All Forum Posts by: Brian Gibbons

You can sell this house on owner financing and get a great price and get maybe even more money per month but you need to understand owner financing if it's a house the people really want to own

Www.sellerfinanceconsultants.com can help you sell one owner finance and underwrite the buyer

Okay I'm going to title this post

To get started to the fastest possible start with the least amount of money, how do I get started?

It is my opinion that the fastest possible way to get started is helping sellers that have very little equity. 

There Is 20 million of these houses, 20 million. If you're in an area in United States with good affordability, meaning you can rent a house for 600 - 1500, and you can buy houses from 50,000 to  250,000, then you're in a possible seller financing market. This means that the rent compared to PI TI is reasonable.

You can help the seller sell on terms and save some money for the seller, then you can take that house and rent it out for positive cash flow or lease it with an option

Say you have a $100,000 house with $95,000 against it, seller has to leave soon, market rent is $800, PITI payment is $600

You can make 3% by putting together a lease with an option or a lease purchase

Steps

1.enter into agreement with the seller as a principal with your LLC. It's helpful to be licensed if you do these. You don't have to act as an agent to enter into an agreement, you act as a principal.

You just state to the seller that your licensed and your entering into this agreement as a principal. 

Why get licensed? Well when you flip lease option contracts in most states, the state run agency that governs real estate agents really want you to have a real estate license. They don't care if you flip the contract, they care if you been properly trained. ????

I train students all over the country  and its just helpful for you to be licensed. 

Ohio, Florida, and California, it's really important to hold a Realestate sales license doing seller financing.   The Department of real estate estate is aggressive there in those states

Finding a real estate broker that you can work with isn't easy, because they like to be able to control your work behavior, but there's many places that will allow you to hold your shingle, meaning your license, and you have the regulations covered.

2. Once the seller agrees to do the lease with option or the lease purchase, you then need to sign a letter of intent, that spells out the terms. This isn't binding, but it allows the deal to move forward. You can then direct the seller to go down to the title company or lawyers office and enter into the lease with option or lease purchase, getting their signatures notarized.

3. Once you have a legal agreement that you can assign, you then market for tenant buyers. I'll do a whole post on marketing for Tenant buyers later on in another post.  It's important to find the right person for that house that can get the mortgage.

4. But so let's say you found a tenant buyer, if they have the right income, you need to get them checked out by an RMLO. 

An RMLO is a registered mortgage loan originator.

5. If you're in Texas you need to do your homework. @John Jackson on this board is done over 500 lease-option assignments in Texas. I trained him in 2002. There's nobody better in Texas.

6. There's other states that have unique laws, Louisiana and North Carolina. So we have to do you due diligence about seller financing and lease-options.

7. After you get the tenant buyer to be checked out by the RMLO, and you have a letter that says that if they pay down debt or improve their FICO score over two years or whatever, they should be able to get a 3% FHA mortgage, you then have a tenant buyer deposit into the title company or's office

3% assignment fee to you

first and last months rent to seller

Sign an assignment contract

8. I think it's important to get the tenant buyer to get all the money in, so you need the title company or lawyers office to cut a check for first and last months rent to the seller, and a check to you for the 3 % assignment fee.

9.To have a good attorney that acts for you and helps you in this area is important. 

Don't try to do it yourself. 

There are too many things can go wrong

So I'm going to say in closing here that you are helping a "no equity house" so sellers tried to sell with an agent, it didn't work out.

So the sellers talk to you about about a lease to own solution where they enter into a lease with an option with your LLC and then you assign the deal for 3% fee for yourself.

Does that sound like a lot of work for $3000? 

If you get your systems in place you can get this done in 10 hours or $300 an hour.

If you got a house that has a more expensive market like 300,000 FMV, then you make $9000 a house on your 3%.

Lease Option Assignments are a lot easier than the wholesaling business in my opinion. You should be looking for problems with sellers, focusing on expired listings, which is cheap marketing.

I'll post again tomorrow , have a fun Sat!

When I don't like about this conversation that you giving us is that the tenant seems to be bossing you around a little bit, offering you a low price. 

When you help them rent to own it should be a good price for you whether it's the payment or the purchase price.

When you asked for advice on BP please just talk about the numbers, what's market rent, what's the property worth, what's the loans against it,and the equity.

 COMMON SENSE + ACTION + ACCOUNTABILTY + FLEXIBILITY + TEAM + PERSISTANCE + HUMILITY = POWER

Awww, @Dev Horn 

I will reciprocate

I love your marketing videos.

Especially the "The Rule Of 7"

Ah Android professional real estate investor, Mr @Dev Horn 

http://www.nytimes.com/interactive/2015/03/04/us/f...

@Bill Gulley 

What happened in Ferguson?

A racist police chief creating a culture of oppression?

I served in the US Marines, only color I didn't like were ******** and they came in every color.  I hired many blacks too.

What happened?  Sounds like MISS in the 60s.

