Creative Suggestions Needed. H E L P ! - Posted by Marc in So Ca

Real Estate Investing
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Posted by Ed Wachsman on December 06, 1998 at 04:25:51:

Based on the very little information you provide (You don’t say what kind of income it produces, what the demand for commercial space is, what your intentions for the property are, what kind of tenant it will attract, how long you think it will take to rent, how strong you are financially, etc.) it is impossible to give you solid advice but I suspect that this is something you should pass on unless you are absolutely certain that the fair market value of this property is worth at least $100,000 more than the asking price and/or the lease option terms are extremely favorable to you relative to the income producing potential and market value of the property.

Though owner carryback and lease option are terms that suggest the possibility of a seller with motivation, they also may be suggesting a savvy pro with good marketing skills and a flexible approach to doing business.

Commercial is usually a very dangerous place for a beginner to start unless it is an absolute no-brainer steal that can be flipped immediately.

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Creative Suggestions Needed. H E L P ! - Posted by Marc in So Ca

Posted by Marc in So Ca on December 05, 1998 at 22:11:29:

Is this a good deal to pursue? I found a fsbo where the owner holds the deed free and clear. Owner asking $225,000 in pricey orange county and is willing to carry a small second for no longer than five years. The property is a fixer. I am guestimating around $5000. worth of work to make it attractive. haven’t got the comps yet(pending).The property is zoned for commercial and is a 4br 2 3/4 bath (2400sf + 900sf office). How could I structure this deal? She is also willing to lease with an option also. I am very new to this and would like some suggestions…thanks

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Re: Creative Suggestions Needed. H E L P ! - Posted by Bill Gatten

Posted by Bill Gatten on December 07, 1998 at 21:44:46:

I agree with Ed, however, if you want a truly safe no brainer, Nothing Down and Nothing per-month arrangement, consider this: I’ve done it over a thousand this way so far (mostly for others, but a liberal few for myself):

Have the seller place the property in a title-holding land trust in her name. Then have her appoint a 3rd party corporate trustee (corps don’t die and tangle you in their probate problems). Then have her sell (assign) you 90% of the beneficiary in the trust with an agreement to forfeit her 10% to you at the end of the trust, as consideration for prompt payment and strict adherence to all the contract provisions. You agree to cover all the closing costs (you’ll get it back in a month, or maybe not have to pay it at all).

Next, you run an ad that says: No Bank Qualifying, No Down Payment! As little as 3 payments and Closing Costs can move you in. 4+2.75, 3300 sq. ft. includ. office. Call about incredible trust property opportunity now!

When they call you say: "Yes, I have this little fixer upper that’s currently in a trust and which is worth about $225,000 or so. And what I’m looking for is someone who can afford the closing costs and the payments and the “fixing up”… to basically just give it to (pause…). All I want out of is to have you refinance it in your own name in, say 2-3 years: and if there’s been any appreciation in that period of time… I’d like to split it with you.

That’s it. I do that presentation about 50 times a week and have never had anyone tell me it?s not a good arrangement. And, as far as you are concerned… you just bought a property for nothing down, nothing per month, no credit, no qualifying and the loan’s not even in your name. And, too… remember that anything you give away in “future appreciation,” you more than get back in having no payments, no maintenance, no management costs, no negative cash flow, no vacancy factor and no headaches. Moreover, if you only make fifty cents… it didn’t cost you anything.

Best regards,

Bill