All Forum Posts by: Benjamin Cowles

Thanks John.  Good info

I thought ROI was COC in this business. Anyway, I may have complicated the picture. I am looking at these potential deals as buy and holds. As buy and holds tho, still requiring a substantial down payment, it would cost me too much in the short term. And, as you suggest, focusing on the first deal, not 2nd 3rd etc... 20-30% is just to much RIGHT NOW for a buy and hold, unless I get that down payment wholly or partially financed, OR I do NOT hold but plan for an exit as I've been recently been thinking like selling it somehow before the balloon or option period come up, however I acquire it. So back to my studying and if you have a comment on how to finance that down payment... I mean, hypothetically under what conditions/criteria would YOU finance someone's down payment as a debt partner? If it's not just the security in the equity then what else? Good enough equity, trust, and a nice fat n juicy interest rate? I appreciate your advice to educate myself but that's why I started the thread.

And never mind the flex option. Apparently they are barely used in the business. They allow the seller to sell the property to someone else(unencumbered) and at the same time give you equitable interest to legally market it, IF they didn’t want the encumbrance of a regular option. At least that is what I’ve gathered recently. Just another option where a seller is saying no. Thanks again Neal for taking the time to reply. 

 Thanks Julie.  Not sure how that answers my questions but I'm  happy for you nonetheless.  That's awesome.  Im looking to flip deals like that too.  So far I'm not getting anything distressed.  Good luck with that deal you have. Very nice. 

 Thanks Neal.

As far as going in 50/50 with a partner, I suppose if it were a matter of just the amount of cash I wanted to put up then that would make sense but it's more a matter my ROI and then the amount of cash I'm investing. I want to make investments I can repeat so this method doesn't seem to solve that issue, just cut it in half. So while I could do it once perhaps I'd still need to work on getting cash.

So I like the idea of getting the DP financed but I still gotta figure out how that can work. Seems like I'd have to get the property at a low enough price so that god forbid the seller has to foreclose there would be room for the fc proceeds would cover the seller and then my partner right? Is there a rule of thumb for how to go about securing deals like this? Seems to me that on top of getting seller financing you'd have to get a low enough price to get some equity right after closing for a partner to want in on a 2nd position. Any tips on this? Sounds like risky business for a newbie

Of the little marketing I've done so far just about all the responses I've received have been from absentee landlords of properties with tenants who will either finance no more than 70-80% if at all and won't take as little as my cash offer.

But what else can I do with these sellers?

Financing with 20-30% down isn't bad but I couldn't repeat that without earning cash at this point so I'd rather find a way to flip these or find a way to get them financed more than 80%.

Option 1) lease options

I've read a bit about these but not with tenants already in place. Would I just take over the existing lease as my own sub lease under my master lease with the seller and replace tenants when their lease is up with tenant buyers to buy the option?

Alternatively I was thinking to avoid getting in the middle of that confusing situation just using

2) a straight option. ..

as these sellers can sit on these properties as they already have tenants. Offer them a substantial non-refundable option fee to show I’m serious, deductible from purchase price, then use the option period to either find a cash buyer to flip it to or find suitable financing for myself to hold it. Or

3) flex option, so seller can still sell to someone else and I don’t have to risk much option consideration but still be able to market the property.

Any comments , corrections or suggestions to my thinking so far? 

Thanks Stephen! 

... I still don't know what to call the alternative, the one where title is transferred. promissory note? loan agreement? either one + mortgage? so many terms and many interchangeable idk. so help with that would be appreciated.

to the main question:

I've read somewhere even with cfd's you need to record a mortgage because of something to do with FL being a judiciary state. And from my limited understanding the cfd is favorable to the seller as they keep the title so if and when buyer defaults seller doesn't have to get the title back but apparently in judiciary states a foreclosure is still required.  

So from the buyer's/borrower's perspective is there a relevant difference between buying on a cfd vs. the alternative(whatever it's called??)? Thanks! 

Ah,  OR the buyer could purchase the option their self to remove the encumbrance correct? I'm assuming the original seller would point out the existing option that the buyer would need to purchase in order to obtain title free of the option correct?  

Thanks Bill.  That was informative.  Didn't know that.  As far as sandwich lease options,  I was wondering just about the difference between regular options,  not sandwich lease options,  and in what scenarios investors use them without a lease,  if at all.  Maybe they dont(?).  

In particular I've been trying to figure out how flex options work :

So how do flex options work in FL? 

If you wouldn't mind checking that out.  

Thanks Stephen.  I was soliciting a referral to an actual option form not an attorney.  But looks like you're suggesting an attorney isn't necessary,  at least for yourself,  for (don't know the right verb lol) an option with a seller.  

And as far as it not tying up a property,  thanks.  That's new to me.  I assumed otherwise since I'd just read about "non exclusive flex options".  So by default all options are non-exclusive? Why then the distinction?  

Anyway, suppose the seller finds a buyer and sells the property before you can "activate"  it.  I'm guessing there is something in the option that says the seller has to inform you(?). If not and the option is still attached to the property,  what if the new buyer declines to purchase the option from you before it expires? Are they required to purchase the option before it expires? Thanks :)