@Account Closed 

do you really want to help people do these, instead of advertising for deals in a forum?

Why dont you post some "real deal paperwork" with confidential info blacked out?

Teach the mechanics here.

Thats what I do on sub2, lease options and wrap purchases in other forums.

Sounds like an ad to me.

Answer and teach, answer the questions @Fred Rivers asked you.

Or go to the Marketplace and place another TX OF deal.

@Scott Wagoner

Regarding the 1st post I use my iPhone "text to speech" and it garbled a few words

Now using a headset and talking into it with Dragon text-to-speech!

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Since you're in Florida Scott, I'm going to talk about Florida.

I live in LA but I'm from Boston. 

The snow in Boston and New England this winter I think is going to be wonderful advertising for Florida!!

Who in their right mind wants to freeze their rear end off!

Housing in Florida, is it coming back, who knows???

Let's say you want a quick start in Florida.

It's my philosophy that we do not be a one trick pony, meaning we all specialize in wholesaling flipping, or specialize in retailing rehabbing, but we have a few tools in our toolbox.

The greatest opportunity in Florida and other places like Arizona, Midwest, etc., housing is reasonable, and the rent to value, is reasonable, is helping sellers that don't a lot equity and they need to sell on terms.

Cash or terms is the business model. 

Give a low cash offer which most sellers hate, and explain to them why it's so low, because you need to resell it not to a consumer but to an investor. 

If they want to go retail that the pay the cost to sell with an agent, which include commissions, closing costs, spruce up costs to compete with all the other houses, like paint, landscaping, etc., and vacant house costs, because houses that are cluttered with people stuff in it just sell a lot longer. 

Realtors want vacant houses.

Most agents that arent trained in seller financing, if there's no equity Agents get nervous, because they know that sellers is not going to be happy.

So why aren't the sellers happy if they had very little equity? 

 Most sellers sell with the intention of buying the next house with equity they have.

So let's do some subtraction

sales price $100,000

1. minus commissions $6000
2. minus closing costs $2000
3. minus sellers concessions $3000
4. minus spruce up costs $2000
5. minus vacancy costs $4000

so 6+2+3+2+4= 17,000

Oh my God that 17% of value the house!

Is that typical? I think it's typical is 10 to 15% of cheaper houses, when the houses are more expensive the numbers are less percentagewise but it's a lot of money

$300,000 house

1. minus commissions $18,000
2. minus closing costs $6,000
3. minus sellers concessions $9,000
4. minus spruce up costs $4000
5. minus vacancy costs $7000

so 18+6+9+4+7= $42,000

30,000 would be 10%, and 45,000 be 15%, so that's about 14-15%

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so low equity house that is 95% loan-to-value, $300,000 house, owes $295,000

what's the problem there?

The poor sellers have to pay get rid of that house. 

 If the costs to sell are $42,000, and their $5000 equity, they have to cut a check for 37,000. to sell their house!  Ouch!

Even if the realtor said "I'll take my commission a note" which they never do, you as the seller still got a big check to pay.

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How to sell it in person not on the phone but in person

You need if you negotiating with sellers, and the sellers don't have an agent, need to present a solution, and presenting a solution is a lot like a financial planner would present a solution for financial planning.

I know this because I have been financial planner since I was 25 years of age.  That's 30 years.

Talking concepts is very important. 

Talking with emotion and not logic is very important.

There's a danger in educating the seller too much and teaching techniques on how to solve the problem is never a good idea.

I never do that.

I don't educate sellers.

I give them WHIFFMs. What is in it for me?  WHIFFMs sell.

Like for instance all draw line paper. Making 3 columns

Column 1, selling traditionally with an agent
column 2, renting it out with a property manager
column 3, seller financing in Florida

Column one a go through all the cost to sell with an agent
and also go through the time it takes to sell with an agent
days in the market (DOM) tell the average amount of time it takes to sell a house with an agent

So it's costs money and it costs time

Column 2, renting it out with a property manager, there are risks and rewards

A property manager cannot guarantee cash flow so you can make your bank payment
A property manager cannot guarantee will be no damage
in a property manager does not keep an eye on the property that much, maybe once in a while

so if there's an eviction you have to pay for it
and if this damage you pay for it
if there's no rent coming in, you have to pay the mortgage

Column 3, I generally talk about seller financing in general
there's lease to own and owner financing

Lease to own you turn the property into an investment property
you are landlord and you have to pay the mortgage
your to pay maintenance and taxes and insurance
hopefully the behavior of your tenant buyer versus a regular tenant is better, money on time, no damage
the tenant buyer wants to buy the property
the tenant buyer does not cause you trouble as the landlord
the buyer wants you the landlord to give them a good recommendation when they try to get the mortgage down the road; they need their landlord to give them verification of rents (VOR)

Owner financing means you're selling the property and the owners have a deed
it's a little bit like contract for deed where you pay on a contract, and you can either finish the contract or refinance contract and pay off the existing financing

How to sell subject to
it's important that you read this next sentence,
I DONT BUY SUB2 UNLESS ITS A PERFECT HOUSE
what's a perfect house?
4 bedroom 2 bath open plan great backyard
quiet Street
two-car garage
perfect rental
perfect location
great neighbors
I'm going to own it, I'm going to be responsible for making the payment the matter what
if I'm renting it out in the tenant doesn't pay I still have to make the payment
if there is maintenance to do I have to do that

Due on sale clause
if you probably do subject to the due on sale clause is generally a non-issue in my opinion. This is a fiercely debated topic. 

