Alot of questions.....

[New2TheGame]

Hi there,

I am one of those who is seasoned in theory but has yet to really put everything into practice. I am this week implementing my marketing which is a mix of trying to find buyers, finding ANY sellers, and more specifically, highly motivated sellers for sub-2. I have so many questions and no current mentor and was wondering if someone would be willing to help. First question is, I understand Lease Options are not the best way to purchase RE since you can only sell on L/O etc., but seeing as most of the buyers I will work with will want L/O's I'm a little confused. Subject-2, multiple mortgages, and land contracts, all give you control, and the first 2 give you the deed. When is it best to try one of those 3 methods as opposed to just Lease Optioning the property from the seller? Ok in sub-2, I also see alot of people say to split the equity, some dont, some even get the seller to actually pay them at closing. Now, I am trying to build my business with win-win situations, so I am trying to make the most money, but mainly help people out. So how do these sub-2 investors get people to walk away from $20,000+ in equity? And if offering the seller who may be preforeclosure or requires a payment for their equity, would you be able to structure it so that their back payments/payoff for equity, is payed with your tenant-buyers consideration? Sorry for the lenghty inquiry, but I am ready to solve some problems! Also if anyone specializes in these techniques in Las Vegas or anywhere else, who is willing to take on a protege, I would be willing to set up a situation where we split profits on the deals we do. Thank you guys for everything......And keep this board awesome!

[Just Information]

First, welcome to what I believe to be the greatest forum for investors who want to learn to do investing with a focus of helping. That's the magic of "Magic Bullets".

Dan has created a great family atmosphere!

Lease option strategies can be a great form of investing if implemented correctly. See http://www.magicbullets.com/forum/showthread.php?t=435

Choosing an investment strategy is dependent upon your customers needs what you plan to do with the property and so on. Placing creative strategies in a formed box can not be done.

Yet again equity splits and so on is simply determined upon finding your customer needs.

I do not negotiate based upon a purchase price; I negotiate based upon my customers needs. When you fulfil your customers needs you have a deal. I have purchased real estate by providing actual moving money, providing a new car, by providing first - last & security deposits and the list goes on.

You will find that most property owners will not pay, for you to take control of their property, as this is not a WIN-WIN.

Before we go any further with this - tell me whom you have studied under, what books you have read and so on. Not the free intro seminars.

[Jim FL]

I am one of those who is seasoned in theory but has yet to really put everything into practice. I am this week implementing my marketing which is a mix of trying to find buyers, finding ANY sellers, and more specifically, highly motivated sellers for sub-2. I have so many questions and no current mentor and was wondering if someone would be willing to help.

REPLY:
First, congrats on taking a step forward, I think as John Michael said, you've found a great place to learn and discuss this business. I do have a question about your marketing?
Why are you spending time, money and effort to market for buyers when you have nothing to sell?
Some folks think this is a good idea, but I disagree.
To me, when we buy a GREAT deal, we can sell a GOOD deal, and buyers will line up.
Also, we are here to help, so stick around, there's a few of us who have done a few deals here and there.


First question is, I understand Lease Options are not the best way to purchase RE since you can only sell on L/O etc., but seeing as most of the buyers I will work with will want L/O's I'm a little confused. Subject-2, multiple mortgages, and land contracts, all give you control, and the first 2 give you the deed. When is it best to try one of those 3 methods as opposed to just Lease Optioning the property from the seller?

REPLY:
I like to quote another investor I know when it comes to sandwich lease options.
He said more than once, "Friends don't let friends do sandwich lease options".
I agree with him and here is why.
When a seller is willing to allow you to control a property completely, and you take over payments with a lease option, it functions in essence the same way as a sub2 deal.........but with that, you get OWNERSHIP......thus COMPLETE control.
Much better in my opinion, because as you pointed out, you have multiple exits available to you..not just a lease option.

Ok in sub-2, I also see alot of people say to split the equity, some dont, some even get the seller to actually pay them at closing. Now, I am trying to build my business with win-win situations, so I am trying to make the most money, but mainly help people out. So how do these sub-2 investors get people to walk away from $20,000+ in equity?

REPLY:
Here is one area where I do not agree with John Michael. I do think there are times when a seller can pay you to take over their house, and it is win win......in fact, I do it all the time.
See, when a seller who is motivated contacts me, they are seeking a service.........a service which relieves them of the burden of owning their house.
If they list with an agent or broker, they have to pay closing costs, and commissions, plus a few other things.
A few, or even just a couple payments after I take possession from the sellers is a smaller amount that what they'd pay to sell conventional, and a whole lot faster.
I even word things that way when talking to sellers from the start.
Something as simple as answering the phone when sellers call with this: "How may I help you?" sets a tone right away.......they are calling YOU for help.
Remember, the sellers need to sell, and you DO NOT need to buy.
The burden is on them.
I cover this in detail in my course materials and try to teach people, don't make offers to buy houses, make a proposal for the use of your 'service' or 'program'.
Much easier this way.
How do you get sellers to walk from equity?
That's easy.
They can TRY to sell themselves, or with an agent, but this is not garunteed to happen.
When a seller signs with me, they know the house is sold, and the problem solved.
I don't work for free, nor am I a charity, so profit in the deal is a must for me to be involved.
I don't hide that fact, and neither should you.
If a seller is facing losing a house either because they are behind on payments, or just low on income and cannot maintain them any longer, that equity does not mean squat anyway........equity does not buy groceries.

