All Forum Posts by: Bill Gulley

Well, had no idea my student Brian was charging 12 grand from picking my brain! LOL

If I'm thought of as cheap I guess it's time to revisit my fee structure, I know free real estate courses don't fit well with the "value of what you get" angle, but just consider it paying back to the industry.  

The "steps" of a sub-to are simple, it's knowing when to use them, how to use them, the ramifications that follow and the real trick is fixing things along the way without anyone getting messed over, robbed, cheated or getting sued. Like most other strategies in RE.

If any state requires notifying lien holders of a Sub-to, I suggest you skip this strategy, unless you know how to deal with mortgages and banks and have cash to pay them off.

For 40K, you'll serve yourself much better by getting an MBA in real estate, why? Because;

No single strategy can be used in all markets, all  situations, nor can the be duplicated with different people; and

All transactions are anchored in basic real estate principles and law, you need to understand the economics of alternative choices; and

Unlike gurus, you can be assured that a real business school won't be injecting ideas and spin off opinions that may well be illegal or lead you to complicated legal matters. 

Here's the problem, every industry has their gurus who teach or give instruction for a fee. The issue is that you won't find bull spitters in all industries because they must show or demonstrate competence, well, not in real estate. You won't find medical doctors being taught a new procedure by a non-physician retired salesman, you won't find a lawyer going to law school being taught by a some basket weaver......real estate is much different, most all of these gurus are "pitch men", they don't teach business or law or real estate, they show programs or schemes that are their product. 

My dad and I talked about these RE seminars, his perspective was from teaching music. If he attended a music seminar and learned one new formation or aspect that he could implement the seminar was worth going to. Know too  there are no music seminars that cost thousands of dollars for educators and the key speakers are vetted very well in their specialty. I've never come across any law dealing with how music is to be played or presented, so  it's a pretty safe gig from a liability stand point.

Can't agree more about buying into the dream, what you get is not an education that teaches you how to apply business principles,  what you get are schemes and most are contrary to the legal and ethical conduct expected in a regulated industry.

Now, if you were some big time guru, would you get on BP knowing you'd get blasted out of the water? Con artists avoid confrontation and exposure of that man behind the curtain? Really ?

I'm no longer laying all the blame at the guru's feet, it also takes gullible, lazy, uninformed, naive dreamers to buy into these tens of thousands of dollar opportunities in real estate. They may deserve what they get (or don't get). :)       

Sorry so late in answering my mentions @John Thedford

Just a few comments;

Innocent until proven guilty applies to criminal law, no so much, if at all in civil matters.

Brokering anything is basically facilitating a transaction between a buyer and seller for compensation and no, a broker does not need to represent either party, they simply facilitate or cause the transaction to take place.

Disclosures, "I will rob you of your equity in my dealings" does not keep you from the legal consequences of robbery.  Informing another party of your intentions will not eliminate your liability of your intentions or acts.    

Stocks and bonds are personal property, not real property and in all states you must have legal title to advertise and show real property or have a lawful position to represent the owner. I say all sates because this is a matter under the UCC and Federal Trade Commission......the UCC is not adopted in all states but those states have similar or even the same aspects of the UCC concerning advertising, showing of real property and representing others in a transaction. See-"Strawman" transactions.

Instead of arguing about real estate license law, study Tort Law and Agency Law, causing a financial loss can get serious. Laws of agency apply to informal business relationships as well as in contracts, notice that an agency may exist with or without specific consent, such as with "Apparent Authority".

It is generally acceptable to market a contract, you may advertise the contract to purchase a property but not the property with representations that you hold legal title. Even if the seller agrees!

Goggle is your friend, the information you find may well be hazardous, so I suggest you read government sites, blogs at law firms, law schools are another good source, you should know the difference between guru crap, public forums and an educational or legal information site.

Most newbies really don't want to know, they want to believe, so if you really want to know just call your state real estate commission, ask to speak to an examiner or investigator or council. Then explain exactly what you intend to do, and then ask if your plan is compliant. They will not mislead you, lie or twist the truth with half truths, if they say fine, the go at it! 

As to intent, your true intent will be shown on your 5th or 6th or 12th deal, after you have done a few deals and never closed in your name, your intent becomes clear, you can't just claim to have good intentions, they must be shown!  

Simple minds seek simple solutions.  Real estate is not so simple :)

@Roy N.

Frank's outline is fine, except as to 3, 4 and 5 which can backfire under the new accounting rules under international treaty. Any option attached to any lease will be viewed initially as an installment sale for taxes unless it can be shown there was no intent or ability to purchase. This applies to lease/options with terms greater than 12 months. 

The longer the term the more difficult it will be to show that the tenant was not to ultimately end up  with the property. 

You'll find details by Goggling "Accounting requirements for real estate options" :)

Real estate is different than selling shoes, do not tell any third party you have a "partner" when you don't have a formal partnership!

One or more individuals can go on title and not have any partnership agreement, but all must show up at settlement or be properly represented.

If you must explain the involvement of others, you can say my buddy and I work together, that doesn't imply a legal standing of a partnership.

