All Forum Posts by: Terry Drake

Johnny,

I just used the purchase agreement that was in the back of Lonnie Scrugg's book. Then where it says "Everything to be in good working order at settlement, which is to be on:__________________________."

But the best part of this agreement is towards the bottom. It says "This agreement is subject to verification of information necessary to complete this agreement and subject to approval by Business Partner. Otherwise this agreement becomes null and void and sellers agree to return all money paid by buyer and cancel this agreement".



Here is a sales agreement that I got out of the back of a book, re-typed and added a few things. (a section for clauses/addendums and added the part about deposit being non-refundable unless declined by park, and that they have 5 days to apply or they lose their deposit). I thought it might be useful for some, and save some time.

www.dndinvestments.com/mhsa.docx

Don't forget, you can always get it under contract with a 2-4 week inspection period subject to partner's approval and market to sell it. If you don't sell it in that two weeks, then it's probably not as good of a deal as you thought. In that case you can either walk away and cancel the contract (nothing gained, nothing lost!) -OR- approach the seller and explain to them that upon inspection, the numbers don't work and the most you can pay is: $xxxx for the deal to still work for you.

Usually by this time, the seller has already planned on washing their hands with the home, and already know what they want to blow your cash on. A lot of the times they would rather put some money in their pocket and be done with it than pay another months lot rent, and try to (hope to) sell it.

Brian, thanks for your time! Do you think I would be better off to get a consumer loan from a local bank? My credit fluctuates between 725 - 745. It was 765 until one of my credit cards screwed me and dropped my credit line from 20k all the way down to 8k! :cry:

For those of us who have never used a hard money lender, we have no idea how much out of pocket expenses we will need to get a deal done. Would someone be kind enough to break down the expenses, terms, what to expect based on say a 50k loan to determine OOP expenses and profit?

One more thing Marilyn, if you look at my first deal post, there is a break down of repair cost on that deal. If you are looking to buy a home that needs repairs and you will have the repairs done, figure how much the repairs would be to have someone in a tuxedo doing the work. That way you won't be unpleasantly surprised. Then make your offer. If they don't accept it, then that's fine. You don't want a deal that doesn't make sense from your end. They have to sell but you don't have to buy!

One thing I will do on my next deal, is have my handy man with me. I will talk with the owners and build report while my handy man picks the repairs apart. While he's showing me things that are wrong, the owner is devaluing the home in their own minds. Not only that, but they are wondering if the next buyer will even buy it for the price they want with all those things brought to their attention.

Please remember these are suggestions from me to you based on my thoughts, opinions, and what I've learned so far. There are many ways to skin a cat and each deal is different! Can't wait to see your 'first deal' thread!

You're right about being time consuming and expensive. I would say it's the easiest way to go over budget and eat away profits. At the same time, if I can put a few hundred dollars in it for paint and curb appeal and increase the value of the home a thousand dollars or more then that is a pretty good return on the dollar.

It depends on the home and what you want to do with it. My first deal I wasn't expecting to make any repairs but ended having to make some to get it sold. I didn't do as well as I had originally thought on that one. It's going to be about 10.5 months before I see the break even point. The second one I didn't touch a thing.

The thing you have to remember when looking at your deals and deciding what you want to do, the more money out of pocket on the front of the deal, the less your cash on cash return will be and it will also take that much longer to reach your break even point.

It's kind of tough on your first deal because you want to jump in and get one under your belt to learn everything you can from it. After you do one or two, the anxiety will lessen and you will be able find the good deals with confidence because you aren't beating down doors to find a deal. They are coming to you.

After doing those two deals I had mentioned in that park, I've been approached by half a dozen people in the same week to buy their home. I had one seller stop me in front of a home I was looking at and said 'Don't buy that one! Buy mine!!'. I'm getting referrals from people that I don't even know who they are. Not because I'm wonderful, but because these people just want to sell their homes!

There I go rambling again.. Just remember that the more money you can keep in your pocket, the more deals you can do with the capital that you have. If you dump money in repairs on everything you touch, you will run out of working capital faster. Now, I am looking for homes that I can sell AS IS for cheap and sell them the same way I bought them.

I know you will feel a big sense of 'whew.. glad that one is over with!'. Even better is you are walking with cash and can roll it into the next one.

Nice job on this deal!

Jeff, we're you able to back out of the contract or are you stuck with it until you sell it? I will tell you that almost all the traffic I received on craig's list were tire kickers! I didn't have many (if any) quality leads from CL but once I advertised in the shopper and put up the bandit signs I was getting 5-6 calls a day of motivated buyers!

You might also try some different incentives such as no down payment, or no payments until the next month. Honestly, even if you don't make as much as you wanted to and can walk away with what you've learned it would be worth it! Just get rid of it! :D

Keep us posted! :cool:

BTW have you advertised a 1br yet to see what kind of demand is out there for that area?

Jon is right. I would explain that you normally don't deal with 1br because the buyers are limited and the holding time is so much more.

FWIW I'm in a park right now and the manager wants me to buy some fixer uppers that have been vacant. I explained that they don't make sense for me when figure figure sales price, lot rent/holding time, repairs, and marketing.

But I would be willing to take them, put the money in to fix 'em, and find year round tenants for the park if they will give me free lot rent while I do so since they aren't generating any rent right now anyways. He didn't even hesitate to say yes.

Also, I don't know if I would do all 3 of them, I would probably just do the best one. It would be a good way to test the 1br market without tying up too much of your time, money, and resources keeping you from the better deals out there. Nobody I have talked to while marketing was looking for a 1br in my area. Just my 2 cents.