All Forum Posts by: Brian Gibbons

Sergio B.

[Knowing market rents is key.
A Market Rent Analysis is invaluable.

See a leasing agent and ask questions about the area. Bring a map. Use other people's knowledge.

Hi Brett Kennedy

"If you do not sell/perform you do not eat."

You sell, he performs GC work.

He (GC) avoids spending time and money to find/market and negotiate with owners. He gets steady work.

You get dependable GC work. You still have to "inspect what you expect".

Ever think of a Joint Venture Agreement? I hate formal partnerships or IRS Employees w-2, think HEALTH INSURANCE!).

An idea....A new LLC and a performance based Operating Agreement might work well. Like a situational bonus structure.
"If this happens, then this bonus happens".

Just brain storming here.

Best of luck!

Brian

The flow goes from
1. LOI to my lawyer
2. Lawyer creates from the LOI a Lease and an Option from me to seller (lawyer closes it with signatures on Docusign)
3. Now I have a legal interest in the property with a signed lease and a signed option.

A flex option is option to lease option or an option to buy on CFD or by on a Wrap - AITD within a period of time.

Option to Lease Option is just that.

Hope that helps!

Brian

Hi Larry N.

This is the way I do it.
1. I have the seller sign a Letter of intent to Lease and To Option

The letter of Intent covers...
Address, Rental Term, Renal Payment per month, Security Deposit, Possession Date, Option Sales Price (could new appraisal), Option Money (usually 3% or $5K min), Representations, Warranties, Covenants, and Indemnification, Legal Effect, Notice of Intent to Assign,
Option Period (45 - 60 days)

I have them sign the letter of intent (LOI), it goes to my attorney, and the attorney prepares the paperwork.

There is an option release disclosure document that discusses that the buyer will be responsible for the following fee’s to be paid out of escrow at closing, which are for the release of the recorded notice of option, the assignment of negotiated purchase price, and the negotiated rent.

2. My lawyer then drafts all the paperwork, seller signs, and the buyer signs, using docusign over the net.

I hope that helps!

Brian

In Los Angeles, there are pockets of stable, increasing and decreasing home values. REOs and Short Sales decrease values.

The sand states of FL, AZ, NV and CA all suffer declining home values the most.

But in the best school districts home values lose LESS of their value because families want to be there.

As far as the best places to own a home now http://www.forbes.com/pictures/mhj45hlfg/10-st-louis-mo/ reports 10 cities that are great to buy. Jobs, expenses to live, crime, housing affordability all come into play.

And @DavidDoyle, there is a reason why the outflow population of Los Angeles are leaving - taxes! And moving to states like Texas!

In the LOA business, where the house is matters alot, especially in the sand states.

For that matter, it matters what kind of loans are in place (no ARMS, fixed rate only).

Jason A. Mortgage Origination and assisting a tenant buyer in qualifying for a home loan is IMHO mandatory for success in LOAs.

A skilled FICO Coach will go over issues as:

-Debt to Income
-Bankruptcies? (If so, there are certain time restrictions that have to be overcome.)
-Foreclosure? (Again, certain time restrictions are set forth by the lenders.)
-Tax Lien? (Normally must be paid for finance.)
-Scores (Although other items are important, most lease option specialists are looking for applicants that are no more than 60 points away from FHA finance.)
-Judgement? (Must be resolved for most lenders.)

This business is understanding today's everchanging credit qualifying situations.

David Doyle and Jason A. I agree in California it is a puzzle to lease option and then assign the deal. I know throughout the process you think,
What if this happens?
What if that happens?

I ask you,

[b]Can you do any of the following in California, with a DRE CA Lic?

-Lease as a principle and assign?
-Option as a principle and assign?
-Lease Purchase as a principle and Assign?
-Sub2 as a principle and Assign?
-Wrap AITD as a principle and assign?
-Mirror Wrap AITD?
-Contract for Sale (like a CFD) as a principle and assign?[/b]

I think the right RE Attorney in your corner with the right language in your agreements will serve you well, especially an attorney that knows the DRE regulations.

I am not an attorney.
But I have used a CFO (Contract for Option to Purchase) for many years.

I wrote about the CFO here http://www.biggerpockets.com/blogs/3/blog_posts/25788-cfo-and-a-lease

RE: The CFO -
The key to this is you use
- a lease and
- a contract for option to purchase

It is a landlord tenant relationship with the lease
You have to finish the lease as a condition for the CFO.
The Option is drawn ahead of time and held in escrow for the buyer, and the buyer has a short time to get the mortgage.
The Option is not in the possession of the end buyer until the lease is finished (addresses the equitable interest issue).

Conclusion:
If you are Licensed in California:
Do not close LO assignments on the kitchen table with no witnesses or notary.
Realize that the courts will always side with the inexperienced Seller or TBer and not you the REI
Do close these in the Attorney's office in California with all the disclosures and releases of liability.

There are alot of lawsuits in California.

(As William Shakespeare said, 'The first thing we do, let's kill all the lawyers)

And, again, do not do LOAs in California if you are not comfortable with the risk and have an Attorney to close sellers and tenant buyers.

BTW If you are a Licensed Agent, you can charge a fee to bring people together (act agent for) and assist in a Lease Purchase transaction, can you not? Like a Marketing Coach to find sellers and find tenant buyers? Perhaps that is an avenue for you to pursue. And not do assignments. Be a coach. Or sell information on how to do it themselves.

Best of luck to you both.

FYI, there are millions of houses that have no equity in Los Angeles. They do not have to be upside down, just 10% or less equity, thin deals from WE BUY HOUSES guys.

Home Sellers need good solutions to sell on terms.

Home Buyers need lease option financing now.

INMO, even if there is risk for the Owner that the TBer will not get financing soon, at least their PITI Payment will get paid (or most of it) and they will avoid a distressed sale.

Is this better than the Seller renting to an unproven tenant and feeding the difference of rent - property manager fees and - maintenance?
Is this better than the Seller paying from savings to get rid of a house that has no equity or little equity or a small negative equity?

I think so.

Up to you to decide.

Brian

I like Mark's thought here. Control it instead of own it, exercise price = loan balance. What if the property does not appreciate? Do you have a stop loss? You could have a "either or" exercise price, with a minimum profit. Sandwiches are fun as long as you have a clause that it is a "performance based" arrangement; if the Tenant Buyer does not pay you the REI, you do not have to pay the Seller-Owner-Lessor.

You could do a 2 note arrangement if the seller wanted to carry 80%, but you need 20% down in cash. I know you want 10%. Seller could then sell a partial of the 1st. See http://noteinvestor.com/notes-101/what-is-a-partial-note-purchase/ Note buyers want a big down payment (skin in the game).

I don't like owning right now, I like lease option assignments and sandwiches. Just my HO.

Brian

Ivan Alfaro Lonnie deals (mobile home investing) is alot different now. http://www.manufacturedhousing.org/webdocs/dodd-frankarticle-final.pdf

You may want to book mark http://www.manufacturedhousing.org/sitemap/default.asp

Best of luck!

Brian

Nicole, once you get started I know you will do really well! It was great fun yo talk to you!

Best Wishes

Brian