Posted by chris on May 16, 2009 at 17:00:51:
once again thanks for the great advice, your so completely right. the funny thing is i’m not even scared about all the zero’s like most people are because i can see were that money will come from (banks, seller-financing, private-investors and investment company’s and etc)
but I am a little scared/uneasy about were the small money will come from, like money to pay attorney fee’s and due diligence cost and loan app fee’s which most beginning cre investors don’t know you’ll run into and etc.
so ray your so right, i’m walking over dollars to pick up dimes
plus ray i don’t know what your lawyer charges you, but the lawyers i’ve been networking with charge anywhere from $310 -to- $360 per hour, so my brain can just see that car crash waiting to happen, plus i once had a very bad experience with a lawyer before
Ray i have two more questions to ask you and that will be it (i know your a very busy man)
how much property info do you request from the seller before you make an offer. the reason why i ask you this question is because i know you don’t make offers based on the brokers property marketing package (pro-forma numbers)
lets just say you didn’t have the money for due diligence, legal fee’s, and etc, but you knew of some investors who did have the money and wanted to get involved. how would YOU go about communicating to them how you’ll use the money? and how would YOU communicate to them if the deal wasn’t a good deal, so you lost/spent their money?
and Ray thanks for helping everyone out with their questions
P&S Agreement Question for Ray - Posted by chris
Posted by chris on May 13, 2009 at 16:26:46:
I wanted to let you know that I’ve bought your course and I think it’s wonderful, but I wanted to know if you have a P&S agreement with language more geared to the purchase of apartment complexes instead of the P&S agreement in your course which focuses on shopping centers?
My other question concerning this matter is…
When does one get their attorney involved?
some say as soon as its time to draft a P&S agreement, while other say they get their attorney involved a lot later down the line (i guess to cut down on legal fee’s and to see if the deal will pan out). So Ray can one use a boilerplate type P&S agreement to purchase commercial real estate like most do in single-family investing
now I’m not trying to avoid using the services of a real estate attorney, it’s just that I see the wisdom in using their services a little later in the deal instead of upfront (because attorneys make expensive secretaries, plus to me it sounds crazy to pay an attorney to draft the same paperwork over and over again for different acquisitions, when you could pay them once for drafting you a P&S agreement and then use that contract as a boilerplate for other property purchases)
Re: P&S Agreement Question for Ray - Posted by ray@lcorn
Posted by ray@lcorn on May 14, 2009 at 06:43:06:
I do have contracts specific to multi-family but as I explained in the book I almost never use the same contract twice. I typically start with one or more past documents and pick and choose the elements that best suit the deal. In most cases I will also have to craft one or more unique clauses to address some specific issue. I’ve been doing this for almost thirty years, and I still involve my attorney in the draft stage.
The clause by clause discussion in the book of the example contract is there to illustrate the objectives of contract construction and how to achieve them. There are so many variables that no document-in-a-box is going to be sufficient for every situation. Buying houses with standardized documents is one thing, but income properties are a completely different animal, and no two are alike.
I also included a caveat about the hazards of handing an attorney my (or any other) contract and asking them to tailor it to your deal. Attorneys are professionals, and a good one considers their documents to be tools of the trade. When you hand him or her a boilerplate document to save drafting fees it’s an insult. Far from being “high-priced secretaries”, good contract construction is a craft, and if the attorney is experienced then he/she likely has crafted a base document that is the result of the lessons they have learned along the way.
Until you have a few deals under your belt, my advice is to consult an attorney prior to signing a contract. In most cases your counterparty will have an attorney to review his side of the deal, and unless you have a law degree you are then in the position of bringing a knife to a gun fight.
When meeting with your attorney, discuss the items raised in the contract chapter of “DealMaker’s Guide…”. Discuss the deal being considered. Then come to an understanding of the best way to proceed.
As you gain experience it will become easier to know up front what elements need to be in a particular contract, but to assume a boilerplate document out of anyone’s book or course, including my own, is foolhardy. There are too many variables and too much to lose to leave it to chance.
Re: P&S Agreement Question for Ray - Posted by chris
Posted by chris on May 14, 2009 at 09:24:21:
Thanks for the great advice, but Ray let me further explain to you my concern/confusion pertaining to this matter.
I guess I’m thinking incorrectly or viewing this whole thing wrong, but Ray I’m trying to go as far as I can without spending any of my funds or the funds of my investors (especially until know i have a great deal).
earnest money I understand that…if the deal doesn’t workout you get that back
due diligence cost I understand that…property inspections, appraisals, surveys and etc. But you at least get to check out and approve of the properties market and financials before spending these funds
but getting/paying an attorney to draft up some paperwork before you even begin your due diligence that scares me. I guess I would feel a little more comfortable getting an attorney involved during the P&S phase if I some how could at least verify the cash flow of the property, but most sellers will not release any substantial amount of property financials until a P&S agreement is drafted and agreed upon
also, Ray is their a clever way to ask an attorney that would not insult him/her if you could delay paying him/her until some later date or even until the closing?
Re: P&S Agreement Question for Ray - Posted by ray@lcorn
Posted by ray@lcorn on May 16, 2009 at 08:42:03:
If you’re planning to do a deal with third-party investor involvement and don’t have an attorney yet, you might as well smoke cigars in a a dynamite factory. A P&S agreement is the least of your worries.
Look, it takes money to play the game at this level. Anyone who tells you otherwise is full of crap. And the more complicated the deal (such as having outside investors) the more advisable it is to have capable legal representation every step of the way. That might cost a few hundred bucks initially, and save you tens of thousands later. You’re stepping over dollars to pick up dimes.
If you’re not willing or able to set your business up properly, then save yourself a lot of heartache and don’t start.
And next time you take your car to a mechanic, ask him if he would mind letting you pay the next time you happen to drive down his street, cleverly of course.