Wendy Patton's Lease Option or Rent-to-Own Training Blog

Commitments to the Tenants

2010-08-12T12:17:00.000-04:00

Commitments to the Tenants

If you have tenants in your home, you have certain responsibilities to them. If you’ve got contracts with them, you need to follow through. Take care of the house, make sure it’s livable, keep open lines of communication. You have to view it as if your sellers and your tenants are your customers. I’m tougher on the tenants because they screw up deals more often, and that’s not really an issue with the sellers, but I still always keep my end of the bargain.

Make sure that you’re keeping your Realtors, lenders and others informed at all times. Communication is key!

My goal is to get people to buy and I’ll do whatever I can to help them, but I can’t make them a responsible person or tenant. I can’t even make them close the deal. Only about half of my tenants ever get to the closing table, and many will walk away from their option fees after only a few months of tenancy. I have stopped trying to figure it out.

Excerpt from Investing in Real Estate with Lease Options and "Subject-to" Deals.

Source

Finding and Working with Buyers – An Overview of Selling on Options

2010-08-10T10:29:00.000-04:00

Finding and Working with Buyers – An Overview of Selling on Options

The weirdest thing about prospective tenant-buyers is that you can’t tell who is going to exercise by looking at their application. Some people are borderline potentials for me but then end up paying perfectly and exercising. Others seem like great potentials, they pay on time then don’t exercise at the last minute. You just never know.

I had perfect tenants in an 18-month lease option and everything was going so smoothly I was sure that they were going to exercise the option. Then came month 17 and “We got a problem.”

The wife called in tears saying that she and her husband were getting a divorce and that she couldn’t pay the rent. She was very embarrassed and wanted a way to work things out in any way possible. Thinking she wouldn’t be able to stay, I asked if it would be possible to start showing the house right away, and she said, “No problem. By the way, I do have some jewelry.”

My ears picked up. “What kind?”

The wife said, “Diamonds and emeralds.”

I said, “What kind?”

She replied, “Well, I have my wedding ring and an emerald ring that my husband gave me for an anniversary present.”

I asked how soon I could come over, and she said, “Come on over now.” I immediately went over to the house and she showed me the two beautiful rings and then gave them to me. Now that just tugs at your heart a bit so I said, “Tell you what, I’ll keep these for you. I’m a free pawn shop. I’ll keep them a couple of years even, whatever. If you ever want them back, just pay that rent, no late fees, nothing. Just take them. I don’t want your rings.”

The wife responded, “Oh no, I’m not coming back for those.”

I said, “Well you never know. You might work it out. I want you to work it out.”

She said, “No no, you don’t understand. I’ve been divorced twice now. From him.”

She never came back for the rings and I still have them. Maybe one day I’ll have them reset for my daughter. You just never know what you’re going to get in this business.

Other considerations:

Forget everything about a tenant’s personal life. Judge only based on what is on paper. If we were all blind and deaf that might be the best way to evaluate a potential tenant properly. Just look at the facts. Personally, I don’t look too much at the credit score number but at what the accompany credit data says. If you do a background check on one person you have to do it on all applicants in order to be fair. Regarding Fair Housing issues, you need to have in writing what your qualification requirements/standards are for credit scores, income, etc. for prospective tenants. You can always have it in your contract, however, that if you find out any of there information is untrue that it is grounds for eviction.

Two of my best tenants ever – I was 21 and not even into options yet. I was just a landlord. I bought a house in a lower end area, and I had an open house. So these two huge guys with tattoos everywhere roar up on Harleys and park them on the front lawn. I ended up renting to them. They were the best tenants, perfectly clean, always paid their rent on time, and when they moved out, they left it spotless. If I had judged on the way they looked, I probably would have rejected them because I found them a little scary.

Excerpt from Investing in Real Estate with Lease Options and "Subject-to" Deals.

Source.

The Due on Sale Clause and Lease Options

2010-08-07T20:19:00.001-04:00

Lease Option Eduction and training is key to making sure you are getting the right deal. When you are giving option fee credits and you give too much - could it trigger the dreaded "due on sale" clause in the mortgage? You can find out more about lease options and the different types by going to http://www.wendypatton.com and reading the articles page.

Lease Option Investing with Condos and Townhomes

2010-08-05T22:14:00.001-04:00

Lease Option Eduction and training is key to making sure you are getting the right deal. When finding a lease option deal it is important to work in the median price point areas. This is where people want to live, but which one if you have many to choose from? You can find out more about lease options and the different types by going to http://www.wendypatton.com and reading the articles page.

Lease Option Investing with High End Properties

2010-08-05T19:57:00.001-04:00

Lease Option Eduction and training is key to making sure you are getting the right deal. Should you do high end homes? Maybe for a Cooperative Lease Option it would be great. You can find out more about lease options and the different types by going to http://www.wendypatton.com and reading the articles page.

More Negotiation Tips

2010-08-05T09:22:00.000-04:00

Everyone likes to negotiate! We may say we don’t, but we all do. Think about this: If you were to offer a price for something and the seller said “Yes” right away, how do you feel? Good you got your price, but you are feeling bad because maybe they would have accepted less. Negotiating is key to getting any good deal in real estate also. Here are some ideas to help with negotiation:

1. Check your ego at the door. The best negotiators either don't care or don't show the opposite side they care about who gets credit for making the deal a success. The talent is in making the other side feel like it was their idea to finalize the agreement.
2. Summarize and confirm. At the end of any negotiation it is best to always summarize the points covered and any areas of agreement that you and the opposite side agree on. Be sure that both are in agreement. Do not leave behind loose ends. Wrap the deal up and take your next steps.

There are many good books and CDs on the market to learn more about negotiation skills. I encourage you to buy some and study different ideas. It will help you in all areas of life, but is essential in real estate investing.

Excerpt from Top 10 Negotiation Techniques for Buyers and Sellers - Tips for negotiating Real Estate, By Wendy Patton.

Source

Determining the Profit in a Lease Option

2010-08-03T21:00:00.001-04:00

Lease Option investing is based on the numbers of the deal just like any other type of real estate investing. When you are doing a sandwich lease option, it is more critical that you really know the numbers vs a Cooperative Lease Option. The reason it is more important is because you are going to stay involved in the deal and there is more time involved and therefore the payout must be bigger. You can find out more about lease options and the different types by going to http://www.wendypatton.com and reading the articles page.

Lease Option Credit Accounting

2010-08-03T20:54:00.001-04:00

When receiving a rent payment on an option and the payment includes "credits" for the buyer, do you need to keep that in a separate account? No - any option fees are non-refundable if the buyer doesn't exercise and credited against the price of the home/down payment if they do exercise and buy the home. It is in essence a "paper credit" to the buyer IF and WHEN they purchase the home.

Negotiation Tips

2010-07-30T10:29:00.000-04:00

Negotiation Tips

Everyone likes to negotiate! We may say we don’t, but we all do. Think about this: If you were to offer a price for something and the seller said “Yes” right away, how do you feel? Good you got your price, but you are feeling bad because maybe they would have accepted less. Negotiating is key to getting any good deal in real estate also. Here are some ideas to help with negotiation:

7. Offer and expect commitment. The bond that keeps deals from falling apart is the commitment to deliver on both sides. This should be offered as a level of comfort to others. Avoid deals where the other side does not show commitment to deliver. Also, if they are not motivated, move on. I like to say, “NEXT”, if the owner is not willing to negotiate on anything.

8. Don't take on the other side’s problems. In a negotiation you will often hear all of the other side's problems and reasons they can't give you what you want. It is a tactic to get their problems to become yours. It is best to deal with each problem as they are spoken about and suggest ways for the opposite side to solve them.

Excerpt from Top 10 Negotiation Techniques for Buyers and Sellers: Tips for Negotiating Real Estate, Written by Wendy Patton.

Rent-to-Own, Your Lifesaver in a Drowning Market

2010-07-28T10:34:00.000-04:00

Rent-to-Own, Your Lifesaver in a Drowning Market

Here are some reasons rent-to-own can be beneficial for you:

1. Higher Purchase Price – Rent-to-own sales typically command a price premium over traditional saes. The buyer is paying extra for the flexibility he recieves by not having to do an outright purchase immediately.

2. Higher Rent – You may be able to charge more for monthly rent in a rent-to-own than you would for just a straight rental.

3. Cash Flow – If your monthly payments are less than the monthly rent, the difference goes into your pocket.

4. Option Fee – This upfront fee paid to you by your buyer is what secures the purchase price down the road. If the buyer closes on the home, it would be applied towards the purchase price. If the buyer elects to not purchase the home, the option fee is forfeited and still remains yours. Eitehr way you win. If you were to just rent the home, then the tenant would put down a security deposit. The option fee is different than a security deposit. A security deposit is owned by the tenant and can’t be used by the owner, except for repairing damages, unpaid rent and other provisions as mandated under state laws.

Excerpt from Rent-To-Sell: Your Hands on Guide to SELL Your Home When Buyers are Scarce.

Source

Your Standards

2010-07-26T09:47:00.000-04:00

Your Standards

It is federal law requirement that landlords put their rental standards in writing. If you don’t have your standards in writing (and, unfortunately, few landlords do), you are liable to end up in a pickle if someone accuses you of violating this rule. Your standards do not have to be complex but should be able to be produced if someone at a local or federal agency, or anyone off the street, requests a copy of them. Written standards can be as simple as this:

Qualifications for Tenant Selection for Majestic Realty, LLC—Lease Options

• No landlord tenant judgements unpaid.

• Ability to pay all outstanding judgements/collections.

• Good landlord reference.

• Gross monthly income equal to three times monthly rental rate.

• If any bankruptcy, it must be discharged.

• Option fee available or must be negotiated/financed.

• Prefer they have spoken with a mortgage representative.

On my lease option standards I don’t put a credit score, but I do state that if they have a bankruptcy it must be discharged. I also don’t put length of employment, but you can. These are only my standards for lease options—my standards for my regular rentals are stricter. You must establish your standards and they must be in writing.

Excerpt from Investing in Real Estate with Lease Options and "Subject-to" Deals.

Source

Setting a Budget – How Much House Can You Afford?

2010-07-22T13:50:00.000-04:00

Setting a Budget – How Much House Can You Afford?

The first step is talking with a mortgage broker. Even if you can’t get approved for a mortgage right now, he can still help you determine how much you can get approved for later. He has formulas that calculate the maximum amount you can qualify for in a mortgage. These formulas are based on your income and debts. Most mortgage lenders use a debt-to-income ratio (DTI) of 28/36 and FHA limits are typically 31/43. Let me explain what those numbers mean.

The first number in the debt-to-income ratio (DTI), 28 (or 31 for FHA) is called the front ratio. The front ratio is the percentage of income that can count towards housing costs, or PITI, which are Principal, Interest, Taxes and Insurance. That means that 28% (or 31% for FHA) of your gross income (before taxes are taken out) can count towards these costs.

The second number, 36 (or 43 for FHA) is called the back ratio. The back ratio includes the amounts from the front ratio (PITI) plus any other recurring debt payments, such as car loans, credit cards, student loans, child support, alimony or legal judgements. This does not count things like groceries, utilities and so forth. Again, this means that 36% (or 43% for FHA) of your gross income can count towards these costs.

Let’s take a look at an example. Suppose your annual household income is $60,000 per year. You divide that amount by 12 months, which equals $5,000 per month (before taxes). Here is how we calculate DTI.

Front Ratio

$5,000 gross monthly income X .28 (the front ratio) = $1,400

$5,000 gross monthly income X .31 (FHA front ratio) = $1,550

Back Ratio

$5,000 gross monthly income X .36 (the back ratio) = $1,800

$5,000 gross monthly income X .43 (FHA back ratio) = $2,150

Excerpt from Rent-to-Buy: Your Hands-on Guide to BUY Your Home When Mortgage Lending is Tight.

Matching Motivated Sellers with Lease Options

2010-07-21T12:24:00.000-04:00

Matching Motivated Sellers with Lease Options

As discussed previously, subject-to sellers are usually, but not always, motivated by bad debt and desperation to restore their credit. Conversely, lease option sellers have good credit, and the sellers that would even consider a lease option fall into two categories:

1) Sellers who don’t need their cash out of the home to move on.

2) Sellers who have no equity in their home—they are financed 100 percent.

I prefer a seller in the first category. Why? This seller has some cushion financially if problems arise later. The second category of seller does not have a cushion, and therefore if they get into financial trouble, they are more likely to botch up the deal—either permanently or for a period of time until things can be resolved.

Excerpt from Investing in Real Estate with Lease Options and "Subject-to" Deals.

Source

My Market isn’t drowning—Is this Still Useful for Me?

2010-07-20T10:09:00.000-04:00

My Market isn’t drowning—Is this Still Useful for Me?

Scenario 1 – No Equity

If you need to sell your home and you have no equity, how do you do it? In other words, you owe as much on your home as it is currently worth. How can you pay the real estate agent a commission and also other closing costs? Sometimes we don’t always have the option of waiting until we can afford to sell, even in good markets.

You can try the “For Sale by Owner” route, but even in good markets that tends to have only modest success and, let’s face it, is fraught with pitfalls. Selling on a rent-to-own basis can allow you to get a higher purchase price than a conventional sale. This can help give you some room to cover the cost of selling. Plus, having a tenant-buyer in place for a year or two paying your mortgage can help pay down the principal giving you some equtiy as well.

Excerpt from Rent-to-Sell: You Hands-on Guide to SELL Your Home When Buyers are Scarce.

Source

How the “Credit Crunch” Affects You – the Buyer

2010-07-19T13:57:00.000-04:00

How the “Credit Crunch” Affects You – the Buyer

While this housing slump is making it tough for home sellers, there is a balancing factor that’s making it tough for home buyers. I call it the “Credit Crunch”.

With the severe tightening of the mortgage lending industry, buyers are having a harder time getting mortgages. The subprime mess we’ve all heard about means that many buyers who could qualify for mortgages before are no longer able to. This may be your situation.

This “Credit Crunch” directly impacts you as a potential homebuyer. Unless you have A+ credit or a very large down payment, getting a mortgage may prove difficult. If you haven’t already spoken with a mortgage broker, you should do so to find out if you can currently qualify for a mortgage. If you have already spoken with a mortgage broker and you know you can’t qualify yet, you know about this “Credit Crunch”.

Many would-be buyers despair after talking to a real estate agent and a mortgage broker who tell them that they can’t help them because they can’t qualify right now. This is why you, as a buyer, would need to do something like a rent-to-own. It gives you the opportunity to get into your future home now, before you can qualify for a mortgage.

You can get your next home NOW without having to qualify for a mortgage until later. This is the solution you need until you can qualify for a mortgage. This is the solution home sellers need because they can’t find mortgage qualified buyers.

For more information on the “Credit Crunch”, read Rent-to-Buy: Your Hands-on Guide to BUY Your Home When Mortgage Lending is Tight.

