Posted by Vic on March 04, 2001 at 02:49:57:
All right Eric…you’re really getting to the heart of things now. Very good post!
You’re first point is a very good one in that I (or whoever I’d have involved in the deal) would have to be careful in that I wouldn’t want some attorney coming back on us saying that we took advantage of him. That is something that really needs to be considered especially if the “paper” sales price were to eventually be 60K (or 5K or 100K or whatever). This is just a brilliant point that could easily be overlooked.
If I’m not mistaken I believe the federal gov’t can go back & undo anything from the last 36 mos., if it can be shown that the seller did what he did to avoid estate taxes.
As for the investors I would use, I doubt if there’s any need at all to worry about them. The one in particualar that I’m thinking of owns a mtg. co, buys & sells notes, makes hard money loans, does land contracts, has an escrow company, etc. In fact, he’s been a member of our REIA group for years & spoke at our meeting not long ago about this very same thing. He could handle it.
But are you saying that I should attempt to put this deal together myself with me as one of the principal’s or to just get a fee for putting the buyer & seller together & let them work out the details?
The only way I can think of that I’d be able to do this deal as a principal is by using your option idea. I would then have to put the investors together & I would have to make certain that it was a strong, strong deal in order to know that I could find others (if needed). I do love your idea of doing this though. I just wonder if I’d be better off to collect my fee & move on. Let them structure it however they see fit.
So if I understand you correctly what you are saying & in the order you would approach this are: (forgetting about the actual #'s)
First - Offer him all cash, using investors that I find to put up the cash - with him to have a life estate. Use an option to do this.
Second - Offer him 5-10K down with monthly payments of whatever, all to go to option price, again with me putting together the investors & again with him to have a life estate. And again using an option.
Third - Put the people together, collect a fee & move on.
Also, you can relax. Whenever I look at buying something, I ALWAYS look to see if I can do it with zero interest. If they own it outright, you can bet I’m going for zero interest payments. If they have a first & I’m paying them equity, I can guarantee you I’m not paying any interest on that equity at all. I avoid interest at all costs as often as possible. So don’t worry about that, I can assure you I deprogrammed myself of paying interest long ago. LOL
I do remember talking to you a while back about that substitution of collateral. I remember you had some good points back then too. I remebered your name was Eric, but I couldn’t remember exactly which Eric it was that I talked to. So I’m glad to finally solve that mystery. I’ve been losing sleep for months over that. LOL
Aren’t you in Texas? Also, didn’t you live here in New Orleans before? Hope things are going well. Keep up the great posts.
Oh, for what it’s worth, I agree with you about getting started by being an agent or stock broker or something of that nature. I sold life insurance for 7 yrs before getting my real estate license. I’ve been doing real estate exclusively for the last 8 yrs (first 6 as agent). I can tell you firsthand that having a background in both those fields has helped immensely.
I really can’t understand how someone could want to be an investor & not at least, audit a real estate licensing course. It’s kind of like not knowing anything about cars, walking into a mechanic shop & saying you want a job. You have to learn the basics before you can do much good.