Posted by Redline on February 10, 2002 at 17:31:59:
Plus I’m not sure your broker is going to be thrilled with the idea that you’re wanting buy his listings (or potential listings) with “creative” techniques.
Most RE brokers just LOVE creative techniques! 
RL
Need Advice - Posted by Yolanda(NJ)
Posted by Yolanda(NJ) on February 10, 2002 at 09:29:40:
Hello,
I recently received my real estate liscense. I was in contact with a seller who wanted to sell one of their houses. He wanted to know the value of the property. Him and his wife bought their second house in Pennsylvania. He is tired of commuting to get his rent checks from the tenant. He stated the tenant lived there for 9 years and is always on time with the rent. The tenant wanted to buy the house from them previously but she used the money for her daughter’s college tuition. The owner seems hesitant about selling the house because of the relationship with the tenant. He said he would rather sell it to her first before listing it. The agent whom I am working with suggested to the seller to allow us to list for 30 to 60 days exclusively then if there is no buyer he can work out a deal with the tenant. The only problem with this is we will be out of the deal because of the owners relationship with the tenant.
My question is by reading these articles on this forum. I think the property has potential. The owner owe $40,000 and the comps in the area is around $140,000 to $150,000. It’s a single family home 4 bedrooms, 2baths, unfinished basement and a good location. I would like to purchase the property myself using creative financing. I would keep the tenant there an ask the owner refinance his house and use the subject to approach. Is there another way of handling this situation. Sorry so long just wanted to give u the details. Also, can I still receive a commission on this deal if he decides to do a subject to?
Your answers are greatly appreciated.
Good investing.
Yolanda
Re: Need Advice-How about this… - Posted by Glen SoCal
Posted by Glen SoCal on February 10, 2002 at 19:40:49:
There are disclosures you must make, but aside from that, what are you offering the seller? As one poster said, what does he need? Disclosure is less of a problem for you than finding what will motivate the seller enough for you to profit from this deal. Picking up steady rent checks doesn’t seem like a great burden, and for sure he knows about the mailbox, so there must be another motivation.
Disclose everything to everybody. Let the broker, seller, and agent know your interests.
Tell your broker that you will give him a percentage once you sell the property. I imagine he’d take 1 1/2% right? If you found the deal that’s all he’d get anyway unless you double-ended the deal I guess. And the agent your are working with wants a percentage also, right, there’s another 1 1/2%.
The only seller consideration I’ve heard so far is that he wants to give the tenant the first opportunity to buy the place. Also, he wants out. But if he gets out now, the tenant won’t have a chance to get her down payment together to buy the place.
So agree to buy yhe place now, and give the tenant an option to purchase later at a certain price.
What you’ll need to do is negotiate a low enough purchace price so that the rents will cover PITI and expenses plus a positive cash flow. If the tenant excercise their option, you’ll profit from the spread. If they don’t you can sell to another buyer for the same profit. Or hold on to the place, tenant is happy there and paying, right? And the option consideration would be paid by the seller in the form of a lower price to you.
It sounds like the seller may want his money though, and just get out. He may not want to finance you his equity and deed you the property subject to his 40k loan balance. But he might. You don’t know till you ask.
It may not be the driving to pick up rent checks that the seller detests, it may be the thought of driving to do maintanance on the property.
You don’t know until you ask. It is said over and over here, ‘what’s the seller’s motivation?’
And what is it that you offer? The seller may not be interested in any ‘creative techniques’ other than cash. He may not be motivated enough to sell you the property at 65% of value, or even 70%,or whatever it takes to make the deal work for YOU. And in the case that the seller has little immediate motivation, i.e. no reason to lower his price (if he did too much, the tenant may be able to afford it) you’ll be in the same position as the tenant.
Find out what the seller wants, let the broker and agent know what you are up to. The agent may say that they saw the deal first and isn’t interested in letting you have it in any shape or form. There will be other deals.
But in the meantime, don’t burn your bridges, but go for it if the way is clear. Good luck to you. Let us know how it turns out.
This all just my two cents. I haven’t been in your situation.
disclosure is the deal - Posted by Lloyd Cook, Los Angeles
Posted by Lloyd Cook, Los Angeles on February 10, 2002 at 14:21:57:
There is I big difference when you as an agent take advantage of a deal and I as an investor does the same thing. Disclosure must be done. Talk with your broker before doing anything like this. Just be sure you are not taking unfair advantage of your client.
Re: Need Advice - Posted by Blaine
Posted by Blaine on February 10, 2002 at 12:16:26:
Hi, I’m new to the real estate investor game but, I will give this a try…
First find out what the owner is looking for… one lump sum of money, steady stream of income, etc?
Is the owner willing to carry a note on the property?
Is he willing to sell the property at a discount?
If he answers yes to the above questions then you could do this…
Purchase the property at a discount of about 70% or better LTV with the owner carrying the note. Take a second on the property for the remaining amount up to 90% - 100% LTV then sign a Lease option with the tenant with nothing down making sure her payments cover both the first and the second. Once she gets the money or the financing to purchase you out you walk away happy, she walks away happy and you got your money up front plus any extras from the lease option.
I hope that made sense. Like I said I’m new to this.
Goodluck,
Blaine