Source

Subject-To Risks and How to Avoid Them

2010-07-16T10:42:00.002-04:00

Subject-To Risks and How to Avoid Them

The biggest controversy for a subject-to is the violation of the due on sale clause. This clause is a provision in the mortgage documents that says if the home is sold or transferred, the mortgage will be paid in full or the lender could call the loan due in full. This means that when the sellers deed the home to you, the lender can demand payment in full on the loan. However, most lenders will never know the seller transferred their title to you, as long as you make the payments on time. Most lenders are only concerned with receiving their regular loan payments in full and on time.

In my opinion, the best and most ethical way to handle a subject-to deal is to be completely honest. Let the lender know you did it. Send the lender a certified letter informing them of the ownership change. Keep proof of the letter and return receipt in your files. If the lender doesn’t respond (most won’t), then the law may hold that they have accepted the change by ignoring your letter. If they try to foreclose, then you may need to pay off the existing mortgage and refinance the property into your own name. If the property doesn’t have enough equity to justify refinancing into your own name, then it probably was not a worthwhile deal to begin with.

Excerpt from Investing in Real Estate with Lease Options and "Subject-to" Deals.

Source

Can I Possibly Avoid Foreclosure?

2010-07-14T10:14:00.000-04:00

Can I Possibly Avoid Foreclosure?

If you are in the difficult situation of falling behind on your mortgage payments and trying to sell your home, offering it on a rent-to-own basis may help you stay out of forclosure. The last thing lenders want right now is to foreclose on your home. They have gotten pretty flexible in working with homeowners to find solutions. Be sure to include them in the process when trying to find a resolution. Critical factors to consider are:

• Monthly Payment Adjusting Up? If your monthly payment has adjusted upwards, will you be able to rent your home to a tenant-buyer for enough to cover the new payment? If not, you will have to cover the difference yourself or get the lender to agree to a reduced payment. There are lenders that will work with you on your interest rate. This is called a loan modification. They usually won’t change your balance but they might change the interest rate and length of loan. Talk to your lender to discuss your options.

• Home Prices Dropping? Do you live in one of the areas where home prices have dropped dramatically? If so, is your home worth much less than your current loan amount? If this is the case you won’t be able to sell it to a tenant-buyer for enough to pay off your mortgage. Do you have the extra money to pay off the difference? Do you need to consider foreclosure? Maybe a short sale is your solution versus a rent-to-own. A short sale is when you get your mortgage company to accept a lesser amount on the payoff of your mortgage than you owe when you sell your home. This is called “shorting” the mortgage. Many people and lenders have had to consider this alternative with the housing market decline.

• Behind on Your Payments? How much are you currently behind in payments? You will need to catch up on this one way or another to stop the foreclosure. The option fee from your tenant-buyer may be enough to cover this. If it isn’t, you might be able to use the option fee to cover part of it and then establish a catch up plan with your lender.

** I recently worked with Tax Expert, John Hyre, on a webinar about "How to Handle a 1099 from a Foreclosure". Check it out!**

Excerpt from Rent-To-Sell: Your Hands on Guide to SELL Your Home When Buyers are Scarce.

Source

More Negotiating Tips

2010-07-13T10:10:00.000-04:00

More Negotiating Tips

Tired of endless back-and-forth disagreements with your buyer and/or seller? Here are a few negotiation tips that can help.

• Set your rules. Many people likely have a set of rules or values that they just won't compromise. If you find negotiations breaking your rules and going against your values, it may not be worth negotiating.

• Ask. Don't be afraid to aim high but do not make any ultimatums. Usually these types of offers are out of place. If you don’t ask the answer is always no.

• Be willing to compromise. Expect to make compromises and plan what terms you are willing to compromise on. Even if the first offer is better than you'd hoped for do not take it. Take time to “think about it” or make a minor change back. If you accept the first offer they might not feel good about the deal they made with you. Everyone wants to negotiate and feel they got a good deal.

I want to share a few companies with you that I personally work with and trust. The products and services these companies provide are specifically for the real estate investor and are meant to save and make you more money.

Negotiation Tips taken from "Top 10 Negotiation Techniques for Buyers and Sellers: Tips for Negotiating Real Estate", By Wendy Patton.

Source

Screening a Good Buyer

2010-07-08T09:58:00.000-04:00

Screening a Good Buyer

Screening a buyer is extremely important, and yet some of us investors still go by instinct or illegal decisions. Screen a tenant by reviewing their application thoroughly. Check it for accuracy and make sure they did not lie to you. If someone lies to me, they are denied the occupancy. Check their name—get a copy of their driver’s license. Check their landlord history. The current landlord may want to get rid of them, but the previous landlord has nothing to hide. Call them both. Confirm it is the real landlord in one of two ways: check it on county records, or call the person and mention a different amount of rent than on the rental application.

Check their employment, too. I use the same technique when I verify their income as I do their rental amount. When I contact the employer I say “Joe put on his application that he is making $16 per hour—is this correct?” when he actually put $12 per hour. If the person you reached is his employer and not his buddy, they will correct you on this one. On occasion I will also ask the applicant for recent pay stubs to put in the file. This information is also handy to have in case you ever have to garnish wages. Be sure to verify the hours they work and time on the job as well. Also check their banking information—you might need it later.

Excerpt from Investing in Real Estate with Lease Options and "Subject-to" Deals.

Wendy Patton Official Blog

Extra Ways to Protect Yourself in a Lease Option: Place a Deed in Escrow

2010-07-07T11:46:00.000-04:00

Extra Ways to Protect Yourself in a Lease Option: Place a Deed in Escrow

This approach can be used along with the filing of a Memorandum of Option. The seller would actually sign the deed at the same time that they sign all of the lease option contracts. However, the deed is not yet recorded on the title. Instead it is held in escrow by an attorney or title company with instructions for its release. While this approach does not protect the title against the potential filings of liens, it tends to give sellers the feeling that they have deeded, or sold, their property, so they are much less likely to try to back out later on their lease option agreement. It can also allow the investor to close on the home without the seller being present.

The instructions included with the deed in escrow specify how and when the deed can be released and recorded. For example: “When Wendy Patton pays $155,000 in certified funds to Joe Smith, this deed can be released to her. These funds must be paid by (date).”

Excerpt taken from Investing in Real Estate with Lease Options and "Subject-to" Deals Book.

Wendy Patton Official Blog

Helpful Negotiating Tips

2010-07-06T11:40:00.000-04:00

Helpful Negotiating Tips

Everyone likes to negotiate! We may say we don’t, but we all do. Think about this: If you were to offer a price for something and the seller said “Yes” right away, how do you feel? Good you got your price, but you are feeling bad because maybe they would have accepted less. Negotiating is key to getting any good deal in real estate also. Here are some ideas to help with negotiation:

1. Be Prepared. If you enter a negotiation without the proper preparation you've already lost. This process begins with you. Be clear on what you really want out of the negotiation. Also, research the other side to get a better understanding of their needs as well as their strengths and weaknesses.

2. Ask Questions. You’ll want to do this both before and during negotiations. When you ask questions, practice silence after your question. Let them talk and listen for clues. You will learn a lot more if you zip it (your lips that is) and let them talk. You will learn so much when you listen and they talk. You want to ask them open-ended questions to give them room to talk and give you details. Try not to ask a question that requires a yes or no answer. You can learn a lot by their answers.

3. Timing is everything. Timing is an important key in any negotiation. First you must know what to ask for and then you have to know when you ask for what you want. You have to know times that you should press forward, and times that you should be patient and wait. When you are doing your best is the time to pull for what you want. Be cautious of pressing too hard because it could potentially ruin long-term relationships and prevent new relationships from forming.

Excerpt from Top 10 Negotiation Techniques for Buyers and Sellers : Tips for negotiating Real Estate, By Wendy Patton.

Source

Happy Independence Day to All!

2010-07-02T10:02:00.000-04:00

"May the sun in his course visit no land more free, more happy, more lovely, than this our own country!"

~Daniel Webster

Enjoy these fireworks and I hope you all have a great holiday!

Source

Lease Option Risks and How to Avoid Them

2010-07-01T11:09:00.000-04:00

Lease Option Risks and How to Avoid Them

The biggest risk for a lease option is the possibility of the seller having a problem financially. Although in the beginning we only lease option from financially strong sellers, there are things that could go wrong in a seller’s life. A lease option is control without ownership. Because the owner stil holds the deed to the property, if they incur a financial problem, there is a chance the title/deed could have a lien placed on it. A lien can usually be placed on a piece of real estate if a person owes someone money, when certain procedures are followed. This may cause a problem such that it may not be possible for the seller to sell the home easily. Fortunately, there are several things you can do to assist in preventing the repercussions of these things on you as the buyer.

1) Make sure the seller is solid when doing a lease option with them. If they want to check your credit, ask to check theirs too. You can also have a private investigator check them out if you are not sure.

2) Make sure you record a memorandum of option. This is a document that gives the world notice that you have an interest in the property. Then the seller can’t refinance the home or sell it to someone else.

3) Focus on and pursue primarily sellers with equity. If the seller has a lot of equity in their home, then even if something bad did happen to them, they would have some cushion to fall on.

Excerpt taken from Investing in Real Estate with Lease Options and "Subject-to" Deals.

Source

The Tool Every Investor in the Country Must Have – Pre-Paid Legal Part 2

2010-06-30T12:22:00.000-04:00

The Tool Every Investor in the Country Must Have – Pre-Paid Legal Part 2

As promised, here is the remaining information you NEED to know.

Here is something that most people don’t know. When you buy a house the purchase agreement you sign is in no way a standard document. Purchase agreements aren’t written out by each state and then required to be used in each transaction. It doesn’t work that way. Every real estate company has their own purchase agreement, any private transaction outside a real estate company will have a unique purchase agreement. Once you sign that purchase agreement you are bound to it. How would you like to be the buyer of a house where you have to pay the seller’s unpaid property taxes for the last five years because it was written into the purchase agreement?

Too many of us don’t want to spend the money to have an attorney review a contract. We just risk it instead. Pre-Paid Legal will review an UNLIMITED number of personal documents for you, up to 10 pages each. Plus they will review one business document once a year at no extra charge. Talk about peace of mind!

Those are some of the common uses we as investors have for Pre-Paid Legal. Those types of things are integral to our business and we would use them on a regular basis. Pre-Paid Legal offers a whole lot more benefits than that for our small monthly fee. I won’t go into them all but here are two critical ones. If you or your spouse is named as a defendant or respondent in a civil or criminal action you receive 75 hours of paid attorney time, and it increases by another 75 hours for each year you renew, up to a total of 335 hours of pre-trial and trial time. That’s enough for almost every trial except O.J. Simpson’s! God forbid that this should ever come to pass, but what a wonderful safeguard to have.

The other critical service Pre-Paid Legal offers that I wanted to mention is that if you are ever audited by the IRS, which seems to happen more to us investors than the average person, you receive 50 hours of paid attorney time. Facing the IRS without the support of an attorney just isn’t something you want to do.

As real estate investors, when we buy and sell houses, we often make use of Realtors™ and mortgage brokers on our transactions. Each time we do, they get paid for their work, usually a percentage of the cost, which amounts to thousands of dollars. If you could retain a Realtor™ and a mortgage broker for $25 a month to take care of you wouldn’t you jump at the chance? Here’s the thing, attorneys charge MORE than Realtors™ or mortgage brokers! I recommend Pre-Paid Legal to every investor I know because it’s such a great deal and I make use of it myself.

Eager to become a member? Sign up Today!

To sign up for Pre-Paid Legal or to find out more please visit: www.GotLegalPlans.com

OR

Call Michael Gott at (248) 227-3943

Excerpt taken from Pre-Paid Legal: The Tool Every Investor Must Have By Wendy Patton

Source

The Tool Every Investor in the Country Must Have – Pre-Paid Legal

2010-06-29T11:18:00.000-04:00

The Tool Every Investor in the Country Must Have – Pre-Paid Legal

For a small monthly fee - with no contract required - we can get access to a battery of attorneys by using Pre-Paid Legal. How small is the monthly fee? Right around $25 bucks a month!

Ready to become a member? Register today for Pre Paid Legal Services!

How can you use this as an investor?

For starters, you can make unlimited phone calls to have your legal questions answered and receive legal advice. How useful is that? Think about how many different ways you can use that when you are buying or selling investment deals, or even for your personal life. For example, let’s say a tenant calls you and says their apartment was broken into and wants you to fix the front door. Tenants speak in code, and more often than not, when a tenant says their apartment was broken into it really means they locked their keys inside and didn’t want to pay the fee for you letting them back in so instead they kicked in their door and claimed someone broke in.

A quick call to Pre-Paid Legal and the attorney may advise you to have the tenant file a police report and have you insist on seeing the police report before the door can be repaired or have the door fixed at their expense if they fail to provide the police report. Tenants know that filing a false report is a crime so they’ll probably think twice about following through.

Pre-Paid Legal can also write letters on your behalf. When people or businesses receive a letter from an attorney on your behalf they know that you have an attorney at your disposal and will not be easily pushed around. This can be very useful when dealing with unscrupulous contractors, for example. I have had my share of great contractors but I’ve also had to deal with some who try to take shameless advantage. If you have a contractor who consistently doesn’t show up at the job site to get their work done this costs you a lot of money in delays. A quick letter from your attorney will probably be all of the prompting that contractor needs to start showing up and getting the job done.

Or what about if the contractor underbids the job and then tries to bill you extra for their mistake? Most people end up paying this, pretty much knowing they are being taken advantage of but not knowing what they can do about it. A letter to the contractor from your attorney will let that contractor know they aren’t going to be able to take advantage of you. If a contractor tries to bill you just an extra $600 for a job that would pay for your Pre-Paid Legal costs for 2 years!

More information on Pre-Paid Legal will be coming tomorrow.

To sign up for Pre-Paid Legal or to find out more please visit: http://www.gotlegalplans.com/

OR

Call Michael Gott at (248) 227-3943

Excerpt taken from Pre-Paid Legal: The Tool Every Investor Must Have By Wendy Patton

Source

Lease Option or Lease Purchase in Oakland County, Michigan

2010-06-28T13:21:00.000-04:00

Lease Option or Lease Purchase in Oakland County, Michigan

A doctor has a new home built for himself. His old home is worth $200,000 and he owes $125,000. He has $75,000 of equity. He is not behind on payments, and he did not need the $75,000 cash out to buy the new home. His old home is sitting vacant and the Realtor has not sold it yet. He qualified for both house payments at the bank and he can technically afford both, but who wants to make an extra house payment?

Although he is motivated to sell because he's paying out of pocket every month to own a vacant property, this type of seller is not going to simply give you the deed and let you take over the mortgage. No way is he going to give up all of his $75,000 in equity, and no way are you going to pay that much cash out of pocket.

When you lease option this house, he gets most of his equity back - although it won't happen until you sell the property. The deal might work like this: You option the property for $195,000, and make payments to the seller that equals his total mortgage payments. You sell the property on an 18-month lease option for $228,000 with payments to match. You get cash flow plus $33,000 in profit when your tenant-buyer buys the property; the seller gets his payments taken care of for a few years, and then gets the bulk of his equity out. And in the meantime, he doesn't have to worry about management, vandals, frozen pipes, and all the other things that owners of vacant houses have to deal with.

