hello to all!
as per my previous post i am new to REI, i am in my third week of study (C. Diamond) and second week of reading this forum. i’ve ordered business cards, joined a local REI club, have 2 RE agents (so far) who will work with me and i will be applying for a DBA today or tomorrow. i will be going to the library today to start my list of potential sellers but i still have a few questions:

  1. when setting up the purchase option for the T/B how do i decide on the interest rate, i know how to calculate it but is this something that i base on comps? is there a rule of thumb?

  2. where should i go to validate my contracts (included in the training pack) for the state of Florida, the county clerk?

  3. how should i introduce myself to a potential seller, as a RE investor, property manager?

  4. when the instructor in the course says “option money can be considered downpayment depending upon the lender” what exactly does he mean? i understand the concept in allowing over market rent or a percentage of going to the downpayment but i thought option money (consideration and rent credit) was all contained within the “margin” that would be created…and THAT option money only affects the final purchase price. i had the understanding that it is the T/B’s responsibility to qualify for and have or will have sufficient additional money for downpayment to the lender to obtain the mortgage. am i making this more confusing than it has to be?

  5. when is the best time to form a LLC?

WOW! That’s enough for now. Thanks in advance again for any input!

Hello Almodesto,

Welcome to REI!!! Looks like you got yourself pretty well set up for this type of REI!! Your going to do great!!!


  1. When your asking the interest rate, do you mean appreciation?
    Nationally its about 4-5%. meaning a 100,000 house will be worth between 104,00 to 105,000. In some areas its up to 10-15% like california. So do a search in your area to find this info out!!

  2. To validate your contracts to see if they are good in your state, trying looking of a RE Attorney in your area and see if he/she has any comments on them. Usually they will do this sort of thing for free for the first time. Never know, you might like them and add them to your network!

  3. Always introduce yourself as a RE Investor. This is your new career so be professional and tell them what your intent is.

  4. The option money you get for the option goes towards the down payment at the end of the deal if they descide to purchase the property. This is between you and the T/B. The Lender has nothing to do with this. So say if the house is 100k and the option is 3k. meaning the house is now worth 97k when time comes Plus apreciation and what not. It will be the T/B responsibility to obtain the money for the lending party. You as the Investor are creating a Win Win for you and the Buyer. Meaning their credit is alittle scary right now, but in say 1 year it will be good and their score will be worthy to get a mortgage. So what your doing is letting them RENT their dream home for a year until they can get the mortgage to buy it. In the mean time your making money off the rent and option money. etc etc.
    FYI, Its a good idea to get a lender in your area in your network who knows what your intent is with L/O’s. You WANT the T/B to purchase the house at the end of the lease. Remember, WIN/WIN so get a lender to help you and help them out!!!

Hope this makes since to ya!

Good Luck!


thanks alot Money for your help, it is greatly appreciated. i’ve been reading more and more of the posts concerning L/O and to be honest i’m a little confused. there seem to be a few who really don’t like L/Os but prefer Sub2s. i think i will read up more on Sub2s before i go gangbusters for L/O. i’m not one to procrastinate but i’m beginning to get a little spooked over legalities. then again, so far i haven’t read a lot of negatives concerning “wholesale flips”.is it more of a “what you feel most comfortable with” approach? maybe i should look into “bird dogging” first.

Hey Almodesto,

Glad I could be of some help. REI Is all on how you want to take it. Take the right aproach and see if it works. One nice thing on this site is you get the inside of experienced Investors. In my opinion, you want to try everything and everything at least once until you get the niche of things. If L/O’s isn’t your niche, than maybe Sub 2’s will be the best for you. There is a wide range of differant roads to go down in REI. My favorate and most experienced in is L/O. But I do whats right for the seller and their situation. Heres a little rule of thumb to remember on L/O’s and Sub 2’s; If the sellers credit is bad, IE late payments, foreclosure etc, Get the deed. "SUB 2"If the sellers credit is good, do the L/O deal. The seller will be more than happy to know that they can forget the house for now. than in say 3 years, than get say 5% each year ontop of what they were asking for, for doing nothing but letting you control the property.

If you get into bird doggin, maybe we can do some business together out in your neck of the woods!

Anywho, Good luck with whatever road you roam. Theres money out there!!!


Hi there! I just read your post, although I know it is 7 or 8 months old. I am curious about your success so far with the Claude Diamond system. Have you found it to be something that enables you to get into real estate investing?