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Chris43

Hello....Can you help me structure this deal?

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Hello Everyone,

 

Introduction and questions... (a little wordy, sorry !)

 

I am a new CPA investor who lives in Denver, CO. I have been reading the posts and lurking for a while but in the same time have been marketing for sellers, today I generated some interest.

 

This guy owns a $375,000 home free and clear but is having a tough time selling it due to its location and due to the fact that it is essentially half of a high end duplex. The house has been on the market for a year, and is listed with a realtor ( ending soon ) to no avail. Its hard to comp due to the diversity of the area.

 

I met with the seller, not super motivated as he owns the home free and clear, but there is enough motivation where I think I can help him somewhere and he doesn't mind being a landlord.

 

I don't want to do a sandwich and just want to assign.

 

Questions:

 

1.) Do I enter a full blown l/O with the seller and then assign my interest to my t/b or does the t/b sign a new contract with the seller on different terms? I don't want to be on the hook for a 18-24mth period if I can't find a t/b. How do you structure this? I want to be in and assign out ASAP without a liability to the seller if I can't find a t/b.

 

2.) He wants a 3-5% option consideration upfront, which I can work with BUT I don't want it coming out of my pocket. In addition I don't want to start making monthly payments after I sign with him, I want my t/b to do that. How do I avoid this while I am looking for a t/b for 4-6 weeks? How does it affect contract if I never find t/b? AM I on the hook until I find t/b?

 

3.) If I get house under contract with him, do you do a preliminary title search BEFORE you market for T/B? What does a prelim title search entail and any ideas on cost?

 

 

I am really new but have always been one to dive in and just do it, but am uncertain on some aspects of CA still. Any help would be appreciated.

 

 

Best Regards,

 

 

Chris

 

PS- Michael C , Adam King sent me here and told me to tell you high.

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Chris - There's smarter people than me on this forum, so take this advice with a grain of salt until you hear from the experts.

 

With the info you've provided, a SLO is out of the question. And if the seller is wanting 3-5%, that doesn't leave anything for you on a CA. The only option I see is to use the expertise you gain from the NI manual and the advice you receive from others here and enter into a Consultation Agreement with the seller, as explained in the NI manual.

 

If the seller is not interested in a Consultation Agreement...well, NEXT!

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Chris - There's smarter people than me on this formum, so take this advice with a grain of salt until you hear from the experts.

 

With the info you've provided, a SLO is out of the question. And if the seller is wanting 3-5%, that doesn't leave anything for you on a CA. The only option I see is to use the expertise you gain from the NI manual and the advice you receive from others here and enter into a Consultation Agreement with the seller, as explained in the NI manual.

 

If the seller is not interested in a Consultation Agreement...well, NEXT!

 

 

Thanks Michael. Maybe I am looking at this wrong but seller mentioned that they would be ok with 10000 consideraton fee. Is it feasible to get this under contract between me an seller with zero option consideration find a tenant buyer that will put down 3.5% of $375,000 ( 13,125..if I am super lucky) and get a L/O worked out between us on sellers terms and then assign back to seller with $3,125 assignment fee? He gets his 10000 and I get my fee? I don't know, help me shoot holes through this...

 

My concern is that I don't find a new t/b....am I on the hook with the seller with our L/O agreement?

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The scenario you outlined might be feasible. As an alternative, you could always base your Consultation Fee on a % of the option fee collected (which could get you to the $3125), but no less than $1,000. I'll let others weigh in with other suggestions.

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Hi, Chris, and welcome to The Naked Investor.

You're on the right track with this homeowner and his property. A sandwich lease is not something you want to take on in this particular case. But it does lend itself nicely to doing a Cooperative Assignment. . .with a few potential hiccups.

My first concern is the owner. Owing this property free and clear as he does takes away his motivation. With no mortgage payments choking him, he may want to sell but he doesn't have to. As such, he can be somewhat demanding. . .such as asking for $10K option money in his pocket. Which leads to my second concern. . .

How do you make money in this deal? If he is getting $10K off the top, there is little room for you to make a buck. Hoping you find a t/b with $13K isn't the way to work the deal. Tell him you need, (fill in your number here), and anything above that is his to keep. If he doesn't agree to that, move on. There are other, more motivated homeowners out there.

Also, what MichaelG suggested is a possiblity. Work with the guy on a consultation, get paid upfront for your smarts, and put some fast, easy cash in your pocket.

Finally, tell my bud Adam that the cans of Corona are damn cold this time of year. :D

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Hi, Chris, and welcome to The Naked Investor.

You're on the right track with this homeowner and his property. A sandwich lease is not something you want to take on in this particular case. But it does lend itself nicely to doing a Cooperative Assignment. . .with a few potential hiccups.

My first concern is the owner. Owing this property free and clear as he does takes away his motivation. With no mortgage payments choking him, he may want to sell but he doesn't have to. As such, he can be somewhat demanding. . .such as asking for $10K option money in his pocket. Which leads to my second concern. . .

How do you make money in this deal? If he is getting $10K off the top, there is little room for you to make a buck. Hoping you find a t/b with $13K isn't the way to work the deal. Tell him you need, (fill in your number here), and anything above that is his to keep. If he doesn't agree to that, move on. There are other, more motivated homeowners out there.

Also, what MichaelG suggested is a possiblity. Work with the guy on a consultation, get paid upfront for your smarts, and put some fast, easy cash in your pocket.

Finally, tell my bud Adam that the cans of Corona are damn cold this time of year. :D

 

 

Thanks Michael, valid points and things for me to take into consideration. Love the site and look forward to being a part of its success.

 

 

Thanks

 

 

Chris

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