Touring a potential Lease Option home.

Additional resources on the topic of Lease Purchase and Lease Option.

Excerpt taken from Investing in Real Estate with Lease Options and "Subject-to" Deals, Chapter 4, Pages 59-60.

Original Location

Script for Buyer When Calling a Listing Agent About a New Construction House

2010-06-25T10:47:00.000-04:00

Script for Buyer When Calling a Listing Agent About a New Construction House

Call the contact person from the sign or advertisement and say:

“Hi Sally, my name is ___________ and I was calling about

the home you have listed at __________ (the address). Is it

still available?”

After they say, “Yes, it is,” I would say:

“Can you tell me more about the home? How much is it and

how large is it?”

Listen to see if it is something you would be interested in. If so,

follow up with:

“I wondered if the builder would be open to something creative.”

Leave it at that and say nothing more. Your goal is for them to launch into a long explanation of what the seller will or will not do. Other times they’ll say, “Like what?”

“Well, something like a rent-to-own or a lease option. I am a rent-

to-own buyer looking for a new home in this area. Would the builder

be open to something like this?”

Like before, you will probably get several possible responses:

1. “Yes, they have mentioned that to me.” If you get a positive

response, then ask: “Great! Do you know what kind of terms

they are looking for or are they looking for an offer?”

If they are looking for terms that work for you or they are looking for an offer, make an appointment to see the home if you haven’t aready. If you are working with a real estate agent, you should tell the salesperson on-site that you have an agent and tell her who it is. Call your agent to tell him you found something you are interested in. Even though the sales person on-site can show you the home and amenities, your agent can still help you with the transaction.

If the terms are not within your budget, ask the following:

“Do you hve any other new construction listings where

your builder might have said to you, ‘ Sally, if you don’t

sell that home soon, I might have to rent it,’ Sally, can

you think of any of your listings that might work for me?”

Sally may also respond to the rent-to-own question

like this:

2. “No, they need to sell now and wouldn’t be interested

in that.”

If this is the case, jump right to the question where you ask if she has

any other listings that might work. You will need to know your price

range and what you can afford; as she will probably ask you about this

(we covered this in Chapter 3).

3. “I’m not sure. I would have to check with them.”

If this is the response, encourage the agent to talk with her builder and to

call you as soon as she knows.

4. “What are you talking about?”

If she doesn’t know what rent-to-own is, you may have to give her a brief

explanation.

5. “Why do you need a rent-to-own?”

Your best answer is to simply tell her that a mortgage won’t work for you now,

but you do want to get into a home now. Ask her if this home or another listing

of hers might be a candidate for rent-to-own. Keep your answer brief and let her

ask you more questions if she has them.

Excerpt taken from Rent-To-Buy: Your Hands-on Guide to BUY Your Home When Mortgage Lending is Tight, Chapter 5, Pages 76-78.

To view this post in its original location, http://www.wendypatton.com/blog/script-for-buyer-when-calling-a-listing-agent-about-a-new-construction-house

Script for Calling a Realtor about Rent-to-Own and Lease Options, Part 2

2010-06-24T10:01:00.003-04:00

Script for Calling a Realtor about Rent-to-Own and Lease Options, Part 2

As promised, the remainder of "Script for Calling a Realtor about Rent-to-Own and Lease Options".

Use this follow-up sentence on any of the

statements below where it applies. You always

want to dig to see what else they have that might

work for you.

Sally may also respond to the rent-to-own question like this:

“No, they need to sell now and wouldn’t be interested

in that.”

If this is the case, jump right to the question where you ask if she has any other listings that might work. You will need to know your price range and what you can afford; as she will probably ask you about this (we covered this in Chapter 3).

“I’m not sure; I would have to check with them.”

If this is the response, encourage the agent to talk with her clients. Remind her that you are looking for a rent-to-own home in that area and her commission would be paid in full when you buy the home.

“What are you talking about?”

Not every agent knows what rent-to-own is so you need to give them a brief explanation. Be prepared to tell them something like, “Well I would rent the home and buy it later.” Keep it simple.

“Why do you need a rent-to-own?”

Most likely it’s because you can’t get a mortgage right now or because you don’t want to get a mortgage right now. You best answer is to simply tell her that a mortgage won’t work for you now, but you do want to get into a home now and ask her if this home or another listing of heres might be a candidate for rent-to-own. Keep your answer brief, but do be honest. If you had a bankruptcy or a foreclosure, it will be important that they know that. Don’t spring that on them later. If you had perfect credit, you probably wouldn’t need a rent-to-own in the first place.

Excerpt taken from Rent-To-Buy: Your Hands-on Guide to BUY Your Home When Mortgage Lending is Tight, Chapter 5, Pages 68-71.

To view this post in its original location, http://www.wendypatton.com/blog/script-for-calling-a-realtor-about-rent-to-own-and-lease-options-part-2

Script for Calling a Realtor about Rent-to-Own and Lease Options

2010-06-23T10:13:00.000-04:00

Script for Calling a Realtor about Rent-to-Own and Lease Options

Once you have the agent on the phone, here is what I usually say:

“Hi __________ (the agent’s name), my name is

___________ (your name) and I was calling about

the home you have listed at ___________ (the street address).

Is it still available?

After they say, “Yes it is,” I would say,

“Can you tell me more about the home? How much is it

and how large is it?”

Listen to see if it is something you would be interested in.

If so, follow up with:

“I noticed it has been listed for a while”…

(Assuming it has been listed for more than four

months).

Wait and see what they say without saying anything else. They might say, “Yes…” and I would go on to the next question, or they might start to talk more – which is what I am hoping they will do. I want them to start to talk and tell me more. Maybe they will tell me why it has been listed a long time or what the status is. You would be amazed at what others will tell you when you zip it and listen. My next question is:

“Well, I wondered if the sellers would be open to something creative.”

Again, I leave it at that and say nothing more. Sometimes they

will volunteer a long explanation of what the seller will or will

not do or sometimes they say, “Like what?”

“Well, something like a rent-to-own or a lease option. I am

a rent-to-own buyer looking for a home in this area. Would

your seller be open to something like that?”

Don’t say anything until they respond. You’ll get one of five responses.

“Yes, they have mentioned that to me.” If you get a positive

response, the next question to ask is, “Great, do you know

what kind of terms they are looking for or are they looking

for an offer?”

If they are looking for terms that work for you or they are looking for an offer, make an appointment with Sally agent to look at the home. Note: Sally will try to become your Realtor. This might not be bad if Sally is creative and willing to read this book along with you, but otherwise don’t sign anything to commit you to Sally except for this home. If Sally is really good, you might want her to be your agent. If the terms are not within your scope, then ask the following:

“Do you have any other listings where your

seller might have said to you, ‘Sally (remember

to use their real name J), if you don’t sell my

home soon I might have to rent it?’ Sally, can

you think of any of your listings like this that

might work for me?”

To be continued until tomorrow! Join me tomorrow as I go over possible Realtor answers.

Excerpt taken from Rent-To-Buy: Your Hands-on Guide to BUY Your Home When Mortgage Lending is Tight, Chapter 5, Pages 68-71.

To view this post in its original location, http://www.wendypatton.com/blog/script-for-calling-a-realtor-about-rent-to-own-and-lease-options

Understanding the Steps Behind Fear Destruction and How to Create Desired Action

2010-06-22T10:07:00.000-04:00

Steps for fear destruction:

When you feel the emotion of fear enter your mind, simply pause.

>>>>

A pause in time will carry away the initial flood of emotion.

>>>>

After the flood is gone, calmly ask…what needs to be done?

>>>>

Put each of your individual concerns on paper.

>>>>

They are now out of your head, and an individual solution can be developed for each one.

Even after a fear has been identified, and a solution developed, fear still doesn’t “disappear entirely.” It also doesn’t need to disappear entirely.
Remember that fear is so powerful that it is usually impossible to get rid of it entirely. Let’s look at our example above, where we discussed the fear of the property “not renting right away.” Even after applying the solution, and having more than enough cash reserves in place, the fear will still linger. Why? Because fear is a very powerful emotion, and it usually “sticks around” even after the solution has been implemented.

This is OK. Here is one of the most powerful things you will ever learn about fear:

There is no need to get rid of fear entirely.

It would be nice, but it’s truly impossible—so don’t even worry about that. You don’t need to get rid of it entirely. All you need to do is this…

1. Identify it, understand it, implement a solution, and reduce it…

2. To the point where you can get yourself to take the action that you desire.

This is all that is necessary. You don’t need to “get rid of your fear.” You just need to manage it, so that you can effectively reduce it beneath the “fear action threshold.” Once you reduce your fear beneath the fear action threshold, you will take action.

Wendy & Justin’s Advice on Fear: Our goal is not to get rid of fear entirely, for that is impossible. Our goal is to simply reduce our fear to the point where we will take action.

Excerpt taken from Making Hard Cash in a Soft Real Estate Market, Chapter 3, Pages 22-23.

To view this post in its original location, http://www.wendypatton.com/blog/understanding-the-steps-behind-fear-destruction-and-how-to-create-desired-action

Successfully Financing Your Real Estate Investments: Buyer Financed Construction-to-Perm Loan

2010-06-21T09:49:00.002-04:00

A construction-to-perm loan is your second new construction financing option. You are more likely to see this type of financing for single-family home developments. In this situation, the builder is selling you the lot and a home plan he will build for you. You, as the investor, are required to obtain financing to pay for the lot and construction. A construction-to-perm loan provides you with financing during the construction process and once the home is complete, the loan modifies into a permanent end loan.

The advantage to securing your own financing is you need substantially less money out of pocket, at least initially. In this case you are not giving the builder a deposit of 10 percent to 20 percent. Your actual out-of-pocket costs can be exceptionally low. Some lenders may allow you to finance your project by lending you a high percentage of the home’s projected appraised value when completed. This can substantially decrease an investor’s down payment costs.

As an investor with limited funds available, this can provide you with a substantial saving; however, when you obtain your own financing, there are additional risks. The first risk is interest payments. A typical construction loan will have an amount of interest charged by the lending institution to pay for construction costs. Some lending institutions may allow you to roll these interest costs into your overall loan. This will minimize your out-of-pocket exposure on the transaction. However, should the construction period run longer than expected, which happens very frequently, you might incur additional interest costs or lender penalties.

The next risk is additional building and materials costs. If the builder runs into additional costs, such as higher than expected site preparation costs, increased impact fees (taxes), or unexpected increases in building costs, you can be sure these costs will be passed on to you. So although securing your own financing will have lower intial costs, it might be offset by higher carrying costs during construction. Always keep reserved funds in place to allow for the unexpected.

The third risk is responsibility. When you secure the financing for the property, the ultimate responsibility for paying that loan is on your shoulders. The bank expects that loan to be paid no matter what happens. If you select an unscrupulous builder, who either fails to build, or takes far longer and incurs far more costs to build than originally projected, the bank will still hold you accountable for that loan.

Key Advantages to Construction-to-Perm Loan

• Less money out of pocket

• End loan is already in place

• Savings on closing costs

Excerpt taken from Making Hard Cash in a Soft Real Estate Market, Chapter 15, Pages 153-154.

To view this post in its original location, http://www.wendypatton.com/blog/successfully-financing-your-real-estate-investments-buyer-financed-construction-to-perm-loan

Successfully Financing Your Real Estate Investments: Builder Financed

2010-06-18T09:29:00.000-04:00

In most cases, this option in which the builder secures the loan, is the best choice. If you are investing in a large resort development or a condominium tower, it will always be this way. Usually you would provide your own construction financing only when doing a single-family build. But with the negotiating power of our group, we have been able to negotiate for the builder to hold the construction financing—even when building our investors’ homes!

One benefit of having the builder carry the financing during construction is that if there are delays, such as natural disasters or construction problems, it will usually cost the developer more money and not you. No mortgage is required for you during the build cycle.

Typically, you would see the first option, in which the builder secures the financing, in a condiminium project and a planned-unit-development (PUD). A PUD is a planned community with common open space, such as a set of townhomes with amenities such as a swimming pool, fitness center, and so on. The builder must pre-sell a predetermined percentage of the units to obtain financing. As an investor, you help to fulfill the developer’s pre-selling quota, allowing the project to begin. Because the builder is securing the financing on the project, you as the investor are not required to get a loan during construction. This can be a huge advantage. In fact, if you resell the property before construction is complete, you will never have to secure your own mortgage. You, of course, always want to be prepared to close on every single property that you secure. Selling before construction is complete can be one of your intended exit strategies, but it should never be the only one.

As an added advantage for the investor, when the builder secures financing, the investor foes not make any payments or pay any interest during the construction process. This reduces your carrying costs on the project. You are also less likely to be burdened y unexpected additional charges during the construction. These items will vary from builder to builder and contract to contract. Review your contracts carefully to make sure the builder won’t be passing on any additional costs to you.

Key Advantages to Builder Secured Financing

• Not using your own credit during construction

• No interest payments during construction

• Less likely to pay for unexpected charges

• If you sell before construction is complete, you never have to get a loan

Excerpt taken from Making Hard Cash in a Soft Real Estate Market, Chapter 15, Pages 152-153.

To view this post in its original location, http://www.wendypatton.com/blog/successfully-financing-your-real-estate-investments-builder-financed

WEBINAR TONIGHT

2010-06-17T10:00:00.000-04:00

Everyone, the Find Cash Buyers Now webinar is tonight at 8:00 PM (EASTERN).

Here are 5 Reasons why tonight's webinar is one you DO NOT want to miss:

1. Instant Buyers List: You will instantly have a list of the most qualified buyers in your area and nationwide. These are people that actually have money and don't have to use a bank to buy your real estate deals!

2. No Real Estate Commissions Paid Out: Think about it this way. Are you going to sell a home over the course of the next couple years? Yes, of course! If you use a Realtor to sell ONE home valued at $200,000 dollars it will cost you $12,000 dollars of your profit. However, if YOU sell the home to a "Cash Buyer" it won't cost you a dime. (Do the math if you sell more than one home!)

3. REO Flipping Now Possible: Flipping REO's is not easy. Period. The reason is because you have a short time period to control the property, find a buyer, and if your buyer needs to get a loan. Forget about it...headaches, deal falls apart, you go bald from stress. Not if you sell to a "Cash Buyer" who can close in 3 to 7 days.

4. Pre-Foreclosures/Short Sales & Title Seasoning: Big problem solved. If you work in this niche of real estate the toughest part of every transaction is getting the deal closed when you are selling the property to another buyer with a bank loan. With a "Cash Buyer" there is no seasoning requirements or hassles.

5. Deals Falling Apart: Over the past few years we have plenty of deals that fell apart at the last minute because the buyers financing got pulled at the last minute. Well, with a "Cash Buyer" you don't have this problem.

Register here because you know this webinar is going to make your life easier, Click here.

