All Forum Posts by: Jay Terpenning

Mike-

Thanks for your advice. Like i said don't take my word for it i am still really new, though, I didn't hear any of what i said from gurus. I did the research myself when i helped a friend get into a house. We had a lawyer write up the contract on how things were to proceed with the deal.

In the contract he agreed to be responsable for maintenance of the property and other things. The terms were agreed upon with buying the right to buy the house in a determined amount of time which was 1 year. Because of his credit he paid me a higher interest rate then i was paying the bank and he was buying the house from me for the appraised value and not the price i was able to nagociate. I made $87 a month after everything was said and done. I put all that away incase of emergencies and the deposite for the option. Over the year we worked on his credit and put money away for the future down payment. He baught the house from me at 15 months and i made overall a little more then $10k.

I am not saying this is right... i am new and maybe there's something i don't know, but as far as i know everything was done legally and safely. I didn't do it in an LLC though which would have been safer, but i have one now and was planning on doing a few more of these kinds of deals. Let me know if i am missing something or if i was right doing everything the way i did.
Thank you.

Castillo183

I have only done this once so don't take my word for it, do your research. I started up my LLC then went head first into a deal. I found that using local credit unions was far easier then using a bank or loan officer. What they will most likely have you do if you want the property in the LLC's name is have you sign with the LLC as a member and guaranty the loan... sort of like co-signing... really that's what it is.

You now have the LLC's feet wet and gaining credit. Acquire a business checking with the credit union you like and credit card. Use the credit card for all business needs and pay it off at the end of each month (I only recommend this if you are extremely responsible with handling money). Take a care to keep track of everything you do with that card! DO NOT USE FOR PERSONAL USE AT ALL. In no time the LLC will be able to act without you.

I am sort of new yet so don't take my word for this do the research, but are you looking to have residual income or are you willing to make a profit in a year or two?

In my opinion (IMO) now is a great time to be renting w/ option to buy. In your contract you make the purchase price for what the appraised value is today. Set up the amortization schedule at what they will buy it from you in a year or so and also a % higher then what you are paying the bank. This way they are making you payments as if you were the bank. You are now making profit! You no longer have to worry about fixing things or such as well because you are the acting bank for them because they have bought the right to buy the house. That's the other thing, in the agreement you sell them the OPTION to buy the house for like $1500 - $3000. You keep that safe somewhere making interest and give it back to them in the closing cost as part of the agreement when they buy the house. If in the end they don’t buy the house EVEN BETTER, you keep that deposit, and start over again. You now owe less on the house, made a positive cash flow from day one + the deposit, and hopefully things have changed in the market and the house has appreciated.

IMO this way you can do more deals too... and I agree with what has been said, you still need to offer less for the house.

I'm not too new to REI, i have bought a few houses that i have lived in and then sold. I also had a friend I helped into a house once. I bought it then leased it to him for a year. Overall i made a little over $10k doing that.

Here is something that has been on my mind for a while. Some family and friends always ask me to let them know if i want them to come in on a deal. My question is can i set up some sort of LLC or group or something where i can have all of them in on deals. The way i see it is that if we all worked together, we can buy more real estate. In total there would be about 7 people buying with me... How can i make this work?

When i think about it i can see the future the way i hope it could be with us finding a deal, getting the group together to see who wants in, buying then leasing the property for a year or so, then profiting.

Please, you thoughts and advice on this... And if you have any advice on setting up this idea in an LLC or something is very welcome too! :)