Posted by al on September 10, 2008 at 15:18:32:
i hooked up with a VP/Mortgage banker with a large database of contacts, a private lender with over 26 properties, and closing manager of a brokerage. ive been fishing for whales lately.
i have over 100 tenant/buyers and im struggling - Posted by al
Posted by al on September 04, 2008 at 11:26:45:
i advertised 7 properties online that i have under a 90 day non exclusive option and ive accumulated over 100 tenant/buyers looking to take over payments and have 3% - 5% just in the month of august! now im seriously overwhelmed and im continuing to get a back log of tenant/buyers emailing me, filling out my forms and filling up my voicemail box. i have a day job in computers full time and my time is very limited after hours between my wife and returning phone calls/emails.
i have no problems making my full price offers, getting options signed, getting tenant/buyers, educating, talking to people, networking etc. i am not struggling with any of these since ive already jumped over these hurdles.
my main struggle right now is matching up at least 1 of 100+ tenant/buyers that i have with a suitable property that i dont have under contract yet. im in southern california and most of us have bad fraudulent loans and high payments which makes them unmarketable for take over. im offering homeowners to do loan modifications to cut the payments nearly in half to make it more doable for one of my tenant/buyers to take over the new lower monthly payments. however i dont have time to do these as well! i started going to work 2 hours earlier so i can free up some time to work on my weaknesses.
so this is my paradox im facing and im not quitting. persistence and stumbling forward would help me jump over this hurdle and close my first creative deal.
ive educated my tenant/buyers and made them my bird dogs to retrieve me properties they’d like to live in and own sometime in the future. this way i can leverage their time and just make full price offers to agents or FSBO’s
basically i dont have good infrastructure to handle follow ups, phone calls, and consistently making offers. this is what im fixing so i can progress and move forward towards getting these deals done.
any suggestions from experienced investors on how to match up tenant/buyers with properties? remember i have way more tenant/buyers than properties that are available for lease to own.
also how do you address the “fear of success?”
im in simi valley, CA
working ventura, los angeles and orange counties
i have over 100 tenant/buyers and im struggling - Posted by Ken - EDH, CA
Posted by Ken - EDH, CA on September 11, 2008 at 09:25:00:
Al,
Where did you advertise your 7 properties online? I’m sure there plenty of homeowners up in my way need help…
Re: i have over 100 tenant/buyers - Posted by Kristine-CA
Posted by Kristine-CA on September 04, 2008 at 13:22:45:
Glad to hear that your marketing is working and that you have both
sellers and buyers, though not necessarily in the preferred ratio. Find
more properties? I’d say that’s everyone’s problem in CA. Plenty of
properties for sale but not many worth dealing with at their current
asking price.
I’m curious about your current option contracts. What kind of time
frame are the sellers giving you to refinance and eventually pay off
their loan? 2 years? 3 years? Is your option to get the deed and take
over subject to? Or are you planning to wrap them with AIDTs? You
say you are making full price offers? If that’s so, what’s your mark-up
for the tenant buyer?
Just my opinion here, but I’d be very, very cautious about placing
tenant buyers in properties with loans in place that reflect values from
2006 or before. The chances for payoff are slim. And your default rate
on monthly payment from your t/bs will be, let’s say, above average.
The trouble today is that much of the public believes that houses that
decline in value should be bailed on. They think they are being ripped
off when the value is lower than when they purchased it. Even when
they can afford the payments. I can assure you that some of your
tenant/buyer pool will fall into this category (or will come to you
already having bailed on a house).
As for improving infrastructure: you may want to consider hiring and
training some administrative help. The training takes time, but then
frees you up to work on the deal making and not taking every call. I
recently got some marketing help from elance.com and it’s great to not
have to do every little thing.
Keep us posted on how it’s going. Kristine
Re: i have over 100 te - Posted by al
Posted by al on September 11, 2008 at 16:04:06:
just craigslist
Re: i have over 100 tenant/buyers - Posted by al
Posted by al on September 04, 2008 at 15:32:34:
Thanks! I’m very surprised that I got all the tenant/buyers within one month. So now I’m juggling a bunch of stuff and fixing it as I go.
I just need to close 1 out of 100+ tenant/buyers and I’ll be very happy.