When I do is I use land trusts and property trusts. Don't get me wrong: subject to and wraparound mortgages in some kind of lease to own arrangements do give the lender the right to call the loan due.

Does that mean they do call loan due no matter what once they have the right? I've done them over 30 years I've never had the loan called due.  Not once.

Here's how to endanger the property and have the lender call the loan due.
Don't pay the mortgage on time
and have the insurance policy lapse

If something's late the mortgage company is going to investigate it.

If there's no insurance on their investment, the mortgage companies going to investigate it.

Now if interest rates rise, there might be a reason for lenders to look at their portfolio and review everything.

I don't know, I just know that if you buy a wraparound mortgage or sub to, and take care of make the payments on time and insurance, and you some kind of trust to protect yourself, youre in pretty good shape.

Please don't ask me for legal advice, I have a great attorney that takes care of all that stuff

So to get back to talking to the seller:

I basically say the seller there's 2 things that I can do to help you. 

But you MUST be willing to be creative. I'm going to go through your choices, and you tell me which one you like the best, or which one you hate the least!! lol

So ask you this question a start off: 

what if, and not even know if I can get this done, because I've to check it out with my business partner, she does all the numbers and crunches the numbers to make sure that it works for us, but what if I could somehow get you a payment for period time that would mirror your PITI payment, your outgoing costs, and this might be for a period time I don't know, say 24 to 36 payments, get some time that create some equity by paying down the mortgage a little, not much, a little,

Then at the end of this period of time, whatever the mortgage balance is at that time will be the sales price, we call this buying it for the loan balance in the future.

Would that be something we could even talk about doing or maybe not?

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Now I don't know if you invested in  negotiation training but this is called "the what if statement." 

I'm being a reluctant buyer there, 

I'm using the what if statement to feel them out, 

just throwing out an idea, and 

I'm using appeal to a higher authority with talking over my business partner, and 

if they get excited about this, I'm not to get excited that they're excited, 

I'm going to go further and say something like...

"Oh I see that something that you consider... okay.... tell me exactly why that would be a good fit for you I mean what you like about that?"

What does this do? Well this is called "reinforcing"

I use analogy of a rope and TUG OF WAR and there is a line to be pulled over.

The sellers on one side and you're on the other, and most negotiations it's tug of war.

Well I don't want to be a tug-of-war.

I want them to pull me on their side, I don't want to pull them to my side

This "reinforcing" helps them pull me to their side.

There's another reason for this, 

this a nontraditional outside the box kind of solution, 

and I want to prepare them the sellers to be talking to their friends about what they're doing with their house. 

They get to answer this question "how you sell your house, how much did you get for it?" to their friends and family.

This is what I want them to say back:

"You know we did something unusual, there was an agent that showed us how to get more money by selling on terms versus for cash, so we did a lease to own arrangement, avoided paying a commission and closing costs, saves that money, and they got a pair mortgage payment for period time and then pay off our mortgage. It's a win-win for us we get full price without a commission closing costs, they get a dream house in their neighborhood that they want for their kids and they can get another neighborhood while they rent for a while and then but it."

So I take a lot of time with the seller to try to get them to think this way. It also avoids buyers remorse, where the seller says "oh my God what I just do??? :(

NLP has to do with how you hold your hands and look at somebody and talk to them. It's so hard on paper to show you what I mean. Video is easier. The tone-pitch of your voice has to be going down instead of up.

In the 70's was a wonderful actor called Peter Falk he was in his 40s of the time, how to show call Colombo. The reruns are on all the time.

Peter Falk was this disheveled, frumpy, police detective in Los Angeles, working homicide.

Columbo always scratched his head have a cigar have this raincoat. But the biggest thing is how he talked to people. He always did it in a nonthreatening way.

His language is the way I want my students to talk to sellers. It disarms them. It makes the seller comfortable.

Talking like Peter Falk and Colombo will help you get terms deals.

Some that in here and happy Friday everybody, I'll try to get something else up here when I have time.

I would love everyone that reads this to get motivated to think about having a terms business and cash business

A terms business is subject to, wraparound mortgages, and lease option assignments.

A cash business is wholesaling flipping.

And don't be a one trick pony, 

have a full toolbox.

@Lee S. The big thing in California you should be licensed in California if you're going to do lease options at all and you should have a broker look over your deals, it's important

OH and CA you need a sales license and you need a broker in your deals