See you there,

Wendy

To view this post in its original location, http://www.wendypatton.com/blog/attention-webinar-tonight

Find Cash Buyers Today!

2010-06-16T09:30:00.001-04:00

Do you want to know how to get access to a list of all Nationwide Cash Buyers in a couple clicks of your mouse? If so, the upcoming webinar on Thursday, June 17, 2010 at 8:00 PM (EASTERN) will show you how.

If you are involved in any niche of real estate (residential, commercial, wholesaling, rehabbing, lease options, short sales, or even a Real Estate agent) this webinar will be right up your alley.

Ready to get started? Register Today

See you there!

Wendy

P.S. I forgot to mention, when you register, you are also going to get 3 FREE TRAINING VIDEOS. Just register and you will be automatically sent there.

To view this post in its original location, http://activerain.com/blogsview/1697617/find-cash-buyers-now-webinar

Points to Consider for the Rental Agreement Part 2

2010-06-15T10:14:00.000-04:00

Additional Issues to Cover in Your Rental Contract

Occupancy - The contract needs to specify that the premises will be used as a residence with a specified number of adults and children. The premises will be used for no other purpose without written permission by the owner. Having any guest staying more than 14 days will be considered a reach of the agreement unless the resident tenant recieves written consent from the landlord. I also don’t allow them to use the premises for a home business without my permission. A lot of people have home-based businesses, and that’s not a concern except if they have customers coming in and out of the home, which creates a potential liability issue. So check with your tenant to see what kind of home-based business they will have.

Pets - I make sure that they sign an agreement with me about having pets on the premises. I need to know, for example, if they have pit bulls or any other potentially dangerous animals on the property. It doesn’t matter to me if they do have pets, and in fact almost all of my tenants have pets – I just need to know about it.

Entry and Inspection - This gives you the right to enter the property at reasonable times and with reasonable notice to inspect the premises. It’s not that you are inspecting their personal lives but that you want to make sure the home and property, which do not yet legally belong to the tenant, are maintained in accordance with the rental agreement. You also may want to show the home to prospective new tenants or buyers. If the tenant decides not to exercise, you want to have the right to affix “for sale” signs on the front lawn, but you shouldn’t even step onto the lawn without calling the tenant first. This is violating their rights to peaceful enjoyment.

Assignment and Subletting - I do not let my tenants sublet or rent any portion of the premises without my prior consent. The subletter’s name is not on the rental agreement.

Joint and Several Liability - Anyone who signs the contract is 100 percent responsible for all the points within the contract up to the total amount due. I had three men who signed the agreement and all three split later. I was only able to find one of them and I told him he was 100 percent responsible for one-third, but this inclusion of joint and several liability protects the landlord from having to find all the tenants. If one can be found, that one is 100 percent responsible.

Maintenance, Repairs, and Alterations - It is the tenant’s responsibility at all times to maintain the residence and property in a clean and sanitary manner including fixtures, equipment, appliances, furniture, and all other furnishings. If they should choose not to exercise the option, the residence should be left in the same condition as originally rented, normal wear and tear excepted. Residents are responsible for changing the furnace filters and the batteries in the smoke detectors on a regular basis. Residents should be responsible for the maintenance of the property and the house costs. The tenant cannot make major changes to the structure until he owns the property. I had one resident who tore off an upper decking because he decided he didn’t want it, and I had to pay for it and then rebill him because I didn’t own that house. The resident also cannot paint, hang wallpaper, or make any other changes without my consent. I had one tenant who repainted the inside of the home navy blue, and then left after two months. I had to sue to recoup my costs for repainting the home. Residents must also be responsible for the cleaning of sewers and drains that have become blocked due to their negligence in keeping them cleaned.

If the resident damages any windows or doors, it is their responsibilty to replace those items immediately. If the resident hsn’t reparied the items within seven days, I will replace the items and charge the residents for the repairs, and these costs will be due immediately. I tell my tenants that any repair under $10 must be reported to me and any repair over $10 must be approved in writing. In other words, they don’t have an open checkbook to make any repairs they want. Make sure your tenant also doesn’t run off and do repairs and then bill you for them, such as “My furnace went out and I paid the guy $200 to fix it.” My furnace company might only charge $100. Also, the tenant may then try to take that repair bill and apply it against their rent. Make it very clear to the tenant that no repairs can be made without your consent if the repairs are over $10.

Appliances - One of the things I list on the contract is all the appliances already in the home. I make it clear to the tenant that all the appliances in the home are there for my convenience- in other words, they belong to me. If, therefore, one of the appliances stops working and they dispose of it without telling me and then leave the home with that appliance missing, I will bill them for it. If they want to remove the appliance, I have to agree to it and I will cross it off their rental agreement with my initials and the date.

Ordinances and Statutes - The tenant must abide by local zoning laws for usage of the property. For example, they can’t run a day care business at the home if it isn’t zoned that way (not to mention the excessive liability that would incur). A home-based business of web site design, however, violates no zoning laws anywhere in the country. You have the right, as the landlord, to evict immediately for any illegal operations on the premises- for example, druge usage or manufacturing.

Liability of the Tenant - The resident is responsible for any personal injury or property damage caused by the resident or tenant or the tenant’s visitors. The tenant is also responsible for damage due to negligence in caring for the property. If there is a fire, however, and all the tenant’s property is lost, the owner is not responsible to pay for that since the tenant carries his own renter’s insurance for just such an event. The tenant must keep all the sidewalks clear and clean, all access to the home free and clear, and should maintain the outside premises to be a safe enviroment.

Insurance Coverage - Because the owner’s policy does not cover the belongings of the tenant, the owner requires the tenant to carry their own insurance against the risk of damage to their personal property. This insurance must be in place before the tenant moves in.

Defaults—Landlord Remedies - Let the tenant know that failure to comply with even one part of the agreement will constitute a default of the entire agreement. This means that the owner can immediately repossess the property.

Attorney Fees - In the event that either party has to take legal action to enforce the terms of the contract, the owner will be allowed to recoup all attorney fees permitted by law.

Security Deposit Act - Make sure that the Security Deposit Act (SDA) of your own state is in your rental contract. The SDA varies by state, and you must know what the rules are for your state. You are the one providing the contract, so you are responsibly for that information.

Notices - Any notices must be in writing for your own protection, and not verbal. Notices should be sent to the residence address. If the tenant is sending you a notice, it should be sent to the address specified in the contract ( either office or post office box).

Waiver - Failure of the owner to enforce any part of the contract will not constitute a waiver of the contract. For example, if I waive the late fee one month, that doesn’t negate my right to enforce it the next month.

Holding Over - The tenant must give a 30-day written notice of intent to vacate the property.

Additional Terms and Conditions - Some further things you may want to add to your contract include:

• Vehicle limit.

• No motorcycles (some can violate the city noise ordinance).

• No working on the car on the premises. All repair work is to be done off site.

• No permanent stickers on the bathtub, and only nonabrasive cleaners to be used on the tub.

• No carpet cleaners will be used without landlord permission. The reason for this is that some of the over-the-counter cleaning solutions can actually bleach the carpet and leave a white spot.

Make Sure Your Tenants Read and Understand the Agreement

It is very important that you go through the contract line by line with the tenant so that they have heard everything out loud and are fully responsible for the contents when they sign their name. Don’t skip over any points of your contract, even if they begin to fidget because it takes awhile. You might also ask after each point, “Do you have any questions about that?” If they want to take the contract with them, then that is okay also.

Excerpt taken from Investing in Real Estate with Lease Options and “Subject-To” Deals, Chapter 13, Pages 187-191.

To view this post in its original location, http://www.wendypatton.com/blog/points-to-consider-for-the-rental-agreement-part-2

Points to Consider for the Rental Agreement Part 1

2010-06-14T09:33:00.001-04:00

The rental agreement: The rental agreement specifies how long the tenant will rent the home and how much they will pay each month in rent to me. During the rental period they can purchase the home, unless otherwise specified. A rental agreement also comes in handy if ever taken to court, so that no matter what the tenant hs put into the property, the judge will let me evict if necessary rather than foreclose.

The rental agreement gives the tenant the right to occupy the property during a specified time period. It is similar to the rental agreement you signed with the owner/seller, except obviously your rental agreement with the tenant will be very pro-landlord (pro-you).

The rental agreement needs to be separate only for selling on an option. If you are the buyer, you certainly can put them into one document, but when turning the option around, you’ll want to use the three different documents. The reason is that if the tenant doesn’t pay, or the deal goes south, you will want to be able to evict them as quickly as your state allows. If you have all three agreements in one contract, some judges will look at the lease option as a sale rather than a lease, and therefore make you go through a full foreclosure or forfeiture process versus an eviction. This will take much longer, be more expensive, and may require an attorney.

Anyone who will be residing on the property over the legal age must sign the rental agreement. This includes children of legal age (determined by the state).

A cosigner can be an important safeguard if you have a weak applicant and they have a strong parent or friend who is willing to sign with them on their rental agreement. It works well for giving liability to someone else who will come through with the payments. I have a situation where a mother cosigned for her daughter. It was just a rental but the daughter had terrible credit. The mother, however, had worked for General Motors for 25 to 30 years and made a good guarantee person for me. The daughter stuck me for nearly $5,000 in unpaid rent and damages, and now the mother is paying for itout of her GM checks. In another case, the mother was a local Realtor in Michigan, and she asked me to help her daughter get a house. Her daughter had been through a rough time, and the mother was willing to cosign. I probably didn’t even run the daughter’s credit because I knew the mother was a well-known Realtor and was good for whatever might happen. The mother paid the $5,000 option fee, and the rent was $1,300. Eventually, the daughter left, owing me $3,000 in unpaid rent, and the mom had to pay if off.

I like to make all rent due on the first day of the month. If a tenant moves in on the seventh, I prorate the rent for the month. My rental agreements specify late fees of $25 for the first day late and $5 per day afterwards, and the tenant, of course, must sign the agreement to this. I can’t reiterate enough how necessary it is to have everything in writing, spelled out in detail. That way your tenant can’t say, “I never agreed to that.” All you have to do is point to the contract and say, “Here it is in black and white, and there’s your signature underneath it.” I also like to add an incentive to encourage my tenants to pay on the first of the month. My contracts state that if they make their monthly payments on time, inlcuding any unpaid option fees, then I will credit them with $100 towards the purchase price of the house.

Your other fees on the property can include a pet deposit, security deposit, cleaning fees, and the like. In a lease option, I usually do not require a security deposit, because if they have an extra $1,500 for a security deposit, which is refundable, I’d rather have them apply that to the option fee, which is nonrefundable. There are some good reasons and areas of the country where even a small security deposit is recommended. It gives the tenant something they can get back if they don’t purchase. Some judges like a small amount showing as a security deposit. None of the option fees, however, show up on the rental agreement, as the option agreement is a separate document.

Your rental agreement should state the total cost to move in. For example, if there are fees, you will add them to the first month’s rent to get the total for the rental agreement, but that is not the total overall cost since you also need to add in any security deposit. The rental fees plus the security deposit make up the total move-in costs. The rental agreement must also show the total amount of anticipated rent for the contracted period, including prorated months.

You can also state in the agreement that if the rent is more than 10 days late, the agreement may revert to a month-to-month rental (nullifying the option) at the discretion of the landlord. I generally don’t do this unless I want to get rid of the tenant, because when this alternative plan is set in motion it allows the tenant to move out at any time. Be sure your rental agreement states that the keys are due back within 24 hours if the tenant does not exercise the option and/or moves out.

Payments should be postmarked by the post office rather than a Pitney Bowes machine, as these machines can have their dates changed. In my rental contracts I also specify that any bounced checks are subject to an additional fee. Although I start out trusting my tenants and allowing them to pay with personal checks, if one check bounces, all payments after must be paid in certified funds or bank checks only. I also tell them that if their rent is late twice within a 12-month period, their monthly rent will increase by $25 per month.

You should specify to the tenant how their payments will be applied, and in what order:

1. Outstanding dishonored check fees.

2. Outstanding late fees chargeable to tenant.

3. Outstanding legal fees, court costs or both.

4. Outstanding utility bills that are the tenant’s responsibility.

5. Any damage caused by the tenant.

6. Collection agency fees.

7. Costs for re-letting the property, if applicable.

8. Option fees owed.

9. Rent.

You should apply their payment toward rent last because it is easier to evict on unpaid rent than on unpaid utilities. So use their money to pay for unpaid utilities, and if the rest doesn’t cover the rent, you can begin eviction proceedings in most states. Again, check with your local investor group or a local real estate attorney on landlord eviction laws.

ALSO, the upcoming webinar, "Find Cash Buyers Now" is scheduled for Thursday, June 17, 2010 at 8PM (Eastern). Click here to register early for this great webinar!

Stay tuned for Part 2 of “Points to Consider for the Rental Agreement”.

Excerpt taken from Investing in Real Estate with Lease Options and “Subject-To” Deals, Chapter 13, Pages 183-187.

To view this post in its original location, http://www.wendypatton.com/blog/points-to-consider-for-the-rental-agreement-part-1

Points to Consider for the Option Agreement

2010-06-10T12:19:00.000-04:00

The option agreement: On the buying side, the option agreement turns control of the property over to the optionee without ownership. When I am doing a lease option, I sign an option with the buyer. I control the property as if I owned it, but I am giving them the right to buy upon exercising the terms of the option, usually in 12 to 18 months.

It’s important to get the optionee to be as responsible for the maintenance and well-being of the house and property as possible so that you are not tied down with constant maintenance. Here are some points in my option agreement:

1. Optionee agrees to accept the property in “as is” condition.

2. Optionee agrees to make all repairs major and minor to the property.

3. If the optionor has to make any repairs to the property, the cost of the repairs will be added to the purchase price. (If someone’s water heater or furnace goes out and the tenant can’t afford to fix it, you should go ahead and pay for the repairs. In Michigan, you just can’t go without heat in the dead of winter.)

4. If there is a septic system, the optionee agrees to have it pumped once per year.

5. If there is a pool, optionee agrees to open and close the pool each year and to maintain the pool.

6. Optionee should pay for all additional assessments, including water, sewage, sidewalks, and road paving.

7. The option can become void if the optionee pays their rental payment or any option payment more than 10 days late. (It is important to remind your tenants that their record of payments will have to be submitted to the mortgage company and may damage their ability to secure a mortgage. So, if they’re serious about owning the home, they need to be serious about paying on time.)

8. If the option is voided for any reason, then the contract becomes a month-to-month rental-only agreement (so that I can take steps to resell the property if I choose to.)

9. Optionee agrees not to record anything against the title of the property. (In other words, the tenant cannot file a Memorandum on the property. The memorandum is used only when you purchase, not sell.)

10. Optionee understands that optionor does not hold title (own) this property, but is transferring their interst in the property. If the optionor can’t transfer title due to something out of their control (i.e., owner refuses to close or can’t transfer clea title), optionor will reimburse optionee the entire option consideration plus an additional $500 for their inconvenience, as full and complete liquidated damages for optionor not being able to close on this property.

