Posted by Bill Gatten on April 20, 2000 at 12:28:14:
Bill! Bill! Bill!
O’m’gosh…No! No such offense taken, contrued or thunk! Ever!
In that note, I was just trying to be real academic sounding in my clever little know-it-all professorial style that I try to fake now and then.
I’m the one who lives, eats, drinks, sleeps the P*. I don’t expect anyone else to. (I pray every night that they WILL someday…but so far, most of my tooth is still under the pillow).
Best regards,
Bill Gatten
P.S., I have a “sink wrench” in my tool box that I’ve never used (but wunna dese days…!).
Found a 4/1.5 FSBO 2 story 2180 sf for sale. FMV is 67,500 they’re asking 55,000 to pay off their loan. Husband was transfered 6 mos ago across the state, wife left with four kids here alone. They need to sell. Making double payments now. They’ve put probably 25k work into house, new plumbing, electric, central air/ heat pump, new wallpaper, carpet, vinyl, etc. I pitched an L/P, she says absolutely not, too risky. She doesn’t trust anyone after the last “buyer” took the deed and bounced the check. I don’t have a lot of money to work with, so any ideas on solving this dilemma? It’s a really nice house in a nice area, worth the money, would be easy to rent out or L/O. Thanks for any/all input.
Re: How can I make this work? - Posted by Ben in Ohio
Posted by Ben in Ohio on April 20, 2000 at 07:34:41:
Here is a method I have used, but I suggest being upfront with the homeowner. Get the property under contract/option to purchase. Include right of assignment just in case. Call local mortgage companies and look for a qualified buyer. Very often a mortgage company will have buyers looking for homes. Make sure your purchase agreement gives you the opportunity to show the property to prospective buyers. And, be sure to include complete disclosures on your sales contract to your buyer, i.e., that states you are a professional real estate investor and that you may or may not be the owner. If you have any questions on the contractual language it would be wise to have an atty review your documents.
Lisa,
If you can’t get the seller to bite on your L/O deal or other suggested methods. You could try a retail flip using discounted notes. There is enough room in this deal to make some easy money.
Depending on the buyer and the down payment I can see a cash profit of 5 to 10 k.with a possible second mtg.
This would solve your sellers problem of being cleared from the loan and you could do this with very little effort or money. Just put the cash in your pocket and walk away from the deal.
Posted by Bill K. (AZ) on April 19, 2000 at 14:57:55:
Lisa,
Continue to sell the lease/option idea. With a lease/option, the deed stays in the seller’s name until you decide to exercise your option. BUT…alleviate their fears by suggesting that a third party accept your check and make the payment to the lienholder. This third party could also immediately notify the sellers when you DON’T make your payment, thus protecting their interest/credit.
Mark,
I guess sometimes the obvious is the one we don’t see. I’m not that versed in discounted notes, so I’m not sure which route to go. What would be the best way to work the quick flip?
Thanks, Bill, I’ll give it a try. Would it be feasable to put the whole thing into an escrow account for disbursement? How about Bill Gatten’s PAC Trust? I’m not too familiar with how it works, would it apply here, or just on an owner financed deal?
Posted by Bill K. (AZ) on April 19, 2000 at 17:03:06:
Lisa,
I don’t know much about the PACTrust, but any method that gets you into this home should be acceptable.
However, if your sellers are afraid of getting burned, I wouldn’t try to convince them of any fancy ways to purchase their home. The more you have to explain an idea, the worse off you’re going to be. And, based on what I’ve read about the PACTrust, it could take some explaining that might turn these sellers off completely. Heck, I’m an investor, and I don’t understand the whole thing. Imagine trying to sell it to someone who’s afraid of getting burned by a fast talking investor with “creative” ideas.
Posted by Bill Gatten on April 19, 2000 at 18:30:51:
Bill,
You’re absolutely right…the alternative system you’re describing should never be a part of a sales presentation…the idea of a 3rd party trustee, co-bene. land trust transfer, connected with an assignment and triple net lease agreement, is merely a legal shield for allaying fears and protecting everyone: the seller, the title, the property, the lender, and YOU from any pitfalls, which may be perceived as inherent in creative real estate financing in general.
I often liken the marketing concept to selling an automobile…if your buyer is merely seeking transportation and safety, you don’t have to explain torque conversion, gas displacement, ignition and how the leather seat covers are tanned. But as a professional in the business, it’s a good idea to know all about those things yourself, in the event you’d one day lose a really good deal because you didn’t.
Candidly, Bill, do you know of a Realtor or Investor who isn?t on the web and whom doesn’t use a computer: but who tells you he?s an investor and not a computer geek, and that he has no need for such contrivances? Do you see a handicap there?
Posted by Bill K. (AZ) on April 19, 2000 at 23:20:24:
Bill,
No. You’re absolutely right. Candidly, after rereading my post, I hope that you didn’t take my post as a slam of the PACTrust. As I mentioned, I understand it only slightly, and it isn’t in my bag of tricks at the moment.
My point, even though it was not well communicated, was exactly what you suggest. Every investor should have a “bag of tricks”, and the PACTrust should be part of that. I was just suggesting that someone unfamiliar with it not try to use it tomorrow. The question from Lisa led me to believe that she isn’t up-to-speed on it, yet she was asking about using it on this deal.