Lease/Options question and "Core" concept of "creative" investing - Posted by Charles

Posted by PBoone on December 21, 1999 at 17:10:35:

If you deliver pizza’s and take a tip why not give the owner of the business the tip, after all he could have done it himself.
Sorry to sound so critical to you, it is not personal it’s just I see so many people use these and many other irrational reasons to procrastinate sometimes I just feel a need to sound off.
Remember alway approach a deal with honesty and integrity. If you can help a seller by activly using your acquired knowledge then the both of you are better off in the end.

Lease/Options question and “Core” concept of “creative” investing - Posted by Charles

Posted by Charles on December 21, 1999 at 16:46:23:

Hi all,

I have a question about L/O.

When we L/O a house from the seller, and then sublease/option to another tenant/buyer, do we need to avoid the contact of the original house owner and my tenant? Because if my tenant know that i sublease the house to him, and selling him at a higher price than what the home owner is selling to me, will there be any problem?

Actually, after i know about flipping, L/O and seller finance skills, i find that all these skills are only doing something that the owner is doing, and we doing it again in the middle of the process to make a profit from the end buyer. For example, if we L/O a house from a buyer, then we sublease the house. If we have seller finance, then we find another buyer and do the seller finance ourselves.

I know we are not taking advantage of the owner, because we do extra work which the owner don’t want to do, but is this the spirit of ‘creative’ real estate ---- act as a middle man in the transaction process?

Please give me suggestion!

Merry Christmas to all of you and a Properous Year to come!


Thanks A LOT!!! - Posted by Charles

Posted by Charles on December 22, 1999 at 11:40:55:

Thanks PBoone, Brian and Bill :slight_smile:
Thanks for you guys advices.

Merry Chirstmas!

What We Do - Posted by B.L.Renfrow

Posted by B.L.Renfrow on December 21, 1999 at 21:29:58:


If the seller knew how to put the deal together, don’t you think they’d be doing it?

We, as investors, get paid for one thing: solving somebody’s problem. What’s that worth?

As an example, I have busted my AS* for the past 2 weeks putting together a deal no one else could pull off. The sellers had tried for over a year to sell their home - no results. I have buyers who thought they NEVER would be able to be homeowners. I have made it happen. Not the lawyer, not the note buyer, not the appraiser - although they have all played important roles. I put the deal together. And I say this, not to be arrogant, but to point out that we SOLVE PROBLEMS.

I have fielded dozens of frantic phone calls just in the past few days, from the sellers, the buyers and the attorney on this deal. I made three trips to the buyer’s apartment this afternoon to gather more documents. I solve problems. What’s that worth? Well, to most people outside of the CRE field, my profit on this deal will appear significant (although to the more experienced here, it’s peanuts)! However, I have EARNED every penny of my profit by using SPECIALIZED KNOWLEDGE to put this thing together.

So your assessment is not correct; we are doing something that the owner (seller) DOES NOT KNOW HOW TO DO…to make a profit. Where’s the incongruity in that? I have no idea how to repair my car’s engine when it goes on the blink. So I pay someone who uses their SPECIALIZED KNOWLEDGE to solve the problem. I could go on…but I’m sure you see the point.

And by the way, on a L/O, I ALWAYS tell my T/Ber exactly what my position is in the deal. They know up front I will be selling to them for more than I am paying my seller (although I don’t tell them how much)! Not only that, my seller knows up front what my intention is. If he had the knowledge/ability/interest to do it in the first place, it’s not likely he would have called me. If you try to misrepresent your position in the deal, you’re going to have trouble somewhere along the line.

Sorry if this seems harsh; it’s not meant to, but I agree with Pat below: quit worrying about stuff like this and go do a deal!

Brian (NY)

Re: Lease/Options question and “Core” concept of “creative” investing - Posted by Billm

Posted by Billm on December 21, 1999 at 18:05:34:

Charles, real estate exists in an “imperfect” market and because it is capital intensive, when people make mistakes, lose their job, get a divorce, etc, it creates motivation. The more motivated a person is to move now, the better your chances of negotiating a transaction the way you want it.

Flip side is … if they’re not really all that motivated, you’ll only get a retail deal. Anyone can buy retail. The skillful investor searches out the owner situation that involves enough motivation so that he can get price/terms that leave room for a profit, considering the risks involved. That’s a different price/terms for every investor.

So, the beauty of this vehicle as an investment is the fluidity of the market. People are constantly in change… and change creates opportunity. Your BEST investments will always involve motivated people.

Don’t worry about peole finding out what you do… if they were that ambitious, they’d be out finding the same thing. Very few people will do that for more than a week without giving up.