11. Equitable mortgage: This Option to Purchase is not, and shall not be construed as, or interpreted as any form of equitable mortgage. It is hereby declared that it is not the intent of the parties to create a loan of any nature or to create a mortgage of any kind. In the event that the optionee hereunder should ever raise such an issue in a court of law or otherwise this Option shall terminate immediately.

12. Optionor has advised the optionee to seek the advice of a mortgage lender and attorney prior to signing this document. (The mortgage broker might look at their credit and their history and tell them that even with an 18-month option they will not be able to clean up their history enough to qualify for a mortgage. They should also always have a lawyer look over any type of document that commits them to an agreement. In my experience, most people talk to neither, but they sign the document saying that they have.)

Excerpt taken from Investing in Real Estate with Lease Options and “Subject-To” Deals, Chapter 13, Pages 183-184.

To view this post in its original location, http://www.wendypatton.com/blog/points-to-consider-for-the-option-agreement

Marketing- Signs & Flyers, Newspaper, Internet, and Word of Mouth Part 2

2010-06-04T09:38:00.000-04:00

Newspaper- Old Reliable

The newspaper classified ads are probably the most expensive form of marketing your home, but they also work for many sellers. Most newspapers in addition to listing your ad in print also have a website which will show your ad.
People have long considered newspapers as one of the biggest sources for housing. So it’s a good idea to have your home listed in this resource. There are ways to keep your cost down when it comes to newspaper ads. The first is to talk with the representative at the classified ads departement to learn what types of ads work best and what days are the most read. Sundays are typically the big day of the week for housing classifieds, but there is usually at least one other day that is popular as well. Focus on those key days if it’s cheaper to advertise just on those days than for an entire week.
Look for local (smaller) newspapers that just target your home’s area.
Some real estate agents, especially agents that work for larger brokerages, will run ads in the Sunday paper for homes they are listing. These brokerages may get discounts for their ads. Not all agents run these ads, or some may charge you for them. It’s certainly better to take advantage of any discount your agent can get than to run the ad on your own. Also keep your ad short and sweet and focus on the most important details, since you’ll probably be charged per line. A useful trick is to ad a line of space at the start and the end of your ad; this really separates it from the other ads and draws your potential buyer’s eyes to your ad. This is actually more effective than having an ad of the same length but with more details and no blank lines.
Here is a same of what I mean:

RENT-TO-OWN

Oakland Hills, 3 Br/2 Ba. $1250/Mo

(123) 456- 7890

This ad would be a total of 5 lines, including the 2 blank ones. It is very simple but it tells your tenant-buyers the key criteria they need to know to get them started. The first is putting rent-to-own in all caps, which lets them know they’ve found what they are looking for. The second line tells them if the home has enough bedrooms and baths to meet their needs and whether they can afford the monthly rent. The third line tells them how to contact you so they can learn more. Also, depending on where you live in the country, rent-to-own might be more recognized, but there are some other phrases that might be better understood: Lease with Option to Buy, Lease to Own, Rent with Option to Buy, etc. See what works for your area and go with it.

Compare that ad to this 5 line ad:

Rent-to-Own Oakland Hills

3 Br/2 Ba. 1350 Sq Ft.$159,900.

$1250/Mo

Gorgeous Home

(123) 456- 7890

This second ad does contain more information, but it get’s crammed in and hard to read, plus some of the information just isn’t necessary to have in the ad. Rent-to-own buyers are acutally less concerned with the asking price than they are with the monthly rent amount (at least initially). The “gorgeous home” line is meant to entice buyers, but when it comes to real estate ads, that really doesn’t mean much anymore.

There is another approach you can try with ads as well. A student of mine from Seattle always says he uses “romance” in his ads. For instance, instead of saying:

Nice 3 bdrm home in SEATTLE.

He might put something like:

Sit by the fireplace in the winter

w/your sweetheart in this

3 brdm home in Seattle. $1295/month

Rent to own this great home.

(123) 456- 7890

He also has a fun one that I also have used with some success. It sounds odd, but goes like this:

FREE PIZZA

with this beautiful rent-to-own home

Seattle area. $995/month – call today.

(123) 456-7890

This ad would make people call and say, “What do you mean by FREE PIZZA?” Then we would respond by saying, “Well, when you rent a home with us you get a FREE PIZZA every month delivered to your door. Would you like to know more about this home?”

Join me on Friday for Part 3 of “ Marketing- Signs & Flyers, Newspaper, Internet, and Word of Mouth”.

Excerpt taken from Rent-To-Sell: Your Hands-on Guide to SELL Your Home When Buyers are Scarce, Chapter 7, Pages 102-105.

To view this post in its original location, http://www.wendypatton.com/blog/marketing-signs-flyers-newspaper-internet-and-word-of-mouth-part-2

Marketing –Signs & Flyers, Newspaper, Internet, and Word of Mouth Part 1

2010-06-03T13:51:00.000-04:00

When it comes to marketing your home you want to get the word out and you want maximum exposure so that you can get quick results. This means you’ll want to explore multiple marketing options instead of just selecting one. The more potential buyers you reach the quicker you’ll find your tenant-buyer and get an offer on your home.

Go Beyond Your Real Estate Agent

Most people that list their home with a real estate agent leave it entirely up to their agent to market and sell their home. In hot markets this usually works for most sellers. In down markets this means that your time on market might be substantially longer and in the end you’ll probably end up knocking your price down a few times before you get an offer. Who wants their home to sit on the market for eternity? It’s not that your agent isn’t doing their job; it’s just that you have many other homes to compete with. Even when you make your home available on a rent-to-own basis with your agent, your exposure, while better, is still limited. Not all real estate agents will do everything to market your home. This chapter is something you can discuss with them and figure out a plan together.

Maximize Exposure to get it Sold Fast

The real key to selling your rent-to-own home quickly is maximum exposure. The different marketing methods I’m going to talk about are almost all inexpensive or FREE. For the ones that cost money you’ll need to decide how much you can afford; but for all of the others, since they are free, you should make every effort to do all of them. When advertising I use the For Rent and For Sale section of www.Craigslist.org and the newspaper. Try them both out to see what works best for you.

It’s also a good idea to enlist the help of your real estate agent in these extra marketing efforts, you’ll get even more exposure that way.

Wendy’s Wisdom: I can’t emphasize enough that you should take advantage of every type of free marketing you can. This is how to get your home sold FAST!

Stay tuned for tomorrow’s Part 2 follow up on “Marketing- Signs & Flyers, Newspaper, Internet, and Word of Mouth.

This excerpt was taken from Rent-To-Sell: Your Hands-on Guide to SELL Your Home When Buyers are Scarce, Chapter 7, Pages 101-102.

To view this post in its original location, http://www.wendypatton.com/blog/marketing-–signs-flyers-newspaper-internet-and-word-of-mouth-part-1.

WEBINAR TONIGHT

2010-06-02T13:33:00.000-04:00

The "Turning Bankruptcies Into Gold" Webinar is tonight at 8:00 PM (Eastern)!

YOU DO NOT WANT TO MISS THIS.

To join tonight's webinar, CLICK HERE!

I can't wait to see you all there!

Wendy

To view this post in its original location, http://www.wendypatton.com/blog/webinar-tonight.

Rent-to-Own, your Lifesaver in a Drowning Market

2010-05-27T12:11:00.000-04:00

While most other buyerse are drowning in the “Credit Crunch”, you have a choice. Renting-to-own can allow you to buy your next home, even at a time when financing is so hard to obtain; but that’s not the only advantage it offers. Let’s take a look at some of the reasons why rent-to-own can be beneficial for you:
1. Flexibility.     This is key. If you live in an uncertain market, you have the ability to get into your home now and still have the flexibility whether or not you want to buy. For most of you, buying is what you truly want and should plan for. Not buying is your “get out of jail card” if things don’t go well for you personally. Don’t go into a rent-to-own without being serious about purchasing the home.
2. Time.     The rental period gives you time to improve your credit score and pay off some other debts or save more towards a larger down payment. It’s very important to take advantage of this time by taking the proper steps. We will discuss credit repair in more detail later in the book.
3. Option Credits.     One imporant negotiating point is having all or part of your monthly rental payment count as a credit against the final purchase price. This is called an Option Credit, and it can be an excellent way to increase your down payment and equity in your new home. For instance, if the rental payment is $1,200 per month and $600 of that gets applied towards buying the home (your option credit), you will build up $7,200 of equity for one year ($600 X 12 = $7,200). This will be covered in much more detail later in this book.
4. Sweat Equity.     If you are a handyman and want to buy a fixer-upper home on a rent-to-own basis, you can build Sweat Equity in the home by making improvements while you are a renter. Once you purchase the home, these improvements will increase the appraised value of the home in comparison to your contracted purchase price. Having an equity spread (the home is worth more than you are buyng it for) can be very helpful when you are obtaining financing. You will also want to consider asking the seller for option credits if you do certain repairs. For instance, if a repair is worth $3,000 but you can do it for $800, consider asking for a $3,000 credit from the seller. This would give you $2,200 in real value for your work, or sweat equity.

Wendy’s Wisdom: Buying a rent-to-own home offers a lot of benefits to you: Flexibility, the ability to live in the home before you buy it, being able to accumulate a down payment while you live in the home and much more!

Excerpt taken from Rent-To-Buy: Your Hands-on Guide to BUY Your Home When Mortgage Lending Is Tight, Chapter 1, Pages 17-18.

To view this post in its original location, http://www.wendypatton.com/blog/rent-to-own-your-lifesaver-in-a-drowning-market.

Keep Common Sense Involved in the Decision Making Process

2010-05-26T09:37:00.000-04:00

While you are looking at homes and once you make an offer on a home, there are some questions you should be asking yourself to help keep common sense involved in the decision making process:

1. Does the home work for you and does it meet your NEEDS?

*Remember the difference between wants and needs?

2. Do the numbers work for you?

*Can you reall afford this home?

3. What sacrifices are you making to get this home?

*It helps to think specifically about what you might be giving up for this particular home.

4. Will the home meet your needs for the near future?

*Will your family be growing? Are the kids going away to college?

*Will you still want to mow that big back yard in a few years?

If you know that you are the type of person who easily becomes emotional in your decision making process, it might be a good idea to carry a note card with these four questions on it to remind you while are looking!

Wendy’s Wisdom: Remember to strike a balance between emotions and common sense in your home buying process. It will help you enjoy your home that much more once you actually move in.

Excerpt taken from Rent-To-Buy: Your Hands-on Guide to BUY Your Home When Mortgage Lending Is Tight, Chapter 3, Pages 51-52.

To view this post in its original location, http://www.wendypatton.com/blog/keep-common-sense-involved-in-the-decision-making-process.

How to Stage Your Home If You’ve Already Moved Out

2010-05-25T10:09:00.000-04:00

If you have already moved out and your home is vacant, there are still some tricks you can use to help increase the appeal of your home. Obviously, moving all of the furniture back into the house isn’t really a workable option – after all you need it. However, if you do have a few pieces to spare that you can use to properly stage one or two rooms it may be worth it. If you don’t have any, then borrow from a friend or relative.

The best thing to do with a vacant home is to make use of the decorative accents. You can still put art on the walls and decorative touches on countertops. Add live or artifical plants in the right places. Only use live plants if you are close enough to water them regularly. You still want to make the best use of layered lighting you possibly can.

In other words, just because your home is empty doesn’t mean you can’t decorate it. Any real esate agent will tell you that empty homes just do not show as well as occupied or staged homes. Even if you don’t rent-to-own your home, this chapter should help you sell it for more and quicker. It is all about standing out in the buyer’s mind.

Another possibilty, if it’s in your budget, is to hire a professional home stager that has their own inventory to furnish and stage your home. This can be costly, so you’ll want to evaluate whether you think it’s a worthwhile step toward getting your home sold.

Excerpt taken from Rent-To-Sell: You Hands-on Guide to SELL Your Home When Buyers are Scarce, Chapter 4, Pages 78-79.

To view this post in its original location, http://www.wendypatton.com/blog/how-to-stage-your-home-if-you’ve-already-moved-out.

Stock Market Performance

2010-05-24T09:36:00.000-04:00

As the stock market continues to flunctuate, it increases the number of people looking to invest elsewhere. Also, as people become more educated about real estate as an investment, they are more likely to look away from the stock market for the increased security and greater potential returns in real estate. More people have been made millionaires by investing in real estate than in any other business.
As these national trends continue to provide solid growth in real estate, people will continue investing and continue buying with confidence in their own homes, vacation homes, retirement homes, and investment properties. The overall favorable national trends contribute to greater potential growth. Remember, however, that national trends do not cause every real estate market to grow. The real estate investor looks for emerging markets to capture the greatest appreciation and highest profits. The national trends help influence the overall market. Where the Baby Boomers, Echo Boomers, and Immigrants are moving will cause areas to experience the sharpest demand and highest growth potential. These are the emerging markets.
Knowing these general trends puts you in the right direction, but where do you look more specifically? For example, you know that Baby Boomers are moving to warmer climates, but that is still pretty general. It is important to know what factors to look for in markets to see what potential they might have. Several things can influence local markets.

Local Market Influences

• Location within a market

• Quality of schools

• Amenities

• Condominiums versus single family homes

• Strength of vacation home market

• Businesses in a market

• Businesses moving to a market

• Population growth

Excerpt taken from Making Hard Cash in a Soft Real Estate Market, Chapter 5, Pages 47-48.

To view this post in its original location, http://www.wendypatton.com/blog/stock-market-performance.

Something to Think About Over the Weekend..

2010-05-21T13:37:00.001-04:00

" All life is an experiment. The more experiments you make, the better."

- Ralph Waldo Emerson

Have a terrific weekend!

Wendy

To view this post in its original location, http://www.wendypatton.com/blog/something-to-think-about-over-the-weekend.

Standard Lease Option Deals

2010-05-21T09:16:00.000-04:00

Wendy’s Ethics Rule: Don’t do lease options with potential buyers who have no way of ever being able to get a mortgage. That’s just being greedy and taking advantage of someone. It is not fair to the buyer. If the buyer messes up, shame on them! If you mess them up, same on you!

My typical strategy is to lease option from a seller and then to lease option that home to a buyer.

How Lease Options Work

SELLER > options to > INVESTOR (may buy) > options to > BUYER (may buy)

The above illustration depicts a sandwich lease option. In a sandwich the meat is in the middle-that’s the best part. You (the investor) are in the middle of this transaction; your reward is the meat-the difference between what you can pay for the home and what you can sell it for. There are other ways to make this deal even better and more profitable, which are discussed in Chapters 5 and 9.

A variation of the sandwich lease is the lease purchase. While a lease option gives the investor the right to purchase real estate, the lease purchase guarantees that he or she will purchase the property during a given time period. Under some circumstances I will committ to buying certain homes using this technique- for instance, with specific Realtors, with deals that have a very good potential for profitability, when I have a solid buyer lined up, with high appreciating markets, and with very long-term deals. I do not use lease purchases much when I’m selling, because they are hard to enforce. If your buyer defaults, you have to sue him specifically for nonperformance in order to get him to buy your home. It is costly and very time consuming to do this. If your buyer cannot get a mortgage it is also a waste of time. I would recommend moving on and, in most cases, finding a new buyer. I therefore use lease purchases mostly to buy and rarely to sell.

