Jump to content
The forums have been archived and are now read only. Years of great info saved for your reading pleasure. Thank you! Visit us on Facebook: https://www.facebook.com/NakedInvestor/ ×
The Naked Investor Forums
Da_New_Kid

Starting the New year of right

Recommended Posts

Happy New Year Everyone!!!

 

 

 

Last night after the big apple fell while most people were probably partying, I on the other hand gave my wife a kiss and sat down for some craigslist marketing. :blush: I emailed about 10 people in the for rent area and I received 4 responses. I called one of them back today because he seemed really motivated, (and I quote "Please call me!!!"). Well after speaking to him this is what I was able to uncover.

 

He has owned the house for 1 year, and is now renting the home because he couldn't sell it. (priced it two high for the market)

Full value is around 186,000 which is what he was asking and now he is asking 174900.

he wants 1050/mo for rent 1st and last up front.

 

Because I'm still a newbie and have not completed my first deal I want to approach this as a CA. I told him that I needed to make sure that his house qualified for our program before we met and signed anything. Verbally we agreed to the terms below.

 

$174900 (a good reasonable price)

rent 1050 (average)

60-90 days to find tenant/buyer

nothing out my pocket to secure the property.

 

There is also one problem, he has a tenant who has been occupying the house for about 1 month and he wants them gone. Reason for eviction is the deposit check bounced and she screaming harassment at him for trying to collect. Does anyone know of any legalities for evicting so early and what is the easiest way to get them out of the house.

 

Any and all suggestions are welcome.

 

Eugene

Share this post


Link to post
Share on other sites

Eugene,

Not a good first deal that's for sure.

 

The Negative

Tenant filled

Asking too much (Obviously owes a hell of a lot less if he's only asking $1050 per month, or he's taking a major loss somewhere else)

 

The Positive

Yes, a CA and yes, an option for 90 days to locate a tenant/buyer and act as a principle

 

As for the negotiating, make sure he knows you don't need the deal. Tell him that you'd like an option, but will be staying on the sidelines until he takes care of "HIS" problems.

 

You're not going to be able to move a property with a nasty tenant in it. I almost always run when I get a deal like this that's filled. I'm always like; yeah, call me when you have something I may be interested in working with. Because right now you don't.

 

Don't ever be eager to do a deal. Do a deal because you choose to do it and it works for you. This is one of the most important lessons in real estate. Touch nothing that will give you a headache. Lack of experience can give you the illusion that you're not worth it, or you have to make sacrifices to get your career going. That's not true. Come out of the gates strong and know what you want, what you're willing to give and what you're worth. Everything else will fall into place. And yes, it will come much quicker if you can tie up something that you believe everyone will want. Especially with CAs.

Hope that helps,

Adam

Share this post


Link to post
Share on other sites

Eugene, Adam already covered it, but it bears repeating. Let the current homeowner deal with the tenant problem. You're not getting into real estate to have the homeowner's problems become your's. Once the property is vacant, then you can revisit the idea of working a deal on this house.

Share this post


Link to post
Share on other sites
Don't ever be eager to do a deal. Do a deal because you choose to do it and it works for you. This is one of the most important lessons in real estate. Touch nothing that will give you a headache. Lack of experience can give you the illusion that you're not worth it, or you have to make sacrifices to get your career going. That's not true. Come out of the gates strong and know what you want, what you're willing to give and what you're worth. Everything else will fall into place. And yes, it will come much quicker if you can tie up something that you believe everyone will want. Especially with CAs.

Hope that helps,

Adam

 

 

Great stuff, Adam.

- Rahul

Share this post


Link to post
Share on other sites

Adam, MC

 

Thank you both for the advice, I'll tell him today that I will be passing on this one. I have to say that it is really comforting to know that I have a support forum to call upon for help when needed. You guys are awesome!!! :blush:

 

Eugene

Share this post


Link to post
Share on other sites

Eugene,

You're very welcome, but let me say one more thing. Don't let anyone's opinion (even ours) force you to walk away where there "could" be a deal. Just play by your own rules. If this guys is as motivated as "you" need him to be, he will play ball. And if he plays ball, you could make some cash on this. But again, it's better to make sure you're not wasting your time and losing other "good" deals when messing with this one.

Learn to be your own inner voice and success will come much quicker!

