Posted by Bill Gatten on January 26, 1999 at 21:21:28:
Thanks, but actually my parents were both circuis clowns. Let me know anytime at all if you can pick my brain (huh?). I’m all yours.
Bill
PAC-TRUST - Posted by Fred Knight
Posted by Fred Knight on January 25, 1999 at 17:30:05:
I have just read your post regarding simplifying the Pac-Trust,I think that it is a great R.E. tool, how would you make it easier for the seller to understand exactly what’s going to be done to their property in laymen’s terms so as not to intimidate the seller or better yet ruin a perfectly good deal because we complicated the deal by giving up too
much info.
Thanks for the great post,I always look forward to reading them.
Fred Knight
Re: PAC-TRUST - Posted by Bill Gatten
Posted by Bill Gatten on January 25, 1999 at 18:33:48:
Fred,
The simple explanation is that the PACTrust? is a way for an owner to put the property in a temporary trust and lease it out, so that the tenant can take the tax write-off in exchange for higher rents and its handling of all costs and management expenses. Or it could be described as ??a way to sell tax write-off to a rental tenant, or trade it for services and higher rents.?
As far as the simplicity of selling the concept goes, in my seminars, I teach the “Pyramid” or “Inductive” approach to selling (also known as the “Tom Sawyer Approach”). When you have a lot of information to convey, employ "Occam’s Razor? on your opening, then expand the concept when expansion is called for.
Here’s my approach to a seller (in answering a FSBO ad, for instance):
“Hi, I was calling about your ad in the paper. What I’m looking for is folks who are selling on their own, who might consider having someone come in and take over all of the payments and costs of the property for a year or two. I would then refinancing at the end of that time and take you off the loan and pay you all of your equity then.” What I?m hoping o hear at this point is that he doesn?t have any equity, because all I want is 100% financing with someone else making the payment. If there is equity, I?ll have him use as much of it as possible to cover costs, so that I end up with my share anyway (e.g., if my costs are $5,000, I give it to him and have him pay the Closing cost with it, thus reducing his equity by $5,000 and enhancing mine by the same amount).
At this level of the pyramid, he doesn’t need any more information… when he does, he’ll ask. He’ll say something like, “Well, I would, but my loan’s not assumable.” I then say:
“Well, I’m not thinking about an Assumption per se. What I’d really like to do is a tax lease, where the title wouldn’t be transferred to me until the end of our agreement when I refinance and take it out of your name. In the meantime, I could take over all payments, maintenance, repairs, upkeep property tax, etc.”
This then forces him to move down the pyramid a little where a broader answer would be required, with something like, “What’s a Tax Lease?” or “How do you do that?” or “Why would you do that?” or how would you get the tax write-of if you’re only leasing? The concept of the Psychology of Selling is generally to sell soft, but with direction, keeping the prospect asking questions that you have designed and that you have ready answers for.
At some point I will protect him even further by explaing how placing the property in to certain type of living trust–IN HIS OWN NAME–can get us both evErything we want out of the deal.
Without going into a treatise on sales, I hope this answers your question. If you’d like more, just say the word.
Bill
BILL… YOU BRILLIANT SONUVAB—H!!! - Posted by Kevin Shupenia
Posted by Kevin Shupenia on January 25, 1999 at 23:44:42:
I write this with an enormous smile on my face.
Bill, I have seen the light!
This makes the equity share agreement we developed, that much simpler!
I am interested in paying for your info, now.
Where do I sign up? (Don’t inflate the price based on my excitement either:))
Thanks!
Kev