Excerpt taken from Investing in Real Estate with Lease Options and ‘Subject To’ Deals, Chapter 1, Pages 6-7

To view this post in its original location, http://www.wendypatton.com/blog/standard-lease-option-deals.

Live Webinar Tonight!

2010-05-20T14:20:00.000-04:00

If you want to make an extra $40k or so?

Then join tonight's webinar and learn how.

As usual, I only focus on tactics that require no cash or credit that even a rookie can do, so anyone can do this (even from home).

The "Filthy Riches" webinar is tonight AT 8:00 PM (Eastern).

To Join, CLICK HERE!!

See you there!

Wendy

To view this post in its original location, http://www.wendypatton.com/blog/live-webinar-tonight.

Example of how to do Rent-to-Own Home Transactions

2010-05-19T10:03:00.002-04:00

Now, let’s take a look at a sample transaction to help you understand the process. John and Joan Homebuyers were told by their loan officer that they couldn’t qualify for a mortgage right now. “Not until you’ve improved your credit score.” They live in a down real estate market and know that now is a good time to buy. They have always dreamed of home ownership. They want a home NOW. They enlist the help of Sally Agent, a local real estate agent, who understands how to do rent-to-own home transactions.

From talking with their loan officer, John and Joan have determined that once they qualify for a mortgage, they can afford the payments on a $220,000 home. So they begin to look in that price range.

Alan and Ashley Homeseller live in the same market. A few months ago Alan received a promotion at work that requires them to relocate to another city. Alan and Ashley know the real estate market is down, but they have no choice but to sell their home now. They have it listed with real estate agent Thomas Broker (and yes, I do go to great lengths to come up with these names).

Alan and Ashley have had their home listed for 4 months at $225,000 without any offers. The need to get their home sold is getting urgent. Their agent, Thomas, recommends Alan and Ashley reduce the asking price to $215,000. He also suggests that they market their home on a rent-to-own basis for $225,000 (Wendy is very impressed with this agent because this agent knows that a rent-to-own is worth more than an outright sale – in almost all cases). After Thomas explains how it works to them, Alan and Ashley agree to add rent-to-own to their listing agreement.

Not long after, Sally Agent shows the house to John and Joan, who decide to make an offer on it. For their initial offer they offer $215,000 for the purchase price, agree to the asking rent amount of $1,500 per month, but ask for a $500 per month option credit. For their option fee, John and Joan offer 1% or $2,150 and a $250 security deposit. They also ask that all appliances in the house (refrigerator, stove, dishwasher, washer and dryer) be included.

After receiving their offer through Thomas, Alan and Ashley make a counter offer of $220,000 for the purchase price, $200 per month option credit and an option fee of 2.5% or $5,500 with a $750 security deposit. They agree to all appliances, except for the refrigerator which is brand new and they want to take it with them.

Getting closer to the agreement, John and Joan counter back, accepting the $220,000 purchase price, but ask for a $350 per month option credit and an option fee of 2%, or $4,400 with a $500 security deposit. They agree to let Alan and Ashley take the refrigerator, but they ask for an 18 month lease and option period instead of 12 months to give them extra time to get their credit in order. (By the way, most tenant-buyers will require 18 months or longer. Very few buyers can repair their credit in less tim with the current mortgage climate.)

Happy to finally have buyers for their home, Alan and Ashley accept the last offer. After conducting the proper screening, they agree to sign all of the paperwork and move in within two weeks, giving Alan and Ashley time to move out.

Excerpt taken from Rent-To-Sell: Your Hands-on Guide to SELL Your Home When Buyers are Scarce, Chapter 2, Pages 20-21.

To view this article in its original location http://www.wendypatton.com/blog/example-of-how-to-do-rent-to-own-home-transactions

Live Webinar on Thursday, May 20th

2010-05-18T10:34:00.000-04:00

You could probably use an extra $40k or so couldn't ya?
Everyone could.
And now, most everyone can!

Not only that, but what if I told you that generating that kind of money could be done from houses no one else wants (or at least you THINK no one wants them) and that most properties in the $100k range will NEVER create a profile like you can get from a house for $5k.

You see, my friend has been working on something HUGE that is going to show just how this is possible.

As usual, I only focus on tactics that require no cash or credit that even a rookie can do, so anyone can do this (even from home).

My friend calls it his "Filthy Riches" system and he wants to share how these types of deals work and how much you can really make.

Everything will be revealed on an upcoming live webinar this Thursday May 20, 2010 and it is open to all my subscribers.

You have to register in order to get access, but it doesn't cost anything to join us and as long as you have a computer and internet - you can access it live.

REGISTER RIGHT AWAY >> CLICK HERE!!

Hope to see you there!

Source

What Makes a Motivated Seller? & Finding Motivated Sellers

2010-05-17T10:13:00.000-04:00

Each seller will have his own reason for being motivated, and not all of them are able to do rent-to-own. The best motivated sellers for rent-to-own are the ones seeking what I call “good debt relief”. This usually means that the home they are trying to sell is a payment burden but they aren’t generally in financial trouble. Here are some examples of motivated sellers:

They built a new home and the old one hasn’t sold yet
They purchased a new home and the old home hasn’t sold yet
They recently got married and each had their own home- now they need just one
They were given job transfer to a new area and haven’t sold their old home yet
They inherited the property
They are landlords and are selling a rental property
They are selling a vacation home, or have retired and moved into their vacation home and are selling their old home

In all of these cases, the seller has essentially moved on or doesn’t live in the home they are trying to sell. They, most likely, have a second home. What this means is that the seller is burdened with two homes and two mortgage payments. While he might be able to afford that second payment, nobody wants to make a payment on a home that is sitting empty.

Wendy’s Wisdom: The best “motivated sellers” to find for rent-to-owns are those with two homes and two mortgage payments.

Finding Motivated Sellers
My favorite ways to find motivated sellers are in this order:

1) Working with Realtors / real estate agents
2) The “For Rent” ads
3) Advertising to find them
4) Getting sellers to call you
5) Distressed builders
6) For Sale by Owners- FSBO’s

There are many other ways to find motivated sellers, but these are more than enough for what you will need to find your home.

Excerpt from Rent-To-Buy: Your Hands-on Guide to BUY Your Home When Mortgage Lending Is Tight Chapter 5, Pages 66-67.

Something to Think About Over the Weekend..

2010-05-14T15:03:00.000-04:00

It's a good thing to turn your mind upside down now and then, like an hour-glass, to let the particles run the other way.

- Christopher Morley

Have a great weekend everyone!

Networking with Realtors

2010-05-14T09:44:00.000-04:00

You only need to work with two to four listing agents per year to make a comfortbale living. You can find listing agents in the real estate section of your newspaper or through personal contacts or your investor groups. I have on Realtor in my area who gives me only one deal a year, but I make at least $30,000 each time. I stay in touch with her every few months just to keep my name fresh and to keep the realtionship moving forward.

Realtors know lots of other Realtors, so if you have one contact, you can network through that one to access many others. Call the local real estate board to find out when they have local functions, and go mingle. Exchange business cards at the functions. If you don’t have cards, get some printed. It’s more important at this point for you to have their cards than for them to have yours, but having a card to exchange is more professional. You want them to know who you are and how to get in contact with you. Take a Realtor out to lunch.

Rent a conference room and invite Realtors to a wine and cheese party; then give them a presentation about lease options or lease purchases. Draw them in by focusing on what’s important to them: “Would you like to sell more listings and make more money this year? I can teach you for free!” Do something to advertise it that grabs their attention without giving away all the details. Don’t be alarmed if only five or six people show up, because those few are very interested in creative solutions. You might even put on your invitations: “Would you like to be more creative than your competition? Would you like to know things that your competition doesn’t know yet? I can teach you some creative ways to sell your listings that your competition hasn’t even thought of."

If you are not sure who to call to get started, talk to the people in your local investing group, since there will be some Realtors in your group. These are not the Realtors you will be working with, as these are investors themselves and not traditional listing agents, but they should be able to tell you who the listing agents are in their offices. The top listing agents from the companies are also listed in the paper. It’s worth starting a database or spreadsheet to keep up with who is where and what they do, especially with the people you begin to contact and develop realtionships with.

Your local investors group can also be a great resource for brainstorming more ideas on drawing people in. Not only will they be interested in giving you feedback, but you may even find a money or managing partner there who is also keen on investing in the lease option strategy. You can then go in as a team and make a presentation.

Excerpt taken from Investing in Real Estate with Lease Options and “Subject-To” Deals Chapter 10, Pages 138-139.

Subject-To Advantages

2010-05-13T09:40:00.000-04:00

A subject-to involves getting the deed to a property without taking on a new mortgage. Instead, the seller signs over the deed to his home “subject to” the existing mortgage. The buyer makes the mortgage payments on the seller’s existing loan but does not take out a new mortgage to acquire the home.

Subject-tos have at leaset eight advantages. Some are the same as buying an option.

1) Minimum or zero down. Usually you only need to pay the seller a small amount to sign the deed over to you. It’s even possible that, if they owe more than you are willing to pay, they may pay you to take the deed from them.

2) No financing required. When you do a subject-to, you don’t need to get a mortgage because you are taking over the seller’s mortgage payments. Techinically, you are not assuming the seller’s mortgage. You are just making the payments on their existing mortgage.

3) Ownership. The day the seller deeds the property to you it is yours. You are the true owner of the home.

4) No qualifying. If you buy a home traditionally, you have to go to a bank or mortgage company and qualify for a loan.

5) No income or credit checks. Not once has a seller ever asked to look at my income or check my credit. They are more worried about their situation and how to get help from you.

6) You can buy them with your IRA. Very few companies handle self-directed IRAs. If you use your IRA for the option payment, the rent payment and any other income goes back into the IRA. Remember, the income from the Roth IRAs is taxfree for life. You can also do a subject-to with your IRA when there’s a mortgage already in place.

7) Great return on your investment (ROI).

8) The seller will love you. You will be making a positive difference in someone’s life.

Excerpt taken from Investing in Real Estate with Lease Options and “Subject-To” Deals Chapter 4, Pages 44 - 47.

Buy Unsold, Discounted Inventory from Builders in Distressed Markets Part 3

2010-05-12T09:24:00.000-04:00

Previously, we have talked about outright purchase at a reduced price, lease option, and lease purchase. Today, you will read about the fourth strategy: short sale.
Short Sale
Another possibility when buying from a motivated builder is the short sale. In this case, the builder is usually behind on payments and in the foreclosure process. One effect of the sudden swing in many of the hot markets is that foreclosure rates have climbed. In fact, just from the second quarter to the third quarter of 2006, foreclosures in your area, check local newspapers that post legal notices or check http://www.realtytrac.com/.
Smaller-scale builders who either built homes on spec (no prearranged end buyer) or who had their building contract canceled are most likely to be in such a position because they have limited funds. In this case, the builder completed the property but has been unable to sell due to the dramatic change in the local market. The drop in property values might have eaten up all of the potential profit and the builder now is unable to sell. He might owe more than the home is worth. He either fell behind on the payments right away, or after some time his funds dried up. Either way, the lender started the foreclosure process. A savvy investor can step in and negotiate with the lender for a reduced purchase price to buy the property.
The investor documents to the lender the new current market value. For example, let’s say the builder built a single-family home to sell for $350,000. Due to the sudden change in the market the value of the home has dropped 15 percent, down to $297,500. Every lender has different rules and strategies to follow when negotiating short sales. For the sake of simplicity, we’ll say that in this case there was only a primary loan. To sell the property quickly and not have to complete the expensive foreclosure process and be forced to resell later, the lender is usually willing to take a reduced price on the property. This is typically in the range of 80 to 85 percent of market value. Keep in mind, however, that a lot of things have changed in the foreclosure market. Today, we do not see lenders taking the discounts that they once did.
There is no question, foreclosure investing is a detailed and complicated strategy. It takes a lot of time and experience to become an expert. In the county we live in, the average homeowner in foreclosure receives 120 letters from investors. Today, there is a fierce level of competition for these leads. That means it takes time and money just to get the leads. Foreclosure is the most time-intensive investing strategy. If you do have lots of time to spend, by all means develop this skill, as it has the potential to be very profitable. If not, other strategies will be more desirable to you.
Always keep timing in mind when buying from a builder in a down market. Buying while values are going down can be risky because it isn’t easy to predict how far down they will go. The optimum time to buy is when the market has hit rock bottom and is poised to start climbing back up. In many of the hot markets in 2004 and 2005, rock bottom might come quickly and the upturn could happen quickly or slowly. Most of these areas still have indicators for strong housing markets, such as solid employment with new jobs created, low interest rates, new people moving to the area, and businesses coming to the area. A huge inventory of new construction, in part, caused the oversupply and resulting market change. As this inventory is reduced and with fever homes being built due to the market downturn, the result might be a swift change where the available supply doesn’t meet the demand. Watching the market inventory can be a good way for investors or home buyers to time their purchases and maximize potential profits. To learn more about timing during market cycles and optimizing the time buyer.

Excerpt taken from Making Hard Cash in a Soft Real Estate Market Chapter 11, Pages 118-120.

Buy Unsold, Discounted Inventory from Builders in Distressed Markets Part 2

2010-05-10T14:37:00.000-04:00

Yesterday, we talked about the first strategy, outright purchase at a reduced price, that can be used when buying from builders in a distressed market. Today, we will be going over the six advantages to the Lease Option and Lease Purchase strategy.

Another approach would be to lease option or lease purchase from the builder. A lease option is obtaining an option to purchase a contract on a property for a specific period of time. During this time period, you rent the property from the seller. At the end of the option period, you may either purchase the property, renegotiate, or forfeit the option. A lease purchase is obtaining a purchase contract on a property for a time period, during which you also rent; however, during or before the end of the specific timeframe, you are obligated to purchase the house.

Let’s examine each of these advantages in greater detail.

There Are Several Advantages to the Lease Option, Lease Purchase Strategy:
1) Fixed purchase price at onset and capture of appreciation during option period
2) Lower payments
3) No mortgage required!
4) Higher price when selling to a rent-to-own buyer
5) Monthly credit toward principal from builder
6) No requirement to perform on option at end of term (lease purchase would require the purchase—the only difference between the two strategies)

1. Fixed Purchase Price at Onset and Capture of Appreciation During Option Period
You determine the purchase price at the time of the contract and any appreciation during the lease period would be yours to capture as profit.

2. Lower Payments

You should be able to negotiate a monthly rent (your payment) to the builder that is lower than your payment would be if you were to buy the property outright and have to make mortgage payments to a bank. This allows you to place a tenant or rent-to-own buyer into the property to make your payments for you with less likelihood of negative cash flow.

