Geovanni

1050-1100/ mnth might work being that this is an LO. Is 1200 the owner PITI because if it is, he'll need to come out his pocket to find a t/b reasonably quick.

How do you "pay the seller off" with only the first month's rent and the option? I'm confused... If you're talking about the purchase price of the home, then you pay the seller off through the t/b when they qualify for financing at closing.

I just did a little read up on Tigrent learning...they got sketchy written all over them. Sources:ripoff report, comsumer affairs. I'd stay away from them.

Thanks, Steve. I have taken a weekend training on lease options through Tigrent Learning (are you familiar with them; or have an opinion on their strategies?). I feel like I have a good understanding of how Sandwich Lease Options should work and I find them very exciting, not only from a REI standpoint, but because they can provide a great win-win scenario for people that just want out of the immediate financial responsibilities of a property they're stuck in and for people struggling to get funding through conventional lenders due to the recent credit crisis. (I've been of both sides of this equation personally and wish I knew what I know now) But, I have also heard concerns from Realtors, Mortgage Brokers and this particular (obviously uneducated) attorney. Specifically, how do you avoid the need to "season" the deed of trust? And how do you fund the purchase of the property on the "sellers" side without having to come out of pocket for the entire amount before you can get the money from the purchasing "tenant/buyer" side? Because, obviously you can't sell the property without having your name on the deed first, right? You time and consideration is appreciated. I'm pretty sure since this is a lease option there's no issue with title seasoning because the seller stays on title until the t/b cashes them out the property...which should be longer then 3 months. You add a "Subject To" clause in your contract that states Seller doesn't paid until you find a qualified t/b. When you collect your option and 1st month rent, you pay the seller off. You can't sell the property but you can sell your interest in the property (your contract with the seller.) by assigning it. I'm not entirely familiar with how SLO's work when it comes to getting paid off at the title company. Correct me if I'm wrong in my explanation.

Thanks Chris, Pilot, and Michael for your words of wisdom. I asked the seller if he's interested in selling his home on a lease purchase. Just waiting for his reply now. I'll keep you all updated through this thread as to what his response is and how this turns out in the end. -Geovanni

Thanks for your response, hope you don't mind me asking more questions I) You said you only give the just under one month rent as down payment, now is that the option payment, or are you giving the owner a piece of the "3% option fee" plus a month security down payment? And if it is just the option payment, wouldn't you face some resistance from the owner for it being such a low down payment? II) Any recommendations as to who to get a home warranty from? Generally, the paperwork we use with a CA will stipulate that the t/b is responsible for all maintenance and repairs. However, your state laws will dictate just how far that goes. For example, if the roof is damaged in a hurricane, the t/b isn't going to foot the bill for that. But the day to day maintenance and repairs are the responsibility of the t/b. The rent is market driven. I can't tell you how many times a month I hear a homeowner tell me they need $2K/mo in rent. When I ask where the figure came from, their answer is invariably "that is my monthly expense". One has nothing to do with the other. The rent is determined by the marketplace. The homeowner's PITI is a factor of the type of mortgage, his insurance premiums, and his property insurance. Again, market driven. But John is on target with his expectations of three to three and a half percent. A little less, a little more. Try and get the t/b to tell you first what they were expecting to put down. You may be pleasantly surprised. Most of these CA's are for 12 months. If the t/b can cash out sooner, so much the better. Yes. You need to know with accuracy what a property is worth. Overpricing a property for the sake of pleasing the homeowner and getting the deal is self defeating. You'll never be able to move it. Thanks for your help, Michael, It's been awhile. Right now I'm kind of second-guessing everything I learned so far, so I needed someone to reassure me of what I was doing. I sent my reply to the seller telling them if they have anymore concerns or questions to contact me anytime. Any advice as to moving the dialogue forward? What questions should I ask? Once again thanks for your help! Regards, Geovanni

Hello, Brian, I'm also a newbie from Manhattan as well. Even though I haven't gotten my first deal done yet, I know pretty much everything I need to know to get myself out there and start looking for deals. Micheal can tell you, He's such a knowledgeable figure here. I'm sure you'll find your way. If you need a push in the right direction you can always PM me . I'm pretty much always lurking the forums on my phone. Good luck, Geovanni

Here's an email I've just recieved from a seller using Micheal's two email approach. This is the second email. "Hi Thanks for the information, how are repairs handled taxes handled. Are they paid by me from the rent. What kind of down payment will there be and how long does it take to get the balance of the selling price and how is the selling price decided. Thanks" - Seller I'm pretty ecstatic because I feel I can nail this one. I had about 4 motivated sellers that I lost due to my lack of experience/knowledge, so now I'm coming to the pros. How do I address this seller's questions without coming off as inexperienced? A ) Assuming the house is in move-in condition, are repairs handled through the tenant-buyer or the seller, or a combination of both? B ) Taxes are factored into rent obviously right? C ) How do you figure option payment? D ) How long does it take to cash the buyer out (I don't want to scare the seller off with my answer to this question) E ) A CMA would tell me the property's value and my offer would be based of this right? Sorry for being a newbie, Geovanni Castro

I had the opportunity to speak with MichaelC awhile back and reccommended I try my hand at online marketing. I wrote a canned email that essentially covers all the benefits of lease purchasing and sent mass emails through craigslist. I don't know any other sources to find home sellers so I'm limited. I got an email from one owner showing interest and I thought I'd have a deal but she was from Connecticut, and asking for one year in advance In rent @ $2,100 a mnth with a purchase price of $200k. I called another homeowner showing interest and got voicemail and left a message. The thing is that with New York city, most family are 2 families and more. Can you even lease purchase on those properties? Is my marketing too narrow, and if so, what sources should I be using? I can't afford direct mail at them moment so I'm kinda limited but I have the motivation to make it work. Regards, Geovanni.

I seem to be on standby in terms of the whole process of closing a deal and I would very much like to have a conversation with someone who could point me in the right direction. I know it might not be worth your time but I'd be very much thankful and grateful if you could help me. Feel free to pm or post your number if you're interested. Good day, G.C.

Diver, I'm not really familiar with notes (or real estate in general) to be honest. That is why I'm asking these questions even though I read in a previous post that this is not a novice thread. Hope someone can help me here. -Geovanni

Taking an option that allows you to create a note (land contract, deed of trust or mortgage) and assign interest. What takes place is simple. We could argue that a sandwich lease option is the same thing because it has the value of seller financing. However, the note is not really being created just the terms are. So to stick to the issue at hand, I am going to explain how this can be done with the note buyer. If a property is purchased at 60% or little more on the dollar, you may have the ability to create and sell then note. This could be done by controlling with an option and having verbiage in the option allowing for the creation for the note. i.e. buyer gives optionee the right to purchase the property at x % with x down and payments of x on a x year land contract with a balloon payment in x years. What this does is allows us to have the option to terms. The terms can then be presented to a third party (buyer) and then once their credit is ran you can create your note and sell it to a note buyer for up to 85-90% LTV if the buyer's scores are high enough. (usually 600 or more) This method can also be done with a double closing so the buyer has no idea what you're making on the deal. Advantage: In all honesty this is a cash deal because most note buyers are not affiliated with national banks such as Chase and Country Wide. You can do whatever you are capable of. Hello everyone, It's my first time visiting this website and forums(referred by someone who claimed gotten his start from Michael C.) I'm new to real estate and have only just started learning options/lease options and I don't quite get this technique of flipping or pretty much any other that was mentioned in this thread but if anyone could help me understand this better I would gladly appreciate it. (I just don't understand what's in bold lol.) Thanks, Geovanni