It’s just weird that I’m complaining about having too many tenant/buyers with 3% - 5% and I don’t have many properties to put them in. So I’m planning to dive in and work with agents hoping to educate them and conver their listings to some sort of lease to own or owner financing using my trust strategy. I have no problem educating people since I love doing that. And I have no problem offering 3-4% commission to the broker just as long as they’re willing to cooperate with me not against me. Otherwise I’ll make my full asking price offer directly to the homeowner after their MLS listing expires and theyll get a big fat 0% commission.
I’m using land trusts as my vehicle so the life of the trust term is 11 years with the right to extend. In my 90 day non exclusive option, i’ve set for 11 years. It’s all negotiable so if the homeowner wants 3 years, then I’ll make adjustments for 3 years with the right to extend. Otherwise he’s going to get the property back with the payments current and he’d be back to square one. I’d just move the tenant/buyer into another trust property for them to take over. This would give some time for the market to cure itself and show some appreciation and give plenty of time for the tenant/buyer to qualify for a loan or simply resell it to someone else. If nothing happens in 11 years, we extend it and keep going until one of my exit strategy kicks in. I have a couple of exit strategies so I will deal with it when we’re near it.
We don’t do wraps or AITD’s because we’d have to foreclose on a defaulting buyer and go through a quiet title action and unlawful detainer. Also the personal liabilities of the buyer can affect the real property with lien attachments. Another risk would be the buyer or homeowner dying and risk the property to the probate courts. I don’t want none of that.
We don’t do lease options because I prefer not to give rent credits nor take option fees applied to a pre determined purchase price. There’s that risk that the tenant/buyer will claim equitable interest and have their personal liabilities affect the property and can compromise the homeowner’s title and put the homeowner at risk to go through a foreclosure process upon claiming equitable interest. I know there are investors who are doing lease options safely and correctly but I prefer using the land trust method.
Yes I give homeowner’s their full asking price offer with terms. The terms are to leave the existing mortgage in place and we’ll take over subject to the bad mortgage or subject to a loan modification. Any existing equity or negative equity will remain in tact. Just wait for it.
Sometimes I can give $5k-10k more on top of the full asking price offer just to sweeten up the deal to get them to sign my non exclusive option. I add a 5% premium on top of my full price offer and I will wait for that when the new financing comes in place in the future. I will then ask for 5% up front based on the mutually agreed value between investor and tenant/buyer. So now I’m working on terms and creating my 9-10 profit centers off a property with no equity or even if its upside 50k-100k. No body wants them. I’ll take them since they’re free for me to control and create my profit centers. I also make that 5% up front refundable to the tenant/buyer. Most investors will make it non refundable.
Loan modifications are a key to fix those bad loans and high payments. So this is my entry tool and then do my trust strategy afterwards since the payments will be more marketable and doable. One example was $4400 was cut down to $2100. I’m using a commercial type triple net lease agreement inside of the trust so there wont be any payment shock when they do bring in new financing. I set a 2 month contingency fund of full payments in the trust to handle the default and eviction. If I collect 5% up front, I won’t be a bonehead and splurge. I’ll take a few hundred to take my wife out and keep the rest in a warchest for any down side. Also I’ll make the tenant/buyer get a life insurance policy in case he/she dies. I’ll also get a separate personal umbrella policy for myself aside from an LLC I plan to create later on. Right now I dont have any assets to protect so an LLC is not needed.
I’ve thought about hiring out but it’s free to train these tenant/buyers to become my bird dogs. They’re bringing me properties they want to live in and ill make offers on them. If it doesnt fit their needs at least I can get one new inventory and leverage that to build a larger tenant/buyer list. I’m looking to educate real estate agents and mortgage professionals about my strategy and pay them their full commission based on my terms - not their terms. I’m always willing to educate first. Money will follow later on. I have a good paying day job so money isn’t a main issue. I have the knowledge and confidence, but I’m lacking real world experience because I’ve never closed a creative deal yet.
I’ve closed 3 regular deals that involved credit but that’s all conventional stuff.
Re: i have over 100 tenant/buyers - Posted by Levi
Posted by Levi on September 05, 2008 at 08:47:25:
This sounds ridiculous. How do you get paid? Have you actually done a deal like this?
