All Forum Posts by: Brian Gibbons

You can do that deal @Kyle Williams-johnson

Just show the seller all of his options!

Keep me posted.

Brian

I have coached lease-option assignments on Biggerpockets for the last 6 years so if you give me a PM we can talk on the phone

Sub2 and note with no payments for 6 months is how I buy

Good advice @Troy Gravett

Lease option assignment,

• 12 month extendable lease
• $100 option to seller
• record the option
• Buyer pays 1st and last to landlord
• 3% to release your option to you and get quit claim deed

@Josh Caldwell care to add?

You are in Wash State

Lease w option is renting then getting a mortgage.

CFD, Contract for Deed, AFD, Agreement for Deed, LC, Land Contract, ILC, Installment Land Contract, all basically the same,

Some down payment, monthly payment, term 1 - 5 years, balloon paid off in full or extended.  No repairs for seller.  Need to foreclose to repossess if buyer defaults.

@Steve Vaughan is awesome in Wash State.  Care to add?

There's an education component to selling on installment sale that are free and clear

Publication 537 from the IRS talks about installment sales

Using a private mortgage and turning your house into a cash flow stream like an annuity should be the focus of the conversation

If you rent out the house you have to deal with insurance and getting sued in case the tenant find some kind of reason to bring you to court

Owning  a private mortgage on the other hand reduces the risk of being sued

My advice to you is also compare it with a reverse mortgage which they get a lump sum but they have to surrender the house upon death

Really study reverse mortgages and understand the negatives of reverse mortgages, mostly the fees that are involved

The eldercare population is a big market, so take a look at AARP's website and understand the basics of annuities

The conversation I have with free and clear houses is this

"Mr. seller you've got a few options

One you could sell with an agent and pay the cost to sell which include real estate commission, closing costs, sellers concessions, and vacancy holding costs.  All that adds up to between 10 and 15% value of the property, so basically you'll net 85 to 90% of value

Secondly could turn into an investment property and rented out and get a property manager to manage it for you, you pay about 8 to 10% of collected rent to the property manager, and you need property insurance to protect yourself. You have to allow for vacancy and damage and cleanup costs when the tenant moves out and you have to retenant it.

A third option is to sell the property on private mortgage where you will get a cash flow for a period of time. This cash flow is like an annuity where you will get a monthly payment and if you pass away before the note is paid off in full D's cash flow payments can continue to either your children were to charity like a church or university

The biggest risk to you as a seller on a private mortgage is what if the payments stopped for some reason, and we can set up a automatic payment directly to you as a private lender

Also to protect your interest we can open up an escrow account and if for any reason these payments are 60 or more days late you will get title returned to you so you do not have to go through a foreclosure process

 Seller Side: First, do a lease and an option, market rent, FMV based on comps, $100 for option, record the option, cloud the title, and have an option release fee paid by the tenant buyer (3%).

Tenant Buyer Agent Marketing: Offer 1 months rent for finding a tenant buyer. Property managers are better, they like 1 months rent, buyer's agents are used to 1.5 % of sales price.

Give tenant buyer a 1003 app.  

https://www.fanniemae.com/singlefamily/selling-ser...

Say you need this info to get prequalified.

Send 1003 app to RMLO Registered Mortg Loan Originator.  Get their opinion on bporrowability for a mortgage.

If there are credit issues, use www.UpGradeMyCredit.com

 Geez Steve that's  pretty brutal! :)

My issue with seller contributions is that when the pain is released that you get a lease to own  tenant in there and the sellers think they're overly entitled, that they don't have to contribute anymore, so I worry about the seller contribution deal falling apart on the poor tenant buyer.

I might say to the seller something like, 

"Now Mr. seller my reputation in the community is very strong because I help seller sell on terms and solve problems and also help buyers buy on terms and buy the house. 

Once you leave this house you need to make a $300 a month payment every month.

We need to put together an automatic withdrawal from your checking account to go directly to the bank to pay the PITI.

And we can put another automatic withdrawal from tenant to the bank paying the PITI

We got to make sure that the tenant buyer is protected, and the two loans are paid on time."

People new to the "terms business" when you are talking to sellers and buyers you are basically being "parent child"; we are the parent of the child. 

You talk to them like you talk to 17-year-old teenager.

You're the boss. 

They are not the boss. 

If they don't like that, you lose all control and you are just gonna have a problem down the road.:)

 Graduate law or medicine students are quiet and driven, MBAs are partners and loud:)

@Steve Vaughan

I don't know if I learn the seller contribution script from Ron LeGrand but you got to remember that second mortgages are generally "debt consolidation on credit cards or  taking a cruise money"

It's important that the seller knows that the money in the second mortgage is got nothing to do with improving the house, it's got to do with improving their life with fun money.