You can do what ever you want together between you and your buddy, within the financial and settlement requirements at hand.

Not only do you need the ability to perform but also the intent. Your true intentions will be demonstrated after you do a few deals and never close in your name as contracted. Otherwise you have a voidable contract. 

Good luck :) 

@John Thedford LOL, good luck. :)

@Roy N. Sorry, but I can't advise on matters north of the 49th, while similar I'm sure, stuff isn't the same.

Canada is a party to the Treaty as to accounting methods of Option Contracts,  at issue is the fact that an Option may be determined to be an installment contract, they will look at intent, consideration, valuation and ability to convey, that means the option money may not be deferred but treated as an installment sale for tax purposes. 

As to NNN, yes, loans are made, but on a different level, anchor stores, larger commercial or industrial properties with tenants wearing wall-street names. No mom and pop stuff.

BTW, a long term (30/50/99) type lease by an individual or small company can still be construed as a sale, the first tests to ask is always......is this usual and customary for the type of property and the parties to the contract? 

And down here, if it walks like a REIT,talks like a REIT, it's a REIT! Same with installment sales.

All  the best up there!  :)    

@John Thedford, sorry I've been gone awhile.

Guess I got tired of beating a dead horse but thought I'd check in to see what's new........no much it appears, LOL

Thanks for your comment, I just don't know where that thread is concerning types of fraud, but you pointed it out nicely.

Since Mr. Pratic P. (@Pratik P.) doesn't want to argue about his poor answer, (not beating that dead horse again) I'll describe "partner".....

So, the seller is to think you have a "partner" (ha, more deception)..... so what is the owner to think?

Is he your beer drinking partner, your hunting partner,  fishing partner, your bowling partner, no because the way you used the term "partner" was in a business setting, like your money guy, a business partner. So now the owner believes he's working with a partner of a partnership.....logical conclusion and I'd bet any judge would agree.

So, now you have legally implied a business partnership to the owner!

Not knowing beans about partnership law and claiming to  have a partner can be dangerous for you and your unaware "partner" but especially for you. You''l need to know about specific consent and implied consent, duties of an agent in an partnership or agency relationship......but most aren't aware of simple business law matters.

Claiming or even implying that you have a business partner when you do not is deceptive dealing, fraudulent dealing, you lied. 

If the real potential buyer (your fairy tail partner) never consented to a partnership, formally by agreement or verbally to consent to your arrangement, eventually he can get out of your web of deceit, but in doing so he will spot light you as acting without his consent or knowledge and by saying no partnership ever existed. 

That just puts liar fraud mud all over your face.  :)

Need to understand that a partner can be liable for the contracts,  acts or omissions of the other partner.    

Don't ever say that you have a business "partner" when in fact you do not, you can claim those other partnership relationship as you please.  Judges will not like that at all!

The truth won't  hurt you.

Mr. Owner, I buy houses and sell them. We generally try to improve them, rehab them and put time and money into our homes, sometimes we sell them as they sit to  other investors we work with.

We try to keep a list of potential buyers and we may show someone what we are trying to buy after we have a contract. This allows us to decide and plan on the types of improvements to make, just as a builder works with their client in building a new home. We are always working with buyers to give them the type of home they are wanting.

At the same time, I work with owners to give them a fair price and quick closings. So, Mr. Owner, if we can come to a fair and acceptable price is there any reason you can't sell to me? (heck no!)

If the home is vacant,  we ask that after contracting we have access to the property for inspections and determinations by our clients. If it is occupied we will arrange entry by appointment only. 

Now, I'm not telling anyone that in saying such a thing keeps you out of the issues of "showing a property to another potential buyer!" Because you're still showing a property you do not own legally.

However, if you learn how to close a deal in your name and then sell and you can show a pattern of buying and selling,I doubt any regulator would violently object if your buyers were asking that you add a deck, new cabinets and appliances while specifying colors.......but technically, you are not to  advertise or show real estate that you do not have legal title to;  exceptions, acting as a licensed agent, estate settlements by the administrator/executor or with a power of attorney under specific directions and not for profit.....states may vary. 

Lastly, the OP's question; By giving sufficient consideration for the Option to Purchase, money binds the obligation under the contract. 

BTW, wholesalers who don't have the intent or means to  perform as agreed do not have a valid contract, so don't push it, if you're unable to perform and the seller wants out, smile and say next!        :)

On the down side, read the small print, terms can be changed, they can pull the credit line, they can call it due upon open ended events from yoour financial position, etc.

Yes,  this stuff happens, a landlord investor had got cut off and the would not advance funds because they thought he had become over extended, that did over extend him and he hurried to sell off his houses, it was a bankruptcy in the end. 

Use HELOCs very carefully! :) 

Wholesalers you need to watch out for are also part time minsters! Good luck :)

Yes, it's a commercial venture and you need to sort out who takes depreciation with your accountant. 

Next issue, leasing and facilitating a lease as a business,  do you have a license? 

Sub-letting homes gets very tricky, there are better ways to skin the cat, IMO, but good  luck :)