You probabaly need a license… - Posted by Jason
Posted by Jason on September 05, 2008 at 07:08:29:
A fellow by the name of Bill Gatten tried something similar to what you are doing and got creamed by the Ohio real estate authority for not having a license. Well it wasn’t him personally, he knows how to stay out of the line of fire, he had one of his worker bees take the fall. Checkout the link below. You will probably need a license in other states as well once the issue comes before them.
Jason
Re: i have over 100 tenant/buyers - Posted by al
Posted by al on September 05, 2008 at 10:10:22:
it does sound ridiculous but this is what separates me from my competition of other investors low balling homeowners and tying up their properties with exclusive option agreements. im giving them what they want with “terms.” if they dont like my terms and full asking price offer, then i dont do the deal. i guess they want a full price offer all cash in a down market?
i dont have cash to low ball sellers with equity, REO’s or short sales, so i prefer to offer terms at their full asking price and create premium terms to the non conventional buyers with 3-5% and can take over payments via sub2. its arbitrage. just like a wraparound or an AITD but im able to mitigate the common risks and pitfalls.
i currently have 7 properties under a non exclusive option agreement as a principal. no need for a license.
Re: i have over 100 tenant/buyers - Posted by al
Posted by al on September 05, 2008 at 10:05:48:
from the 3-5% up front contribution which i split with the homeowner. im simulating an equity share on the property. also using a triple net lease agreement, im planning to include $200-$300+ in monthly cashflow to be split with me and the homeowner. i also add a 5% premium on top of my full price offer and that’s due to me when the property is liquidated/disposed with new financing in the future. also seller is entitled to 25% of any future appreciation. investor gets the other 25% and resident/buyer will get the other 50% upon refinancing or reselling it to someone else.
i have about 9-10 profit centers that im willing to share with the homeowner.
Re: You probabaly need a license… - Posted by al
Posted by al on September 05, 2008 at 10:02:48:
thanks jason,
ive read this and the investor didnt follow suit of how the system was laid out. investor bailed out on the property and fled to the west coast. investor failed to secure a replacement and then blamed bill for his system that’s been working since 1984 with over 1200 successful transactions.
i use a non exclusive option to real property. upon securing a qualified tenant/buyer, i exercise my “non exclusive” option to real property and then becomes an “exclusive” option towards acquiring beneficial interest/personal property. then id get a percentage of that beneficial interest of personal property NOT real property. also i would not have equitable interest since i wouldnt have the deed yet im able to control the land trust that holds real property.
im a principal in the deal for loss or profit with an exclusive option towards becoming a co-owner/co-beneficiary of the trust which means i don’t need a real estate license. im buying on terms, and selling on high terms. isnt that how lease options, wraparounds, AITDs, contract for deeds, land contracts, equity sharing, wholesaling, work? how is this any different from all the creative financing other investors are doing?
my name is on the purchase offer towards personal property NOT real property.
im working in california. if i have a deal in ohio, then ill find a estate/trust attorney first before i even consider it.
Re: i have over 100 tenant/buyers - Posted by al
Posted by al on September 05, 2008 at 10:14:56:
im still working on closing my first deal using this strategy. at the moment im asking the homeowners to work a loan modification so i can get the payments down nearly in half so the payments are more marketable for take over subject to a successful loan modification.
i tell my tenant/buyers that have been calling if they want to be in the loop and get any updates on my properties that are available for take over subject to(sub2 a loan modification). this is how i get them to fill out my forms and be on a list.
Please let us know when you actually close a deal. - Posted by SoCalGal
Posted by SoCalGal on September 08, 2008 at 09:55:38:
Thanks.
Re: i have over 100 tenant/buyers - Posted by SoCalGal
Posted by SoCalGal on September 06, 2008 at 11:55:21:
** at the moment im asking the homeowners to work a loan
modification so i can get the payments down nearly in half so the
payments are more marketable for take over subject to a successful
loan modification. **
If the current homeowner is able to obtain a loan mod to get the
payments down nearly in half, why then would they sell to you subject
to?
Re: Please let us know when you actually - Posted by al
Posted by al on September 08, 2008 at 10:40:09:
i will and im itching to close my first!
