Posted by Scott (UT) on August 04, 2005 at 18:06:41:
How hot a market is has nothing to do with if it will work or not or the availability of Sellers or Buyers. I’ve done over 200 deals all over the country in all kinds of markets and have no trouble getting someone to come up with 5% to 10% plus 1st month. Some markets do take a little longer (60 to 90 days) but I’ve only had a handful of properties I couldn’t find someone for for 5% plus 1st month.
Obviously your experiences are very different from mine. Just because I can do something you can’t doesn’t mean it can’t be done.
As far as the Utilities are concerned you are right for most locations. Again, to this day I have never ever had a Resident not pay utilities.
You’re also right with regard to not expecting “renters” to come up with “thousands of dollars” to move in. That’s why I don’t have “renters”. I have Resident Co-Beneficiaries that are treated as owners by even the IRS for tax purposes.
The reason I don’t have vacancies is because my offer is that of a Non-Exclusive nature. I have no obligation to make any payments ever and, until I locate a suitable Resident the Seller makes all the payments. My Option only requires me to put up $10. So if I don’t locate a Resident in 90 days my option expires and I go to the next property. In addition to that I get the seller to pay for ALL my marketing costs. I think $10, No Payments, No Risk, No Liability is pretty good.
I’ve had only two Residents have to leave the property early and we simply sold their beneficial interest to a new Resident which cost less and takes even less time to do.
What benefit is there to the Resident? How bout ALL the benefits of Fee Simple Real Estate without any of the Qualifying, Credit or New Loan. Like I said, It’s been working for me and hundreds of others for years.
I remember reading an article some time ago about how you can get 3 times the market rent for you property… and that’s without gold-plated toilets and sinks. Has anyone heard of this?
Joel
Huh? I don’t get this thread. TENANTS understanting a “triple net” lease? Yeah, I can see it now, “it’s just like a commercial lease, but different”, LOL!
This sounds like one of those ideas that really works on paper, but doesn’t quite go over in the real world. Most tenants I see are barely capable of filling out an APP, let alone understanding the tax-advantages of an NNN lease. Of my tenants I have now, almost all collectively gasp when I pull out my “whopping” seven page residential lease. I can only imagine, “now, after you’ve exceeded the amount of the ‘standard’ deduction for your tax position, you’ll be able to itemize, but be careful of depreciation recapture down the road…”
Right. Anyone doing this IRL? How do you advertise for it? How do you screen for it? How do you EXPLAIN it to the average tenant?
Contrary to Scotts post that this works in all jurisdictions, it doesn’t. If you were to try this in California you would be violating the security deposit laws. It may be ok where Scott is but check the law of your state, and oftentimes county or city ordinances. e,g, rent control laws, etc.
Re: How to get 3 times the market rent - Posted by Scott (UT)
Posted by Scott (UT) on August 02, 2005 at 18:19:00:
Not sure about 3 times the normal market rent but maybe three times the normal monthly cash flow.
Most Investors who become “Landlords” don’t understand how to calculate cash flow. They believe that if their mortgage payment is $1000 and they rent the property for $1200 that their “positive cash flow” is $200 per month. That’s not the case at all. After you factor in 2 months of average annual maintenance and 2 months per year vacancy, you?re only breaking even at best.
However, if your lease is that of a Long Term Triple-Net Lease you may in fact have $200 per month in Positive Cash Flow.
I of course use a Title Holding Land Trust coupled with a Long Term Triple Net Lease. After many dozens of transactions I have never had any maintenance at all and have never had one month of vacancy in 4 years.
Result? Double to Triple the normal Positive Cash Flow that most Landlords receive.
Re: How to get 3 times the market rent - Posted by Scott (UT)
Posted by Scott (UT) on August 08, 2005 at 18:25:02:
How many examples do you want to see, 1,10, 100, 200, I could keep going.
July
$240,000 Value, $7500 upfront plus 1st mo., cash flow $250 per mo.
not 5% but it was a friend of mine.
$140,000 Value, $8000 upfront plus 1st mo., cashflow $300 per mo.
Put the sign on the lawn…
Lease-To-Own
No Qualifying
No Credit Apps
No New Loan
only 5% plus 1st mo. Moves You In!
Payments only $925 mo. plus Taxes and Ins.
Valued at $140,000
…and before I got home had the call
handed out flyers at the grocery store and before I got to the other side of the lot I had a lady chasing me down with $20,000. Told me as long as I can get her in for under $10,000 she’d take it. Guess what it cost her to get in?
$230,000 Value, $14,400 upfront, $550 per mo. cash flow.
he proposed a Lease Option with only $1000 Option and $1500 per mo. with $900 rent credit. I showed him the errors and dangers of his proposal and got $14,400 upfront and $1750 per mo. with NO RENT CREDITS.
I won’t even begin to tell you what my Equity Share is, or will be, because you wouldn’t beleive me anyway.
BTW, all these folks get 50% to 70% of the Appreciation and Note Reduction over 3 to 5 years as well as the active tax write-off on the mortgage, I get the rest. They also are responsible for 100% of all maintanence etc (NNN Lease).
I put up $10 for each property, get hundreds of dollars in cash flow per month, put thousands of dollars in my pocket upfront and have ZERO Tenant or Toilet issues.