I'm working up some articles, and if Dan allows, I'll send them to him to post here.
They are based on seller coversation examples, from first phone call to closing.
This way people can get the picture in their heads of how we set up these deals, and handle communicating our offer of service to the sellers.
i'm swamped so they might be a while though.
Suffice it to say, you are better off just having a conversation with the sellers, determining whether they are motivated or not...and then what will solve their problem.
If the solution is one you can provide while making a profit, then you have a deal.

And if offering the seller who may be preforeclosure or requires a payment for their equity, would you be able to structure it so that their back payments/payoff for equity, is payed with your tenant-buyers consideration?

REPLY:
Sure you can, and I do, all the time.
In fact, I bought a house this week from someone who lives out of state.
They wanted $5k from the sale of their house, but agreed to take $2500 instead.
So, I agreed to pay that, but expressed to them that my resources are better spent at the moment on cleaning the house up and marketing for buyers.
Therefore my $2500 payment to the sellers will go to them upon resale or occupancy of the property.
I already have a T/B'er gathering info and funds, and plan to sign it this weekend.........for $8k down.
From that $8k, I'll send the seller their $2500 and everyone is happy.
Remember, you are a service to the sellers, if you present things right.
No service that I know of pays you out of the gate to sign up and use it.
So waiting for their cash makes sense.

Sorry for the lenghty inquiry, but I am ready to solve some problems! Also if anyone specializes in these techniques in Las Vegas or anywhere else, who is willing to take on a protege, I would be willing to set up a situation where we split profits on the deals we do. Thank you guys for everything......And keep this board awesome!

REPLY:
Keep your money, and ALL profits from your deals.
This place and others are FREE, so use them for questions etc.
You'll do fine, just take persistent, aggressive action in marketing, and make sure you understand the mechanics of whatever purchase method you use.
and of course...........REMEMBER THE GOLDEN RULE!
BUY RIGHT!!!
Meaning, no matter what method you use to purchase a property, you are in for far enough below value that you can sell the property right away, and still make a nice cash profit.
I prefer to buy my houses in the 0-70% of value range, hovering between 50% and 70% of value.

HTH,
Jim FL

[Dan Auito]

New2, where those Fantastic replies or what? Thank you both, John and Jim!
I'll extend an extra big thanks to Biker Jim on this one for the time he spent to address each specific part of your question.

Jim no doub't you're busy, gee? I wonder why? must be all that problem solving going on. You are free to post up your own articles at anytime Jim, you don't need permission from me, again you have proven yourself time and time again so the trust has been established. These boards are as much yours as they are mine or anyone else who decides to be a participating member here.

I'm simply the watchdog and patriarch of the family here, that's part of the allure (FREEDOM)! :SM020: Thank you both for taking on the role of advisor in this realm of education. :praise:

[REIaddicted]

I love when there are many questions,
Different people have different answers for them. IT is called CREATIVE investing.

The diversity makes this forum unique and great! :icon_bete :clap:

[New2TheGame]

First off, thanks everyone for such amazing answers and turn around time....I CAN DO THIS!

JohnMichael..Thank you for your help. I have studied many different courses. The most intense being Kris Kirschner's auto pilot systems (A Ron LeGrand student, who uses mainly Sub-2 and owner financing to purchase) John Lockes Sub-2 Thats What I do..... and more recently Azam Meo, a Joe Crump protege. He's not a big name, but the info he has given me has been great. And finally Randall Mixon who sells his option, L/O, and sub-2 course on Ebay.


JimFl... God bless you for taking time out of your day to help someone like me. I know of a sub-2 investor Mr. Gaudina who likes to use private funding to give his sellers their equity payoff or make up back payments, but that didn't make much sense to me if you were bringing in a tenant buyer with a large consideration. Thanks for clearing that up.
About marketing to buyers before I have something to sell. Can't I just reverse engineer the process? I have a buyer with 6k down, a decent fico, but he isnt qualifying for a loan. Couldn't I just look in the paper in the area he wants and his price range for FOR RENTS, and get the landlord to do a L/O, then collect the down payment for bringing him a tenant buyer? Just wondering if this will work?

And while were on a roll, what about not using a Land Trust to "hide" the sale of the property. The sellers I have talked to were all go until I brought into picture the land trust, which only an Attorney can explain. Can I just use a Disclosure Letter to Lender, and let them know what's going on. I am not much for deception.

Keep it up, and boards like this are going to put Bootcamps and Bus Rides out of business. =)

[Dan Auito]

Beware John Micheals investment plans are headed toward bankruptcy according to what he has said. Just a word to the wise.

[Aldo]

And then there's Atty. Troy Titus. His problems make JohnMicheal's problems appear to be a walk in the park. Anyone dealing with Atty. Titus needs to disconnect immediately. Yesterday would be better.