Posted by JohnBoy on November 09, 2000 at 19:00:22:
Merle,
You said you recommend the 1st, 2nd, & 3rd arrangement if using more than one investor per property. Is there a reason behind this instead of using multiple investors all being recorded on a 1st mortgage like you have done in the past? If so, could you give details as to why that is?
Thanks
Answering Brad’s questions - Posted by Merle
Posted by Merle on November 09, 2000 at 15:53:20:
One of the biggest problems most people seem to have in selling involves convincing the prospect of their honesty and integrity. Sadly, they attempt to do this by ?hanging out a sign? touting their worth. Kind of like ?Honest John?s Used Cars.? Or, how about the person who says, ?Let me tell you the truth.?
By explaining your offer from the prospect?s viewpoint in terms of benefits to them automatically establishes your credibility with them. Most people fear the ?buyer beware? setting that seems to occur frequently.
They say animals can detect fear in the human being. Prospects can often detect the greed in the sales person. If the greed exists, it shows thru regardless of the words spoken. That?s when, in my opinion, the salesperson ceases being a salesperson, and instead becomes the con artist.
Trying to convince someone of something he/she knows to be untrue ? with a selfish motive in mind.
Hopefully, adding those thoughts to the ones we?ve already discussed helps when you meet with your prospective investor.
Following are answers to your latest questions.
Do our investors need to see the property? Some of ours have. Only one or two require a drive by before loaning the money. Most of them (probably 85%) never see it.
We used to do appraisals, but we don?t any more. The appraisals have become so far removed from market value, they are not worth the price for our business. We just recently established a very large bank line of credit and they drive and take a picture of the house ? beyond that, the loan is based on our assessment of the value.
Some of our investors send their money directly to us. We ask them to send it to the closing agent, but they seem to prefer sending it to us. We have received cashier?s checks in excess of $100,000 without any documents being signed. You probably won?t see that in your business for a while.
I am assuming your question about showing them the contract refers to your purchase contract. We never have done that. Can?t see that it would hurt anything. As I said in last night?s email, they make the loan base on the quality of the loan ? what you pay for the house is irrelevant.
Very definitely, explain your plans for the property. You will be providing a very important service to a family who cannot qualify for a home loan. You have a solid plan for doing that. Your investor becomes a part of that fantastic good deed you are doing ? and you both earn a profit doing it. Truly a WIN-WIN-WIN arrangement! Rather than causing insecurity, it bolsters their confidence in the whole idea.
We create their note in whatever manner they choose. Usually list our mailing address for them on all documents. All recorded documents come back to us and we send them to the investors.
We no longer accept more than one investor per property. If you do, I recommend the 1st, 2nd, & 3rd arrangement. Better to talk to your attorney about local and state regulations that might be involved in your location.
Hope this helps,
Merle