Someone told me, including so-called Gurus on this site that I couldn’t do that, and so I did. I quess this is just my revenge and way of saying Neener, Neener, Neener and Look At Me Know!
Yes it can be done. So I don’t act like your model of a “Successful” person. So what LOL. I’ll just keep laughing all the way to the bank.
Re: How to get 3 times the market rent - Posted by Scott (UT)
Posted by Scott (UT) on August 03, 2005 at 20:27:17:
Sorry it’s so difficult for you to figure out. But over 200 of my Resident Tenants haven’t had a problem with it.
My signs and ads simply say…
Lease-To-Own Trust Assumption
Only 5% plus 1st month Moves You In
Payment only $xxx.00 plus Taxes and Ins.
No Qualifying
No Credit
No New Loan
No sooner do I put out a sign, I get calls. When they call I tell them that their total payment includes the taxes and insurance and the interest tax deduction.
The owner of the property maintains the passive deduction IF they want to take it.
Heres how I “screen” for it. If they’ve got the cash, I’ve got the property. Cash Talks!
Here’s the thing, I don’t advertise for Renter Mentallity people or “average” tenants. Therefor I don’t get Renters or Average Tenants. I get folks that have previously owned but can’t qualify at this time for whatever reason. As previous owners they understand all the benefits of fee simple real estate including tax benefits. Tell someone they get the tax benefits and what more do you need to explain. Their CPA will make it work for them, I just provide the appropriate documentation.
BTW, my documentation is not seven pages, it’s more like 40 and it’s not a problem either. Are you telling me that you wouldn’t advise someone to purchase a home because it’s too much paper work. Geez, the last home I bought had about 60 to 70 pages of docs. If it takes 40 to get those kind of benefits LEGALLY without having to qualify for a new loan, WOW!, then so be it.
You keep laughing on your end and I’ll keep laughing all the way to the bank as I have for years and now hundreds of deals including Texas and North Carolina.
Re: How to get 3 times the market rent - Posted by Scott (UT)
Posted by Scott (UT) on August 03, 2005 at 20:35:25:
The entire system was created in California over 15 years ago and has been taught as a three hour continuing education course for Realtors. It was originally created as a Joint Ownership Program for Realtors when it tough to sell houses in California. Now it’s used in EVERY State without question. It’s use is protected by Federal Law.
I don’t believe you. I’m calling you out. Prove it.
Here’s why: For one, I don’t believe for a second that an ad that says “Lease-to-own Trust Assumption” is going to make the phone ring. I call BULLSH*T on that.
And second, your attitude. You took what was a lighthearted, tongue-in-cheek post personally, and responded to it with uninstructive insults. In my personal experience, I’ve never seen a person who is TRULY as successful as you claim to be act like that. Successful people have consistent behavior characteristics, which you don’t seem to share.
In short, I think you’re full of it. Prove me wrong.
You missed Eric-FL’s point. His point was not that he would not undertand the lease, it was that the tennnat would not understand the lease or would not care to read though a long lease just to rent an apartment.
BTW, Eric-FL said his own documentation was 7 pages.
I could not find anywhere in your previous posts in this thread that this was a rent to own lease. Seems like an important point to leave out. And off topic from what the original poster asked about.
It sure seems like you are trying to sell something.
What federal law? Please cite the code. I doubt there is a law that is superior to the states law.
What continuing education course? I was a California Realtor for 36 years and I never saw it, but will check with the CA DRE to see if it was an approved course. Do you remember the course title and who was approved to teach it?
Lastly, any funds to be held for future rent and other monies are considered by law in California to be part of the security deposit on residential property and can’t exceed the statutory limit or your violating the law.
Re: How to get 3 times the market rent - Posted by Scott (UT)
Posted by Scott (UT) on August 02, 2005 at 19:16:24:
Maybe your using the wrong documentation process.
It has held up in court everytime, without fail, and has for years in every State, including yours regardless of the repairs etc., but only if you use the proper system of documentation.
Re: How to get 3 times the market rent - Posted by Scott (UT)
Posted by Scott (UT) on August 08, 2005 at 14:00:12:
The Garn St. Germain Act
(FDIRA) (10/15/82) 12 U.S.C. 1701(d)-3)
[Dept. of Real Estate Continuing Education Cert.#3309 California]
Funds are not collected and held for future rent or for a security deposit but are a “contribution” to the trust and used, as privately agreed, by the owner/beneficiaries of which the Resident is one.
This is all fine an dandy as long as the tenant pays em… but long term lease and tenant doesn’t pay water (a lienable item) Taxes… another one… or insurance… and you can wind up losing the house.
I’d say NNN in residential might work in hot/higher end residential… but you’d lose your shirt doing this in depressed markets.
Re: How to get 3 times the market rent - Posted by Scott (UT)
Posted by Scott (UT) on August 03, 2005 at 03:09:48:
Be cautious how you use a Net Lease. If you use it with or in conjunction with a Lease Option you will have problems. It should only be used as part of a Straight Lease without an option to purchase of any sort. Doing so would give a claim of equity in the property and allow the Tenant to further encumber the property or force foreclosure instead of simple eviction in the case of non-payment or other lease violations.
I use a Land Trust with a Net Lease Agreement. The Tenant only has the Right, not the Option or Obligation to purchase at Fair Market Value on or before the lease term has expired.