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jplives4surf

Interesting site -- LO Legality issues

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Hi All:

 

I love this forum. This may have been discussed before, but there's a very interesting site which reviews all the RE Gurus out there (no mention of Michael, I believe):

 

http://www.johntreed.com/Reedgururating.html

 

Mr. Reed rides Claude Diamond pretty good among many others.

 

He's also got a page -- "what you need to know about lease options" which discusses the legality & ethics of them (due-on sale clauses, etc):

 

http://www.johntreed.com/leaseoption.html

 

Now Mr. Reed is also selling his own books and frequently pushes them instead of the reviewed Guru's books which makes his objectivity suspect.

 

I'd love to hear your comments about the above.

 

JPLives4Surf

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Hi, JP, and welcome to The Naked Investor. We're glad to have you.

As for John Reed, sure, I'm familiar with him and his website. I assume many in our industry are.

John Reed knocks just about anyone and everyone is this business as being a con man, snake oil salesman, and scam artist. It's his right to do so, I suppose. But, the problem I have is the same as you alluded to: after knocking everyone, he follows us with "Oh, by the way, I happen to have a book or two on real estate that you might want to consider buying. Unlike those other guys, I'm the one you can trust." Hmmm.....can you say "conflict of interest"?

My advice is to never accept another's word about something without first doing your due diligence. Trust your own judgement above all others, and always look for the money angle when trying to determine someone's motivation.

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I use to love to read fiction but, I am to busy working on deals to go to reeds page any more.... :lol::lol::o;)

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Hi Guys:

 

Thanks for the follow up to my post. Being in California, I am particularly worried about Reed's statements:

 

"They trigger almost all mortgage due-on-sale clauses. They trigger reassessment for property-tax purposes in California, thereby wiping out the protection California homeowners normally get from Proposition 13."

 

Now I understand about most lenders won't call the due-on-sale if they are still receiving payments but do you disclose this to potential sellers? Disclose, disclose disclose? Or shhh, shhh, shhh?

 

Also I read somewhere that Dataquick is providing an investigative service for Mortgage lenders to discover instances where a due-on-sale cause can be exercised. Why would they offer this if lenders weren't going to act on it?

 

What's the safest way to do a LO so it's a win-win for everyone and to really cover yourself in the event of litigation -- if a full mortgage get's called, I have a hunch a seller is going to sue you...perhaps the tentant/buyer will too. It could get quite ugly.

 

Thanks. I look forward to your thoughts on this.

 

JPLives4Surf

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First off, take a deep breath....okay read on.

 

The DOS clause is always disclosed by my company and myself because it is there. Just like the fact that the tenant/buyer could trash the place. The other issue about the DOS, is that in most LOs they are NOT an issue because there is no legal sale. A subject to may be a different story though. And take this from where it comes from; I'm one of the guys that works with the banks. YES I TALK TO THE BANKS ABOUT THE DOS CLAUSE ALL THE TIME! They don't care if you make the payments, just that SOMEONE makes the payments. Banks are in the business to make money, not throw it away by doing needless foreclosures. They are LENDERS! This is why they hire attorneys to foreclose! Because it’s NOT THEIR JOB!

 

LOs are much safer in my opinion than subject tos or other ways of taking OWNERSHIP to a property while leaving the mortgage in place. They are MUCH more flexible etc.

 

And on a final note about John T. Read. We are a society of fear and “what about me” so much, that WE lose focus on the real reason for why we are investors. Service. If what you read from Mr. Reed appears to be that way, then fine. But if there is substance in the material that creates fear in your ability to help others, then you need to make a choice. I have made that choice and it is the only reason I have gotten where I have.

 

As for the rest of your questions, I think there is much more to be answered from a personal level. You will know what win/win is just like you will know what a motivated seller is. With time there are no illusions to this game. Just like riding a bike. :lol:

Regards,

Adam

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Great answer, Adam -- thanks. That's what I was interested in knowing...if you talk to the bank about the DOS to see if they are ok with it.

 

Ethics is important to me even if it may break the deal. I'd rather not have a deal than get sued.

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None of us want to be sued, but it happens. I think the fear of doing anything that creates a mistake is really the ego's way of telling the true self "go for it".

 

I once went to a Pre-Paid Legal seminar just because of that. The speaker was asking people why they were there and when it was my turn I answered, "because I didn't want to be". Of course the whole room turned toward me for an explanation. That was simple, the night before I made up at least 5 excuses why not to go. I didn't need the extra money to sell it, I didn't want to wake up at 7AM on a Saturday, I already knew enough to do what I wanted to etc, etc, etc...

Of course, the true reason was simply fear. It's a new and strange place, what if I feel uncomfortable there, what if I get picked to say something in front of a hundred people....

 

People are generally the same inside with their ambition and desire for fellow service, but the ego will control things to make "you safe" and quickly forget all of that. You either have the ability to choose freely without it, or you don't.

 

We all go through the "what ifs"? It's when we can change that to the "when and how", that gets us and other's what we need.

 

Regards,

Adam

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You know Adam, you are right more than you know. The other consideration is that the "fear" can actually become a form of procrastination. "Oh my, what if the seller says 'no'?" or "Oh my, what if the seller says 'yes'"? ANYTHING new carries with it a form of fear - fear of the unknown as well as a thousand other fears. I think it is a natural reaction to procrastinate on actively pursuing anything outside of your comfort zone. Is that a legitimate reason to stop you? The answer to that question is what determines who makes it and who doesn't; not only in real estate but in life.

 

Gary

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