Re: i have over 100 tenant/buyers - Posted by al
Posted by al on September 08, 2008 at 09:20:22:
you are correct. if they want to stay put, then i do it for a service fee. if they dont, then i write a purchase agreement and option subject to loan modification.
Re: i have over 100 tenant/buyers - Posted by Scott Schuhwerk
Posted by Scott Schuhwerk on September 08, 2008 at 22:05:05:
Al-
You mentioned you would like to educate/train mortgage
brokers/realtors on this on your terms, I would be interested in talking
with you as we are starting to market to sellers in similar positions here
with a decent marketing budget (bandit signs, telemarketing to expired
listings, for rent ads, FSBO’s, letters, classified ads, etc.). Just get
stuck on a few things that would like to talk to you about and work
with you on. We are in CA as well, but in Northern CA and have more
time than you from the sounds of it. Don’t have a day job, just focus
on mortgage, creative real estate full time. If you would like to talk
please email me at scott@novomortgage.com with your number
Thanks,
Scott
Re: i have over 100 tenant/buyers - Posted by Escobar
Posted by Escobar on September 09, 2008 at 24:03:12:
Ok.
If I got this one, you do Subject2, with Land Trust, with Comm NNN lease agreement, and subject to Loan Modification trms for the lower monthly payment. Now, I can see how you get to this point – but why would a seller then back out of the home, and sell the property in a land trust, while you place a Resident into the deal after the loan has been modified. What is the key factor that will trigger the sale of the home to a new bene of the trust?
If you are successfuly at this point with the seller – then I can see how you can do this deal. There are PLENTY of buyers/residents for the land trust. Yes, no issue here since the qualifications is less than a full blown FHA loan for the new buyer/tenant. If I can understand this part – then I would be willing to work with you to duplicate the work in our local area and expand your busines. You have a model that can work – but needs to be streamlined and you need to make the cash.
Email me some details. I would love the chat about the possibility of working together. I wrk in the commercial lending business (Ca) and this type of land trust investing is of great interest to me.
Regards, JCE
Re: i have over 100 tenant/buyers - Posted by al
Posted by al on September 10, 2008 at 15:32:16:
ill send you an email.
i was studying 1031/TIC(tenants in common) using commercial buildings with a single tenant on a triple net lease agreement. same concept but on a smaller scale using residential properties. its genius and i really have no competitors in this niche because everyone else is low balling and passing up negative equity properties. these are free properties for me to control and co-own by getting an assignment of beneficial interest of personal property NOT real property. and im able to split the profit centers with the homeowner for allowing me to use their property creatively.
to answer your question, if the homeowner did a loan mod and was successful, then they should stay put if they can afford it. if they cant afford the new lower monthly payment, its time to move out so someone else can move in on a NNN basis.
either i charge a service fee for the loan mod if they want to stay or take over sub2 loan mod.
no foreclosure bailouts here. too risky and dangerous.
makes it a performing asset for the lender. just reduce the rate and extend the term. keep the principal loan balance as is and wait it out for 11 years with the right to extend. the new financing will come in, we just dont know when. this also helps preserve the neighborhood values since im giving homeowners their full asking price offer. 100% of their equity is theirs. they just have to WAIT for it. so there’s no equity skimming. i dont allow the homeowner to touch the NNN payments. it goes to our trustee’s collection service who’s licensed, bonded, non for profit. we include the monthly trustee fee in the NNN payments. so there’s no rent skimming
Re: i have over 100 tenant/buyers - Posted by al
Posted by al on September 10, 2008 at 15:17:25:
here’s my email
thefullpriceofferguys@gmail.com
let me know that youre from creonline.com and post my original thread so i know where you came from.
my problem is finding properties with good payments for my resident beneficiaries (aka tenant/buyer).
i can give the homeowner a full asking price offer SUBJECT TO (SUB2) LENDERS APPROVAL OF A SUCCESSFUL LOAN MODIFICATION.
i have my loan mod resource and theyre currently at 100% success rate and averaging 4.25% interest only for 3 years. some can be for the life of the loan of 30 years fixed. loan mod isnt my main niche but its an answer to this bad mortgages and high payments.
my partner reduced his las vegas home in henderson from $4400 down to $2100 and hes a sub2/lease option investor. same concept but i prefer to use land trusts to mitigate the risks.