Regards,

Adam

Share this post


Link to post
Share on other sites
Eugene,

You're very welcome, but let me say one more thing. Don't let anyone's opinion (even ours) force you to walk away where there "could" be a deal. Just play by your own rules. If this guys is as motivated as "you" need him to be, he will play ball. And if he plays ball, you could make some cash on this. But again, it's better to make sure you're not wasting your time and losing other "good" deals when messing with this one.

Learn to be your own inner voice and success will come much quicker!

Regards,

Adam

 

 

Translation:

"I'm a ballin' motha f'er, doing massive transactions.

So these $5k CA deals, I may steer you away from

and not realize it, cuz I'm used to cashing bigger checks."

 

 

:blush:

 

 

 

Those that don't mind making $1k-$9.9k/deal may refer to Adam's archived posts

pre-2006.

Share this post


Link to post
Share on other sites

Quick question for you naked guys and gals :P

 

The last two people I've spoke two I was able to convince into letting me do CA's with them on their houses. This is how I did it, when the seller asked me how much will I be receiving down this is what I said. Most people receive 1st and maybe last months rent as a down payment, I would suggest the same for you. When I place a tenant into your home they will be paying you 2200, how does that sound? They both said it was fine, so I told them I would see if their house qualifies and I would call them back. I've been figuring 2% of the asking price as my assignment fee to the T/B so on both of these house it would equate to about 2500 - 3000 in my pocket. The T/B would be placing 4700 or 5200 down total, does this sound right to everyone. :unsure:

 

By the way for some reason it has become so much easier to make cold calls, I guess my confidence is rising. Now if I can only collect a paycheck :rolleyes:

Share this post


Link to post
Share on other sites

Hey Eugene-

 

Initially it may be a hard sell or difficult to receive your option consideration and 2 months of rent up front. I usually state right off the bat that I do not pay any deposits or option consideration to the seller. Then I explain why by reminding the seller of all the advantages that are put in place and that tenant/buyers are better than renters etc...

 

However, you can get the seller a little extra cash. I like to set up the lease where it starts on the first of the month. It usually takes the T/B some time to give notice where they currently live and prep for their move. Also, the lease for many T/Bs in there existing house/apt. ends at the end of the month. So, if the tenant/buyer puts down the option consideration, I will hold the house up to 30 days before their move-in, then they can pay the first months rent and I give them the keys at move-in.

 

The result is that I am always asked if they can start moving in a week or so early because it is difficult to move everything in one day. So, I say sure you can start moving in the weekend before the 1st of the month (start of the lease) and I will need to prorate the rent. The result is getting the first months rent plus a few extra hundred bucks for the extra week. Many times if the T/B is really motivated they will call back to see if they can move-in even earlier, which means more $$ up front.

 

Not to make this post to long but another "advantage" to doing this is, when I receive the option consideration way before move-in, I will also go over all the agreements and have the T/B sign the Assignment. When the T/B is ready to move-in and meet the owner its smooth sailing. I have already been paid, the T/B has already agreed to the terms of the agreement and all that needs to be completed is the seller's signature and giving the keys to the tenant/buyer and I am out of there. Works good for SLOs too but I keep the extra $$ :rolleyes:

Share this post


Link to post
Share on other sites
By the way for some reason it has become so much easier to make cold calls, I guess my confidence is rising. Now if I can only collect a paycheck :rolleyes:
Eugene, a step at a time. . . You're progressing just fine. Stay with it and continue talking with sellers and making offers.

In addition to what Steve said, keep in mind that the more money you require a t/b to put down, the t/b's you are going to disqualify because they won't have the required cash. It will benefit you if you can remind the homeowners that you are dealing with tenant/buyers, not tenants, and of the other lease purchase advantages we always discuss. Remind them they run the risk of pricing themselves right out of the market if they insist on first, last, security deposit, pet deposit, and utilities deposit, (as I had one homeowner email me over the weekend).

Share this post


Link to post
Share on other sites
Remind them they run the risk of pricing themselves right out of the market if they insist on first, last, security deposit, pet deposit, and utilities deposit, (as I had one homeowner email me over the weekend).
LOL you too? I had a seller a few weeks back who wanted the entire first year's rent upfront!

Share this post


Link to post
Share on other sites

×
×
  • Create New...