracts the perfect sellers and t/b's for a transaction that is easy and effortless and for the good of all concerned. Thank you God, and so it is!

 

I hope I didn't offend anyone with this prayer-treatment, but I wanted to give back in the one way that I know I can.

 

Prosperity to All,

 

Kevin

[BEV! 0]

...I know that this Higher Power is at work right now through MichaelC, this forum and all who participate. That all who are drawn here to this forum and this business are blessed, prospered and provided in every way. Every question is answered, all support is provided, and everyone takes from this experience Love, Joy, Wisdom, and Prosperity. Each one of us who chooses to move forward with this business attracts the perfect sellers and t/b's for a transaction that is easy and effortless and for the good of all concerned. Thank you God, and so it is!

Kevin

AMEN to that!

I will like to personally welcome you aboard Rev Kev

 

BEV!

[CS1977 0]

Wow! Gotta love that!!

 

 

I know that this Higher Power is at work right now through MichaelC, this forum and all who participate. That all who are drawn here to this forum and this business are blessed, prospered and provided in every way. Every question is answered, all support is provided, and everyone takes from this experience Love, Joy, Wisdom, and Prosperity. Each one of us who chooses to move forward with this business attracts the perfect sellers and t/b's for a transaction that is easy and effortless and for the good of all concerned. Thank you God, and so it is!

 

I hope I didn't offend anyone with this prayer-treatment, but I wanted to give back in the one way that I know I can.

 

Prosperity to All,

 

Kevin

[serrow 0]

Whoa! Ok, I'll take a crack at it...

 

1. No need to file a memorandum since you'll only be in the deal for a short time. The T/B can file one after you've assigned your position to them though. Seasoning wouldn't be an issue since the T/B is buying directly from the seller.

2. I don't bother.

3. I don't bother with that either.

4. The lease and option are still separate in a CA.

5. Of course. MC"s manual is for investors so it focuses on protecting yourself. Once you assign your position you really have no right to get involved. However, I tell both buyer and seller that I'm available anytime if they have questions or need a referral to a mortgage broker or attorney.

6. Yes. You use the assignment agreement to transfer all of the privileges and responsibilities of the L/O contracts to the T/B.

7. Yeah I give them $1, my lawyer laughes with glee everytime because I'm the only guy he knows that buys houses with $1 deposit

8. That depends on how you want to do business. You may get more business if you offer the seller part of the OC. Typically there's no "deposit" except for the OC.

9. I make T/Bs responsible for ALL maintenance.

10. Take it off the price.

 

Whew...!

 

 

I'd be a little concerned with the lack of due diligence for #2 and #3. what happens when you sing the praises of rent to own only to hook up a buyer with a seller with liens on the property? i mean, i could be a real selling point to do those tests (costs passed to buyer of course) and really offer a bit more safety.