Which Is the easiet and has the least disadvantages?
sub.2?
rehab and rent out?
rent to own?
or anything else?
Lets talk about this guys ;D
Rent to Own aka Lease Purchase is the best way for me to control homes in good neighborhoods without the hassles of banks, titles, escrows, etc.
With $1 to one month rent I get to control someone’s property without bank qualifications and credit problems.
I make money upfront, during and backend profits.
I could also use several techniques withing a Rent to Own.
Sandwich Lease: I make money upfront, during and after.
Assign: I could assign the contract to a third party and collect an assignment fee.
Cooperative Agreement: I work with non motivated sellers on a cooperative agreement and make money too!
The Rent to Own Alternative allows me to control not own beautiful homes and go to the bank without the hassles of traditional real estate investing.
To your success,
Diana Fontanez
Lease Purchase Specialist and Consultant
I would suggest -starting off with wholesaling if your new…you’ll get good idea on how investing works not to mention valuable exp.
Diana, how does the Cooperative Agreement work?
Hi there,
You will find that 80% of sellers out there are not motivated. This strategy allows you to work with a seller for 30 - 90 days or more. You will write the terms exactly as the owner wants. The price, rent credit, etc. Then you will assign the contract subject to the owners approval and collect an assignment fee.
I raise the price 5% which will be my assignment fee and so the seller doesn’t loose anything.
To your success,
Diana Fontanez
Lease Purchase Specialist and Consultant
Hi,
You said that most sellers aren’t motivated, but isn’t it true that you find the most motivated people who are in the pre-foreclosure stages?
Hi there,
I am talking about a strategy to use with non motivated sellers within the Lease Purchase Alternative. Sometimes we make a cold call and get a seller who is interested in learning more about rent to own but upon further dialog he objects. Now we switch our negotiation and go for the cooperative agreement.
He doesn’t know how to structure one and maybe doesn’t even have the contracts. You will be a saver for the seller when you structure a cooperative agreement.
To your success,
Diana Fontanez
Lease Purchase Secialist and Consultant
Diana, can you give me some insight as to how to structure a cooperative agreement?
Thanks
I’d like to know more about them also please.
Coopertaive Assignment is nothing more than a Lease Option with the permission of the seller for you to find and assign a contract your contract for them. =) Whatever terms you seller would like, that is what you get them.
Great answer Pinoydarv.
That is correct. Is just a way to help a seller out. You help him set the sales, price, rent credits, contracts, etc. You will then find a buyer tenant and collect an assignment fee.
If the seller wants $100k. You raise the price to $105k. %$5k is your assignment fee and that allows the seller to absorb the fee.
If the seller objects to that fee. You could negotiate a split of the positive cash flow and/or the assignment fee.
To your success,
Diana Fontanez
Lease Purchase Specialist and Consultant
Diana, what happens if the tenant/buyer defaults AFTER you receive payment due to unforseen circumstances? Does the owner get the house back quickly without having to go through lengthy eviction procedures?
Diane,
As a beginning investor with little money, would you recommend signing up a contract with a motivated seller and then flipping itto an investor to increase my initial capital and then finding other properies to which I can invest the money to have them cleaned and marketed?
Anything that happens after you have assigned your contract is not your problem. But please do your due diligence on screening the tenant you put in. You really can’t guarantee anything that the tenants will not default. It just happens sometimes. =(
On a cooperative Assignment once you assign the contract you are out of the deal. You are assigning/selling the contract to a third party. You are out of the loop once that is done.
On a Sandwich Lease where you will be making money upfront, during and after, you are responsible for that procedure.
I suggest you educate these tenant/buyers on the consequences of not making payments. Also, by giving them great value it is less likely that they will default because they have a vested interested.
To minimize that risk although not 100% fool proof, i suggest the following:
Credit Check: Check the credit of the tenant/buyer. Go back as far as you can. I suggest you use tenantverfication.com.
Deposit: Get a good non refundable option consideration. State in your contracts that if they dont make payments on or before the 1st, they loose their option consideration and the contracts turns into a month to month rental. Go for 2 - 5% down as option consideration or 5 to 6 months worth of rent. The bigger the deposit the less likely they will want to loose that non refundable option.
Rent credits: Give good value. I go for 50 - 100% rent credit depending on the deal and the spread you create with the seller. State in your contracts ( important ) that rent is due on or before the 1st of the month. 2nd is late and they loose their rent credit for that month.
Educate them from the beginning. I have 3 specific and powerful questions I ask these sellers in order to qualify them for a home that I have under contract.
I let them know straigh up front that rent is due on or before the first, 2nd is late, 3rd eviction starts no matter what circumstances. This is a business and you are not playing games!!! End of story!!
Also, you need poweful contracts to protect you.
To your success,
Diana Fontanez
Lease Purchase Specialist and Consultant
I suggest you do a Cooperative Assignment or a straight pure option and assign your contract. This way you could get your feet wet and know how things works. Once you are comfortable in doing deals. Cooperative Assignment is a great way to make money with unmotivated sellers.
So to do a cooperative agreement, I sign up a house worth approx. $100k for $105k, and then I start marketing the house. Am I marketing for a standard retail buyer or a tenant buyer?
Once I do get the buyer, how do I handle the paperwork. Do I just write and or assigns on the original contract and write in their names? What is the difference between this and an option?
I’m gettign a lot of calls from sellers who aren’t ready to do a straight lease option, who would be willing to do something like this.
How is this different from what a agent would do, and can you get in trouble - to some they would say you are acting as an agent.
As you can see, I’m very interested in this! ;D
So to do a cooperative agreement, I sign up a house worth approx. $100k for $105k, and then I start marketing the house. Am I marketing for a standard retail buyer or a tenant buyer?
Yes, but you can also do a sandwich lease just depending on the spread. When I do a Cooperative Assignment, I keep the option consideration which is 3% - 5% of the purchase price which will be credited towards the purchase price of the property as well. It makes it more attractive to the buyers when you do it this way rather than just collect 5K to assign your contract. I also offer a generous rent credit to get my phone rining off the hook. =)
Once I do get the buyer, how do I handle the paperwork. Do I just write and or assigns on the original contract and write in their names? What is the difference between this and an option?
I use different contracts just depends on what kind of deal I am doing. If it is a CA, SLO, or Pure Option. Of course my contracts all benefits me depending on what my position is on the deal.
I’m gettign a lot of calls from sellers who aren’t ready to do a straight lease option, who would be willing to do something like this.
Thats great! Sign them up and assign your contract. Nothing beats the fact when you call un-motivated sellers and tell them you will give them whatever terms they would like and also have a tenant buyer in less than 1 week. =)
How is this different from what a agent would do, and can you get in trouble - to some they would say you are acting as an agent.
You are in no way acting as a broker or agent. That is why it is very important that you have them sign the contracts. Once the contracts are all signed, you are the principal of the property. You have total control of it. Sell it, Rent it, Live in it or Rent to own it. =)
As you can see, I’m very interested in this! ;D
Great! Get out there and do some deals! [i][/i]
That could work. But investors are out there to make good money. I suggest you start doing Cooperative Agreements. It hardly costs you anything. Sometimes a $1.00 will do the trick and get you off to a great start!
To your success,
Diana Fontanez
Lease Purchase Specialist and Consultant
Thank you for this great post you have both helped me understand this alot better. Im going to save this so I can re-read it when I have more time. I’m sure I’ll have more questions later. Thanks again for taking time to explain this stuff!