Questions from one ... answers for all. - Posted by MERLE WOOLLEY

Posted by Merle E Woolley on April 09, 2001 at 07:00:20:

Not sure what you mean by “setting up accounts” with our investors. Ours is a very simple arrangement. When we purchase a property, the investor delivers the funds to the title company just as a bank would do. The title company prepares the note and Deed of Trust for our signatures, they have the DOT recorded and mailed to the investor.

We pay the payments to them on the first of every month just as we would if they were a bank.

If I have not answered your question, try me again.


Questions from one … answers for all. - Posted by MERLE WOOLLEY

Posted by MERLE WOOLLEY on April 07, 2001 at 20:13:13:

When someone emails questions to us, I usually post them here for all … just in case someone else has the same problem. Always leave out the name of the sender … just in case of their desire for privacy.

[My answers are in brackets.]

Hey Merle and Pat,

We listened to you guys at the round table. XXXX talked to Pat most of the time.

Our question that We are not quite sure what to do is–How do you get the 20% down to initiate new loans?

[We actually finance the entire purchase price of the property with our investors. There is no down payment unless we choose to do so to get rid of extra cash we have on hand.]

We have a ton of equity, but we only have about 50k for down payment money, and that’s at 12%, still not sure how you do it.

We have had the problem before, you know, seasoning. Most mortgage companies will not refinance until you’ve owned for a year. Then it is at a much higher rate because we are investors.

Different note–how do you find properties?

[We used to run ads. Today we get most from referrals and a few foreclosures purchased on the courthouse steps. Whe we ran ads, the ad went something like … Wanted. Nice 2-3 Bedroom home. To $75,000. Cash or terms. Close quickly. Merle Woolley 725-1132.

The callers usually thought we were individuals looking for a home and this gave us the opportunity to explain how we buy the house. The typical investor ad you read on about on CREO, by its content, tells the seller you are an investor. They assume you are looking for a bargain and possibly do not call. We have purchase very few houses where the seller was intending to discount the price.

The ads always worked best in the local “shopper” rather than the newspaper. We found that few sellers read the “Houses Wanted” section.]

We do run an ad in the cheap papers. We leave it in all the time. We have contacted realtors, who will not send us any information. We do call ads in the paper for FSBO’s, but most are not motivated. Basically, we make NOOOO offers, because we can’t find anything to make them on. How do you do it?

[We do not FSBO’s nor do we call Realtors. And, I guess we could say that we do not make “offers” … again as often discussed on CREO. When someone calls us, we explain what we do and how we buy (up to 85% of market value). If they can possibly sell that way, we tell them we will drive by, then call if we are interested in seeing the house. Do you get calls on your ads? What do the ads say?]

At the convention, we heard all kinds of ways to buy, negotiate, etc, etc, but nobody really gave us any good advice on how to find deals.

[We do negotiate or do most of the neat little things most people do to buy houses. We are quite straightforward in our dealings with the sellers. We also try to always remember: (1) It is our money in the transaction - we should be the ones to dictate how it is spent; (2) The seller has the problem, not us; (3) We may have to live with this house & loan for a number of years - it makes sense to make wise decisions; (4) We know what it takes to make the business work and we must stay within those guidelines.]

We know people are doing it. We just don’t know how.

[In the beginning days of our business, we had the same problem. We spent thousands of dollars on courses, tapes, and seminars looking for a simple answer to the question … “how do we start?” Everone wrote about and talked a lot about what they supposedly were doing … but, nothing on how we could start.

So, after studying everything we could find, using all our years of experience in other businesses, we created a business plan that we felt was the best we could do. Once done with that, we started buying houses.

We bought the first two with cash from that sale of a business. Then, I went to a bank to finance these for money to buy more. That’s when we learned about the due on sale clause. You see, we sold those two houses on a Contract for Deed. The bank would not loan us any money on them.

Back to the drawing board. We learned about using a Lease with Option. Went back to those two buyers and cnovinced them to let us change the contracts to LO’s. Back to the bank, etc. Everything went well until we learned the banks limited the investors to 4 or 5 loans on income property.

Back to the drawing board.

That’s when we came up with the plan to use private investors. The best thing we had going for us was ignorance. You see, if we had known of those problems in advance, we would likely be doing something else … more hours, harder work, less satisfaction … and perhaps less money.

After owning a number of businesses where we were dependent on someone (suppliers, banks, etc.), one of our objectives was that of being 100% independent in our business operation. We are about as close as you could hope to be. We buy according to our terms, pay the interest rates we want to pay, earn a fair profit on every transaction, and know that everyone involved in every transaction receives their fair share of that transaction.

Hope this gives you some food for thought. Feel free to ask more. Will help if I can.]

Have a GREAT day … TODAY!!

Re: Questions from one … answers for all. - Posted by Laura

Posted by Laura on April 08, 2001 at 18:20:30:

Merle, great post. Could you explain the technical details of how you set up the accounts with your private investors? Is it escrowed, put in a trust, do your investors keep it in there savings account? Thanks a bunch!!!

Re: Questions from one … answers for all. - Posted by Terry (Houston)

Posted by Terry (Houston) on April 08, 2001 at 09:32:28:

Thank You once again for taking the time to share your information with us.

I was very honored to meet you and Pat at the convention and always look forward to your posts.