Consulting or Not, That Is The Question - Posted by ChuckD


#1

Posted by Redline on October 30, 1998 at 21:47:35:

Wow - I have to admit this sounds real nice.

Basically they’ve bought the house, but they don’t have the deed yet, right? So anything that goes wrong with the house is theirs to fix, right? (no landlording for you).

However, you DO have an interest to make sure the place gets kept nice in case you have to take it back, right?
How do you go about that? Write in something like “right to inspect property x-times per year” or something?

Thanks alot guys,
RL


#2

Consulting or Not, That Is The Question - Posted by ChuckD

Posted by ChuckD on October 26, 1998 at 23:29:27:

Three times in the last two weeks, we have had homeowners ask us if we could help them with lease optioning their homes. We said no, but it got us to thinking.

Is it possible to work with a homeowner strictly as a consultant, much as you would in any other field. I’m not suggesting that we find buyers and sellers and put them together, that’s a broker, but rather impart your
specialized knowledge on how to word ads, do credit checks, screen potential tenants, etc.

The consultant would not or should not get into the legalities of the contracts, but could suggest how to structure terms and/or pricing.

The homeowner would be responsible for placing and paying for all ads and actually all the work involved. The consultant would just be providing information.

From what we’ve run into, there seems to be a market for this, but we were not sure of the legal ramifications.

This appears as if it could generate income on those properties where a deal is just not possible.

Any thoughts?


#3

Re: Consulting or Not, That Is The Question - Posted by MJS

Posted by MJS on October 30, 1998 at 17:16:42:

Hi
not sure about this but
If you are a consultant and something goes wrong you can be held liable.
Something to consider
Check out JB’s post
He states he covers his but
Good luck and keep a lawter on retainer.


#4

I’d say “not.” - Posted by Joe Kaiser

Posted by Joe Kaiser on October 27, 1998 at 04:04:05:

No matter how you set it up, you’ll end up bumping heads with narrow minded people who view your venture as a threat to their livelihood. If you get really good at it they put you on the evening news. John B. will verify this from personal experience.

I think you’re considering the “swimming upstream” route, and it’s always the toughest way to go. Why not rethink your role and see if there’s a better way to structure it?

I’d be inclined to work with sellers as you suggest, but with a real payday included in the mix. I’m not sure you could ask for $5k or $6k for showing them how to place ads.

Instead, get an option on the property yourself and put your skills to work. Whatever you can negotiate over and above your price and terms is yours to keep, and that can amount to a not so insubstantial amount.

Finally, if there’s no deal possible, than your suggested services would not result in something of benefit to the seller anyway . . . so why bother?

Joe


#5

Re: I’d say “not.” - Posted by ChuckD

Posted by ChuckD on October 27, 1998 at 22:26:40:

Joe & John,

Thanks for the responses. As I said, I wasn’t sure this was doable. The situations I was thinking about were where there was little equity in the property and the market value was close to the mortgage amount, plus the mortgage payment was near the top of market rents. That is, no real spread available for a L/O.

Also, the fee I was thinking about was in the hundreds, not thousands.

I could see a benefit to the homeowner if there was not room for a realtor to list it commission wise and the homeowner had to get out from under his payments. I certainly would not take someone’s money unless I was confident of being able to provide something positive in return.

However, this appears to be a not so bright idea. :slight_smile:

Thanks again for your help.

Chuck


#6

Re: I’d say “not.” - Posted by John Bulik

Posted by John Bulik on October 27, 1998 at 16:57:14:

In my mind when I agree to do a consultation with a homeowner I am thinking “acting like an attorney”. They bother me a little and so in my agreements I make it clear that I am offering no legal advice, that the owner should still seek the advice of their attorney and that I am selling them the right to use my contract. I include disclaimers written in the contract to cover my butt. I don’t specifically market to do these and they do come along now and then. People that express interest in having me consult are the ones that want to remain in control of their property. If they don’t like my consulting fee they usually try to do it on their own. Most aren’t interested in a middle man (something kin to a realtor taking a cut, in their minds). When a homeowner decides to do it I keep my time involved to a minimum. I charge a thousand dollars for a contract and an hour of my time. I’ll spend more time on the deals that bring in more money.

Joe has a point. Make yourself too visible and some will try to find something wrong in what you do. We just got our umpteenth notice from the real estate commission because of some bozo who thinks that I have to be a realtor to do lease / options. They haven’t found anything yet to hang us with and they likely never will. I just hate the hassle. It took me a while and I finally learned to value my time. I walk away from any deal that requires me to jump through too many hoops or puts my neck too far out.

John Bulik


#7

Re: I’d say “not.” - Posted by Alex Gurevich, TX

Posted by Alex Gurevich, TX on October 28, 1998 at 09:04:40:

>>There was little equity in the property and the
>> market value was close to the mortgage amount, plus
>> the mortgage payment was near the top of market
>>rents. That is, no real spread available for a L/O.

Why do you want to be a consultant in the 1-st place ?
The owner is between a rock and a hard place. If they need to move they only have 3 options: 1)walk, 2) overprice to break even to sell with the realtor
3) bring money to closing to pay commission and costs.

I love these 100% financed homes as long as a) they are in a good condition, b) good area, c) it’s a 30 years fixed mtg at


#8

Alex … - Posted by Redline

Posted by Redline on October 28, 1998 at 12:09:43:

So what do you do after they sign up?

Hold and wait to collect/possibly take back?
Discount the note?
When does the payday happen?


#9

Re: Alex … - Posted by Alex Gurevich, TX

Posted by Alex Gurevich, TX on October 30, 1998 at 08:58:33:

$300/mo for 30 years (if it lasts that long) is $108,000. If it gets paid off I’ll collect $15-20K plus the cashflow until then. That’s not bad for a house with almost no equity which you got with no money invested. Yes, I may need to take it back and resell a few times, but with these terms (and assuming the market does not crash) I’ll likely always have buyers.


#10

Re: Alex … - Posted by Joe Kaiser

Posted by Joe Kaiser on October 29, 1998 at 01:33:16:

You collect the 3 bills a month!

I’ve had tremendous success of late doing this exact thing with Military sellers and 7% VA loans. Equity is zip, cashflow from lease option buyers is substantial.

Joe