3. No Mortgage Required!

You do not have to obtain a mortgage on the property during this time. As such, you do not incur any loan origination fees at the closing, which saves you several thousand dollars in closing costs. The only down payment you might need to make would be your option fee, which you can typically keep very low, many times nothing at all. This will save your cash so you can do more deals with other builders in the same situation.

4. Higher Price When Selling to a Rent-to-Own Buyer

If you place a rent-to-own buyer in the property, you should be able to collect an option fee from that buyer, which is non-refundable whether the buyer chooses to purchase or not. Additionally, a typical rent-to-own buyer expects to pay a premium for the same home versus a conventional buyer. This allows you to mark up the price (slightly above retail) for an additional profit for yourself.

5. Monthly Credit toward Principal from Builder

You might be able to negotiate a monthly credit from the builder. For each month’s rental payment you can ask for a certain amount (sometimes 100 percent) to be credited toward the end purchase price by the builder, paying your down balance due when you purchase the home. It is not required to offer this credit to your tenant buyer, or if you do, you would credit much less, thereby increasing your profit margin.

6. No Requirement to Perform on Option at End of Term

If you do a lease option and the market fails to appreciate sufficiently during your lease period, you do not have to close on the property or buy from the builder. Lease options can be powerful ways to acquire real estate from motivated builders with very little money out of pocket. Given a lease period of sufficient time, the real estate market is likely to turn around and appreciate again, providing the investor with a nice profit. A lease purchase is a guaranteed purchase that would require you to purchase the home during or before the end of the lease period.

Excerpt from Making Hard Cash in a Soft Real Estate Market Chapter 11, Pages 116-118

Buy Unsold, Discounted Inventory from Builders in Distressed Markets Part 1

2010-05-10T09:47:00.000-04:00

Amid endless media speculation aout whether there was a real estate bubble, and if there was, when it would burst throughout many of the hottest real estate markets of 2004 and 2005, the bubble either burst or deflated rapidly. Home builders had been building at unheard of rates. In areas such as Las Vegas, Phoenix, Washington D.C., and much of California and Florida, real estate was appreciating at more than 20 percent per year. In some cases, appreciation was nearly 50 percent in some years!

An investor can adopt several strategies when buying from home builders in depressed or soft markets. The best strategy will depend on both you, the investor; and the builder. Even a combination of strategies might be the best approach.

Strategies When Buying from Builders in Depressed Markets:
1) Outright purchase at a reduced price
2) Lease Option
3) Lease Purchase
4) Short sale

Outright Purchase at a Reduced Price

Obviously, the first option is to purchase the house outright from the builder. With this strategy, not only do you accept all of the closing concessions, free upgrades, and price reductions available to the public, but you would also want to negotiate the purchase price vigorously. The key here is to ensure that the deal you are buying is not only a good deal now, but will be a good deal next year if the prices haven't recovered in that year. In addition to securing a better price, you might be able to negotiate guaranteed rents or mortgage payments for a period of time. In this case, the builder is guaranteeing rental or mortgage payments for a certain predetermined amount for a given period of time. This helps cover you, the investor, should you have trouble keeping or getting the property occupied or sold.

Your exit strategy on this approach could be either to hold the property as a rental until its value has gone up enough that you are ready to sell and make your profit, or, if you have secured a low enough purchase price, to wholesale the property to a home buyer or another investor.

We will continue tomorrow with Lease option and Lease purchase in Part 2 of Buy Unsold, Discounted Inventory from Builders in Distressed Markets.

Excerpts taken from Making Hard Cash in a Soft Real Estate Market Chapter 11, Pages 113-116

Negotiating Tips

2010-05-07T11:11:00.000-04:00

You don't need to be an expert negotiator to negotiate successfully. The point of this is to teach you some useful tips and tricks to help you negotiate better. The reason we need to know how to negotiate is that everyone (including you) likes to negotiate to some extent.

Here are a few tips and examples to follow:

Don't Give Away Anything without Asking for Something in Return

This tit-for-tat technique helps ensure that even if you are giving your tenant-buyers a key aspect that they want, you are getting something in return. A good way to handle this is either with a question, "If I gave you the $5,000 in option credits you are asking for, what do you think is a fair exchange for that?"

Or, you can ask for what you want, "If I give you the $5,000 in option credits you are asking for, I would need for you to agree to a price increase of $1,000, plus be responsible for any repairs that are necessary during the lease."

By asking a question, you give the tenant-buyer a chance to voice what they think is a fair exchange for what they are asking for. It may turn out to be MORE than what you would have asked for. If it isn't enough you can always negotiate up from what they propose.

By stating what you want, you are more limited. The tenant-buyer may even try to negotiate you down from that position. However, if there are a few key things that you really want out of the negotiation, this is a good time to go after them.

Wendy's Wisdom: Just a reminder again that most tenant-buyers will not try to negotiate much. I just want you to be prepared in the event that you do need to negotiate.

Last Minute Add On

This trick is used to capture small concessions at the last minute after everything else has been agreed upon. The idea is that once you are already emotionally invested in the deal, you don't want to let it go over just a couple of little things thrown in at the last minute.

There are a couple of effective ways to counter this technique:

1) Say no. At this point the tenant-buyer is likely just as emotionally invested in the deal as you are, and isn't going to walk away from it if you won't give in on these last minute requests. Hopefully, you also have everything in writing, signed and the deposit in hand.

2) Counter by asking for something in return. This is the tit-for-tat technique that will allow you to meet their last minute request if they are willing to give up something in return.

This type of situation is more likely to occur with questions or requests after everything is signed. For instance, "Can we put our stuff in the garage a week early?", "Can we move in on the 28th versus the 1st since it is a weekend?", or "Can we start to paint the master bedroom before we move in?" I will usually try to accommodate these requests if I can, especially if it doesn't affect me either way. I will usually let them move in or get in early if possible. In this case I might give them free rent for those days, but they must have paid their entire balance in full to move in. I then request they also put the utilities into their name on the day they want to move in. Sometimes I even suggest this approach after we have agreed on everything. I do this so I can then reduce my expenses of utilities for a few days. Of course, all of the paperwork would be signed, as well.

Wendy's Wisdom: Remember, most tenant-buyers won't be very strong negotiators. They typically negotiate most with the option fee and accept most everything else.

Excerpt taken from Rent-To-Sell: Your Hands-on Guide to SELL Your Home When Buyers are Scarce Chapter 13, Pages 155-167

How to Control the Emotions of Home Buying

2010-04-23T14:16:00.003-04:00

How to Control the Emotions of Home Buying

Buying a home is almost always an emotion-based process. Once you find a home you like, you become emotionally attached to it. Emotional attachment can cause you to make unwise decisions when making an offer, handling negotiations, and so forth. Once you’ve fallen in love with a house and visualized it being your home, you’ll start to do WHATEVER it takes to make sure it becomes your home.

This is about the worst possible way to buy a home, but also may be the best possible home for you. You do want to fall in love with your new home, but you also want to be careful.

You can literally cost yourself thousands of dollars, if not tens of thousands of dollars, by being too emotionally attached. Instead of letting emotions rule the game, try to include some common sense in the buying process. Real estate investors have a saying that goes, “Don’t fall in love with the house, fall in love with the deal.” This is easier for an investor as he won’t live there, but you should be aware of this, and use your head.

Having said that, I realize that you will always have some emotional attachment to your house. You need to like it. Your goal is to strike a balance between liking the house and using common sense to tell you whether you are sacrificing too much to try to get the house. If you find you have to make lots and lots of compromises to get a house, stop yourself and ask, “Is this really worth it?”

Remember to strike a balance between emotions and common sense in your home buying process. It will help you enjoy your home that much more once you actually move in.

Do You Really Want to Miss This?

2010-04-22T15:04:00.000-04:00

You are probably thinking, “Why the heck do I keep bringing up this recession and how it can impact you succeeding in real estate?” Well it does, and I’m not sure when the market will recover; but what I am sure about is that if you’re ready to make more money and you want to do it fast, you need to understand how to profit in a flat or declining market.

My good friend, Kris Kirschner, will be on a webinar with me tonight (Thursday, April 22) to discuss the current real estate recession we are in now and exactly what you can do to make money, part-time – even if you live in a declining market, have no experience and very little money or credit.

This is a one-time only webinar with critical information that you will not want to miss. You already know that if you work for a living or own your own business it doesn’t get easier, it gets harder. The real question you need to ask yourself is, “What will I do if unemployment hits 15% and more and more businesses continue to go under?”

Listen, I am not trying to scare you but there is so much you should be aware of to protect yourself and your family during this economic recession. Join the webinar tonight and listen very closely for 55 minutes because Kris will be teaching you 3 strategies and exactly how to profit for the next 36 months!

The webinar is free – you will not want to miss it. To register go to:
www2.gotomeeting.com/register/557972963

Check Here for Your Time Zone:
Thursday, April 22, 2010
8:00 PM - EST
7:00 PM - CST
6:00 PM - MST
5:00 PM - PST
3:00 PM - HST

4 Location Factors to consider when purchasing a Rent-to-Own

2010-04-16T14:24:00.000-04:00

As they say in real estate, the three most important things to consider when buying a home is location, location, location. Once you have established what you need and want in a home, you need to decide where to look for a home.

1. School District: There are some important components to location when making this decision. If you have children, one of the big ones is the school district. If your children are already in school, you need to decide if you want to stay in the same school district so they don’t have to change. If they aren’t yet in school, you want to consider what school district you prefer, and specifically what schools in the district you want them to attend. Historically, homes in good school districts appreciate better and hold their value better than equivalent homes with poorer quality schools. This makes school selection not just an important investment in your children, but also an important investment in your home.
2. Work: Another important location factor to consider is proximity to work. Given the uncertainty of the cost of gasoline, commuting costs are definitely worth factoring in. It’s also important to factor in the amount of time your commute takes. If you live an hour away from where you work, not only are the gas costs going to be enormous, but that means two hours per day of driving, which is a lot of extra time away from home.
3. Lifestyle: Amenities are also important when deciding on location. How close do you want to be to the grocery store, your favorite restaurants and your favorite entertainment locations? Long travel times to get to these locations is not just inconvenient, but adds to gas costs too. In some cases, if you are trying to cut down on dining out to save money, you might want to move just a bit farther away from your favorite restaurants so you are less likely to frequent them.
4. Safety: The last location factor to take into account is crime. For the sake of the safety of you and your family, the lower the crime rates, the better. It will also affect the long-term value of your home. If you live in a high crime area, appreciation rates will be slower and in a down market, your home will decline in value faster. Larger cities tend to have higher crime rates than small towns, so you can’t compare the crime rate in San Francisco, California to Cheboygan, Michigan. However, many cities have good and bad neighborhoods. As a general rule, the better the neighborhood, the better off you are.

In summary, you want a house that is in the best school district, a five minute or less commute to work, close to all of the best amenities and in a zero crime neighborhood. If you find one, let me know because I’m not sure they really exist. Obviously, when you add all of these factors together, selecting the location for your home is a series of compromises. You want good schools, but you don’t want that to put you an hour away from work. You want to be close to amenities that are important to you, but not too close if it means you have to settle for a high crime neighborhood, and so on.

Share this blog with others if you DIGG it.

5 Questions to ask yourself when purchasing a New Home

2010-04-09T15:12:00.001-04:00

5 Questions to ask yourself when purchasing a New Home
While you are looking at homes and once you make an offer on a home, there are some questions you should be asking yourself to help keep common sense involved in the decision making process:
Here are four IMPORTANT questions to ask yourself:
1. Does the home work for you and does it meet your NEEDS?
Remember the difference between wants and needs?
2. Do the numbers work for you?
Can you really afford this home?
3. What sacrifices are you making to get this home?
It helps to think specifically about what you might be giving up for this particular home.
4. Will the home meet your needs for the near future?
Will your family be growing? Are the kids going away to college?
Will you still want to mow that big back yard in a few years?

If you know that you are the type of person who easily becomes emotional in your decision making process, it might be a good idea to carry a note card with these four questions on it to remind you while you are looking!
Remember to strike a balance between emotions and common sense in your home buying process. It will help you enjoy your home that much more once you actually move in.

View this blog at it's original source: http://www.wendypatton.com/blog/5-questions-to-ask-yourself-when-purchasing-a-new-home

The Top 3 ways to Determine a Homes Value

2010-03-31T14:02:00.000-04:00

The Top 3 ways to Determine a Homes Value

In most states there are values determined by the tax assessor’s office. It might be called your tax value, assessed value or something similar. That number might not be 100% of the property value. Usually there is some type of formula that each city or state uses.

Unfortunately using the taxable basis fails to take into account a number of things, like:

1. What are homes actually selling for in your neighborhood?
2. What is the condition of your home?
3. What upgrades have been made to your home?

As you might be able to guess, all of these factors can have a huge impact on the value of your home and would be in no way reflected on the taxable basis. The result, your home will either be over- or under-priced.

Here are the top 3 ways to determine a value of a home:
1. Appraisal

An appraisal is probably the most accurate way of determining a home’s value. While it seems to be the most costly in the short term, what it can save you in the long run by having your home accurately priced offsets the upfront cost. If you are going to sell your home on a “For Sale by Owner” basis, I cannot encourage you enough to have an appraisal done. When you order the appraisal, make sure you ask for a market value. This will give you the closest possible pricing guide for your home.
1. Real Estate Agents

Making use of a real estate agent can be an excellent way to determine the value of your home. Real estate agents, like appraisers, actually look at recent sold comparables and look at your home to determine how its condition affects its value, and then suggest a price before listing your home. Unlike appraisers, they also take into consideration the current competition. They will perform an analysis of value, for no charge in most cases.

When you meet with an agent, ask to see “comparables”. They should show you recent sales comparables as well as what is currently on the market. Ask the agent WHY they are suggesting a particular price. Also ask them what you should expect to receive for a sales price on your home. A good real estate agent should easily be able to justify the asking price with accurate comparables and condition analysis of your home.
2. Your Neighbors

Another method I have seen employed quite often is to price a home’s value based on what your nearby neighbors are trying to sell their homes for, and then almost always adding some. Why would you add some? Of course, your home is better, right? It might be or it might not be. But most sellers think their home is nicer or more updated than their neighbors. Be careful with this, as it can be a dangerous way to price your home.

This method makes several assumptions that will likely lead to pricing trouble:

1. You are assuming that your neighbors’ homes are priced accurately.
2. You are assuming that your home is genuinely comparable to your neighbors.

Even if you happen to live in a neighborhood of identically sized ranch houses with identical lots, there can still be pricing differences based on the condition and improvements in the home. If you have a finished basement or a newly remodeled kitchen, you need to be able to accurately set a value for those improvements.

Want to learn more about selling your home as a rent to own? See Wendy Patton’s book, Rent to Sell, Your Hands on Guide to Sell Your Home When Buyers Are Scarce.

How to Get Sellers to Call You and Offer you Their Home for a Rent-to-Own

2010-03-26T13:13:00.002-04:00

How to Get Sellers to Call You and Offer you Their Home for a Rent-to-Own

Now that we’ve discussed ways to find rent-to-own homes, what would you say to having rent-to-own sellers call you and offer you their home? That’s right. You can just sit by the phone and wait for sellers to call you and tell you about their rent-to-own home.

