djbusch 2 Report post Posted July 31, 2012 In a previous thread, I mentioned a lady who keeps insisting that I meet with her and her husband to talk about their options. Well, despite all the obstacles I throw in her path, this woman is still in daily e-mail contact with me, asking questions and offering information on her home and situation. I may be mistaken, but I sense motivation here. The problem is this: I don't have any money to "hold" the property in the event of a vacancy. The seller has made it clear that a SLO is more to her taste than a CA. She wants me personally responsible for the property and the payments. She's heard horror stories about t/b's trashing houses and bailing on the payments. How can I move her into the CA direction without her getting spooked about a bad t/b? Of course I'll screen all the prospects and let her (and her husband) have the final say, but once the ink is dry and I'm out of the deal, what assurance can I give her that her home will be taken care of or that the t/b will exercise his option? Share this post Link to post Share on other sites
DeeLight 8 Report post Posted July 31, 2012 Hi David. This biz is so funny. There's no set pattern to things-----well except for the crazy sellers and the crazy buyers. I look forward to the replies to this from the veteran pros. But I am playing a game of trying on different situations and seeing how I would handle it. So, if this were me I'd change my CA hat to put on my SLO hat. If this lad y is truly motivated I'd make her see that you'd need to get a killer price if you were to take on all the responsibility of this. I'd want some good spread (cuz I'm not sure of myself in these yet).I'd make sure that it is worth my while to do the deal. Have you checked out the fmv and the frv? Is there equity in the deal? Heck if you don't want a slo but you are a good negotiator you could set up a killer deal and then flip it to another investor. Just my thots. can't wait to see what happens! Share this post Link to post Share on other sites
<Steve> 82 Report post Posted July 31, 2012 David- I'll just comment on the SLO and paying the rent should the house go vacant. I can remember having 4 or 5 SLOs go vacant at the same time. Can you say panic! It's that saying don't promise anything you can't do. Anymore I tell SLO sellers that I do not make the payment should the house go vacant. I let them know that I will give them a thirty day notice and send the a final payment (also in the notice I state I am canceling the agreement). During that 30 days I am marketing the property to place another t/b. Typically it takes 4 to 6 weeks, so it is possible that another t/b can be placed within that 30 days. Worst case the seller may need to make one payment. Doing this I also take the risk that the seller will take the house back, but they can continue with the SLO and typically they do and the agreement gets reinstated. Share this post Link to post Share on other sites
MichaelC 160 Report post Posted July 31, 2012 Interesting discussion. A few thoughts come to mind. . .From your description, David, this homeowner certainly is motivated. Like all things in life there are pros and cons to taking this deal on a sandwich lease. To make if worth your risking it, what are the numbers, the terms? What does she want from you and what can you expect to receive from a t/b? If the numbers aren't fat enough, explain that to the homeowner in a way that will appear that you are putting her best interests in mind. "Mary, I'd love to help you out and do this sandwich lease with you. However, in order to do so would require you drop your selling price and your monthly rent quite a bit. The better way to do this would be with a cooperative assignment". Then launch into the details and present her the numbers. That might get her thinking along the same lines as you.On the other hand, if she insists or is willing to make the deal so attractive as to make it too good to pass, keep in mind what Steve said. Page 3, Paragraph 21 of our Lease with Option to Purchase Agreement limits your risk to a maximum of one month's rent should the house go vacant.Also, Dee made a very good point. If the terms are good but you still don't want to be in the middle, lock up the deal and assign it to another investor for a few grand. The key to making this work is there has to be some value in the deal: below market price and rent, and preferably a long term deal, 36 months or more. Share this post Link to post Share on other sites
Mastamike6 1 Report post Posted August 1, 2012 You could also remind them that T/B's take better care of the home because they are working towards buying it and making it their own as opposed to just renting someone else's place. I know John also preaches to have the t/b take out a home warranty to cover any maintenace or repairs to the home while they are leasing. This covers both parties interests in case it gets trashed or something goes wrong and the owner doesn't want to come out of pocket for the expense. Share this post Link to post Share on other sites
MichaelC 160 Report post Posted August 1, 2012 Mike, a home warranty policy doesn't cover wear and tear or damages. It's for things like appliances and systems. Share this post Link to post Share on other sites
djbusch 2 Report post Posted August 1, 2012 Well, I've set up a time to call & hash out the numbers with the seller and her husband. With any luck, I should have some kind of deal signed up with them by early next week. Now the butterflies are setting in... The only other real estate deal I've done in the past was set up for me by a 3rd party who lived out of state and didn't want the hassle of doing a deal so far from home. This represents my first solo deal. I hope I don't screw it up. I've already put a dummy ad up on craigslist for this house, but haven't seen any responses. I'll have to tweak it to get the prospects calling... Share this post Link to post Share on other sites
MichaelC 160 Report post Posted August 1, 2012 Enjoy the butterflies and excitement. This stuff is fun! You won't screw up, so don't assume the worst, David. You've got questions? We've got answers. 1 Share this post Link to post Share on other sites
Shar NJ 1 Report post Posted August 4, 2012 Muster up as much confidence as possible! When you sound knowledgeable, confident, and assure it eases the sellers mind. When faced with the sellers fear I always assure them that we are very careful when screening potential applicants and we look for buyers that have a strong driving factor to go through with the purchase (and I do!). These people want to care for the house and I tell my sellers if there is a problem please contact me, this is my business and my livelihood and I care about it. There are risks in everything and while you cannot guarantee there will not be bad Tenant/Buyers you can screen to your fullest capacity and professionally deal with any problems if they crop up. Good luck and have fun! 1 Share this post Link to post Share on other sites
Shar NJ 1 Report post Posted August 4, 2012 Also, just remember this! Empty pockets never held anyone back. Only empty heads and empty hearts can do that.Norman Vincent Peale Share this post Link to post Share on other sites
DeeLight 8 Report post Posted August 4, 2012 :lol: David, not laughing at you. I'm laughing at US!! I did a couple deals in the wholesale and preforc niches years ago. I don't know why I'm making this harder than it is. I TOTALLY get the "butterflies". I'm realizing that not every deal will work out so I'm using each one to learn something new from. This week alone I was contacted by investors with a house that they SWEAR will be bought by a "buy & holder". But I was laughed off the planet when I shared it on one of the investor forums I visit. And then I received a lead form a new mtg banker friend---from my cl mailings----she wants a l/o realllly bad so I gotta find one for her----but not exactly sure how to do that. I don't want to hijack this thread so I think I'll start a new one. Go gettum TIGER! Share this post Link to post Share on other sites