Many of these sellers will not have their homes listed with a real estate agent, so if you are working with an agent, this may not be for you.

The advantage of having the seller call you is that you already know he is willing to consider rent-to-own. You just need to figure out if his home and terms will work for you.

“Alright Wendy! So how do I do this?”

Posting ads is a way to get sellers to come to you.
Posting Ads

The first way is by posting ads about yourself and rent-to-own. Here is one example:
Can’t sell your home? Thought about renting it?
I’m looking to rent with an option to buy.
We could be the perfect match!
(123) 456-7890

This is a sample ad of what you would put in the newspaper where space is an issue – the more space you use the more it costs you. These ads though are just enough to get the attention of a home seller who has started to think about what choices he must make if he doesn’t sell soon.

You can also post an ad on FREE sites like Craigslist, Yahoo! groups and Google groups. I also recommend posting some flyers on community bulletin boards as well as posting flyers using these FREE Internet sites. These methods are much cheaper than the newspaper classified ads and may be all you need.

The whole purpose of these ads is to filter out the home sellers who don’t want tenants and to get the ones that would consider tenants to call you.

Here are some questions you can ask sellers once they call you:

* Where is your home located?
* Can you tell me what price you are looking to get for your home?
* How many bedrooms and baths does it have?
* Do you know what the rental rates are in your area? About how much were you thinking for monthly rent?

Not only will these questions help you gain more information about the sellers, it will also help you build rapport with the seller as well. Check out my book Rent-to-Buy to learn more about other ways to get sellers to call you.

Rent to Buy is your hands-on guide to buying your next home as a rent to own. You can get your next home NOW without having to qualify for a mortgage until later. To Learn more about Option Agreements purchase your copy of Rent-to-Buy today.

Feel free to comment and let me know of other ways you have sellers calling you!

How to find Motivated Sellers for Lease Options

2010-03-19T12:35:00.000-04:00

How to find Motivated Sellers for Lease Options

What Makes a Motivated Seller

There are, of course, different circumstances and situations in the lives of people that motivate them to need to sell their home. This can include a job transfer, bankruptcy, foreclosure, divorce or upgrading to a bigger home -- any number of reasons. However, the circumstances of the sellers may also be affected by the state of the two vying economic real estate markets – buyers and sellers – which also affect seller’s motivations. For real estate investors it is crucial to buy homes from truly motivated sellers -- sellers who have an extra urgency, usually financial, however, not always. You can’t get a good deal from a seller that is not motivated, because, they will have no reason to negotiate any part of a transaction.

There are different degrees of motivated sellers and different reasons sellers need to sell their homes, but overall there are two basic categories of motivated sellers:

1. Desperate and distressed (bad debt) – someone in trouble financially, behind on payments, going in a bad direction, lost their job, divorced, foreclosure, etc or

2. Not desperate or distressed (good debt) – someone not in trouble financially, not behind on payments, but motivated for other reasons: possibility have two house payments, inherited a home, burned out landlords, job transfers, etc.

Most real estate investors only go after #1 above, but there is also huge profit potential with sellers that fall in #2. All of the lease option sellers should fall into number 2, because these sellers are safer for a lease option buyer.

5 Ways to Improve Your Credit for Rent-to-Own Buyers

2010-03-12T11:43:00.001-05:00

#5 Close out old accounts

In some cases if you have TOO MUCH available credit on your credit report it can hurt your score and reduce the amount lenders are willing to loan you. This can happen to people who have long credit histories. Old, unused accounts are never closed but they do count as available credit nonetheless.

If your credit score is suffering from too much available credit it may be to your advantage to close out a few of those old accounts. However, if you do this you need to close these accounts early, well before you apply for a mortgage. Closing them too close to the time when you apply for a mortgage won’t help your credit score at all.

# 4 Don’t take on new debt

Boy, I can’t emphasize this one enough. When you move into a new house how tempting is it to go out and buy new furniture or new appliances? It’s a new house right? You want new things to go into it.

This is like suicide for rent-to-owns. You are supposed to be improving your credit and not taking on new debts is critical! Not only that, but the payments on those new debts will also reduce the amount of mortgage you can qualify for. Even a monthly payment as little as $25 can reduce the amount of a mortgage you can qualify for by $4,000. Is that new couch really worth it if you can’t buy the house at the end of the option period?

That being said there is one case in which taking on new debt can help you - if you don’t have enough established credit to qualify for a mortgage. This only applies to people who are very new to building their credit. It is not intended for people who are trying to RE-BUILD their credit. Additionally the only way it helps is if that debt is PAID OFF at least 3 months before you apply for a mortgage. If it isn’t paid off long enough before you apply for a mortgage it won’t register on your credit report as paid off yet. These things can be slow to update so you need to give yourself plenty of time.

# 3 Stop using your credit cards

Even if you weren’t trying to improve your credit I would suggest this one. Credit cards are just sickeningly easy to get in trouble with. I don’t know many people that have credit cards that haven’t gotten into trouble using them at some point in their life. Just keep this in mind – the more credit card debt you have the lower your credit score.

Just stop using the darned things. Not only do they lower your credit score when you have higher debt, but remember that when the monthly payment on your credit cards goes up the amount of mortgage you can qualify for goes down – by thousands of dollars!

# 2 Pay everything on time

This is the second-most important thing you can do when it comes to improving your credit score. If you want to qualify for a mortgage you absolutely MUST make all of your monthly payments on time! NO late payments. NO bounced checks. NO excuses!

Consistent, on time payments will really help your credit score. Not only that, but if you make even one late payment during your rental period you may not be able to qualify for a mortgage at the end. Lenders HATE to see late payments on your credit, so once you start an option period make sure that you make those payments on time. Remember if you can’t qualify for a mortgage your option fee is non-refundable. You don’t want to lose that money or the house.

# 1 Sign up for a credit repair service

When our credit reports have damaging items on them, sometimes the only way to get your credit score high enough to qualify for a mortgage is to get those damaging items off. This is where credit repair comes in. A REPUTABLE credit repair company can help you repair your credit and help you remove damaging items from your credit report. In fact, in cases where a buyer cannot qualify for a mortgage and wants to do rent-to-own, I almost always recommend they sign up with a credit repair company.

If you are serious about doing rent-to-own, working with a credit repair company is a must. I recommend www.renttoowncreditrepair.com. They are a reputable company that can often achieve impressive results at rebuilding your credit.

Credit Repair for Yourself

2010-03-10T13:07:00.001-05:00

Credit Repair for Yourself

Previously, I spoke about a few tips from my book Rent-to-Buy that will help you once you have been approved by the seller. I want to take it a step further and talk about the most important step you should take. If your credit needs improvement before you can qualify for a mortgage, you absolutely want to jump right on this. You should sign up for this as soon as you are approved by the seller and have scheduled your move in date. Credit repair is absolutely critical. Unless you already have excellent credit, this is something you definitely need to focus on. You won’t be able to get a mortgage if you don’t improve your credit. If you are working with a seller who has read my book ‘Rent-to-Sell’, they will almost certainly require you to take this step.

Without this, you may not be able to qualify for a mortgage when it comes time to buy. A credit repair company will help you get your credit in shape so that you can qualify for a mortgage. If you are looking for a quality credit repair company, go to: http://www.wendypatton.com/credit-repair. Don’t put your option fee at risk and don’t waste all of those months of rental payments with nothing to show for it. Chapter 17 of my Rent-to-Buy book goes into details about credit repair.

Also, join me on Thursday, March 11, 2010at 8 PM EST so that I can introduce you to my credit repair specialist. His ability to repair credit issues and get my Lease Option buyers to the closing table is incredible.

CLICK HERE to reserve your spot.

In addition to helping your tenant buyers, you may also want to consider credit repair for yourself.

Even if you currently have good credit, I will show you an example where an increase of just 22 points (from 679 to 701) saved an investor over $100,000 in interest on just one investment property.
CLICK HERE to register now!

Thursday, March 11, 2010
8:00 PM (EST)
7:00 PM (CST)
6:00 PM (MST)
5:00 PM (PST)

View this post from it's original source here: http://www.wendypatton.com/blog/credit-repair-for-yourself

How to Possibly Avoid a Foreclosure using a Lease Option

2010-02-26T11:54:00.002-05:00

If you are in the difficult situation of falling behind on your mortgage payments and trying to sell your home, offering it on a rent-to-own basis may help you stay out of foreclosure. I wish I could say for certain, because I hate to see people lose their homes to the bank, but obviously it’s no guarantee. The last thing lenders want right now is to foreclose on your home. They have gotten pretty flexible in working with homeowners to find solutions. Be sure to include them in the process when trying to find a resolution. As you read on you can evaluate whether you think selling your home as a rent-to-own will help you. Critical factors to consider are:

* Monthly Payment Adjusting Up? If your monthly payment has adjusted upwards, will you be able to rent your home to a tenant-buyer for enough to cover the new payment? If not, you will have to cover the difference yourself or get the lender to agree to a reduced payment. There are lenders that will work with you on your interest rate. This is called a loan modification. They usually won’t change your balance but they might change the interest rate and length of loan. Talk to your lender to discuss your options.

* Home Prices Dropping? Do you live in one of the areas where home prices have dropped dramatically? If so, is your home worth much less than your current loan amount? If this is the case you won’t be able to sell it to a tenant-buyer for enough to pay off your mortgage. Do you have the extra money to pay off the difference? Do you need to consider foreclosure? Maybe a short sale is your solution versus a rent-to-own. A short sale is when you get your mortgage company to accept a lesser amount on the payoff of your mortgage than you owe, when you sell your home. This is called “shorting” the mortgage. Many people and lenders have had to consider this alternative with the housing market decline.

* Behind on Your Payments? How much are you currently behind in payments? You will need to bring them current one way or another to stop the foreclosure. The option fee from your tenant-buyer may be enough to cover this. If it isn’t, you might be able to use the option fee to cover part of it and then establish a catch-up plan with your lender.

Yes, you do have choices other than the traditional way of selling your home! Obviously this is the part where I sing the praises of rent-to-own.

Want to learn more about selling your home as a rent to own? See Wendy Patton’s book, Rent to Sell, Your Hands on Guide to Sell Your Home When Buyers Are Scarce.

View this post from it's original source here: http://www.wendypatton.com/blog/how-to-possibly-avoid-a-foreclosure-using-a-lease-option

Real Estate Investing – An Essential Tool

2010-02-19T11:27:00.000-05:00

View this post from it;s original source: http://www.wendypatton.com/blog/real-estate-investing-an-essential-tool

Now You Can Get my Online Lease Option DVD for Free!

2010-02-17T14:21:00.000-05:00

If you are like many others who have come to my site to learn how to make more money by investing with little or no money down in lease options, I have an exciting opportunity for you. I am now offering a FREE online DVD to help you Learn How to put $5,000- $10,000 into your pocket within 29 days using lease options . I am sure you may have concerns and may be wondering if it is even possible in today’s Real Estate market when you do not have:

* Enough credit to purchase a property with a mortgage
* If you do not have enough cash to buy or put down
* You do not want to get stuck with a property you can not

Take a few moments from what you are currently doing and watch.

Here is what you will learn:

* Why Real Estate?
* What a Lease Option is.
* Why you need a Lease Options.
* 6 keys to success.

Check out the Box located on the right side of my blog and get it now!!

To get your Free online Lease Options Go HERE: http://www.wendypatton.com/blog/now-you-can-get-my-online-lease-option-dvd-for-free

The Top 3 Terms to Negotiate that Sellers MUST know for Lease Option

2010-02-15T12:13:00.001-05:00

1. Price

Typically buyers won’t try to negotiate price. They often accept your asking price (which includes a rent-to-own premium) because of the flexibility they receive by doing rent-to-own. However, should a buyer try to negotiate on price (and they will if they read my book, Rent-to-Buy) there are a couple of ways to counter them.

1. You want to emphasize the flexibility they are receiving by being able to rent the home before they buy it. This type of flexibility justifiably commands a greater price than a comparable home being sold conventionally.

2. You want to emphasize the rarity of what you are offering. Simply put, a buyer who is buying a rent-to-own home has very few choices in homes. There aren’t that many out there. This rarity also makes the home more valuable.

2. Option Fee

More than any other term buyers will likely try to negotiate a smaller option fee. In some cases they’ll do this because they don’t have enough money saved, in other cases they’ll do it simply because they don’t want to part with the money.

Obviously the more option fee you receive the better because it means the buyer is less likely to walk away from their money. When a tenant-buyer tries to negotiate a lower option fee you can counter it by:

1. Pointing out that the option fee counts as a down payment when they are trying to qualify for a mortgage and the larger the option fee the better it will look to the lender.

2. (If the tenant-buyer has poor credit) Explain that you are taking a risk by letting someone who can’t currently qualify for a mortgage move into your home and that the option fee is your security against that risk. Tell them that the option fee conveys their seriousness about the home.

3. Closing cost contributions

Typically at the beginning of the option period tenant-buyers won’t ask for or won’t know they need to ask for help with closing costs. This usually comes up at the point when they are applying for a mortgage and discover that they need to pay them.

This is when either their real estate agent or their mortgage broker will tell them that they can ask the seller (you) to help pay closing costs. The way this is usually handled is that the purchase price is increased to offset all of or part of the closing costs. Assuming that the home will appraise for enough to cover this.

You may have done this when you bought the home yourself, it’s a very common practice. By increasing the purchase price to cover closing costs, it’s mostly a wash for you as the seller. It does end up costing you a little bit with increased taxes, commissions, title fees and so forth based on the slightly higher selling price (maybe a couple hundred dollars depending on the cost of your home).

I recommend granting this concession if you can because it gets your buyers to buy your home. The cost to you is pretty small so it’s worth it to get your home sold. If you suspect that your home won’t appraise for enough to cover the closing costs because property values are going down in your market, you may want to encourage the tenant-buyer early during the rental period to start saving some money to cover their closing costs when they get a mortgage, this way you are less likely to have to add them into the purchase price.

View this post at its original source here: http://www.wendypatton.com/blog/the-top-3-terms-to-negotiate-that-sellers-must-know-for-lease-option

Top 5 Reasons Lease Options can be beneficial for you

2010-02-12T11:23:00.000-05:00

I’ve talked a fair amount about why you NEED to offer your home on a rent-to-own basis to get it sold in this market. But I haven’t talked at all about the benefits to you in doing so. After all, most of us hate doing things just because we HAVE to, we would much rather do things we WANT to do.

Here are some of the reasons rent-to-own can be beneficial for you:

1. Higher Purchase Price - Rent-to-own sales typically command a price premium over traditional sales. The buyer is paying extra for the flexibility he receives by not having to do an outright purchase immediately.

1. Higher Rent - You may be able to charge more for monthly rent in a rent-to-own than you would for just a straight rental. I will cover this in more detail later.

1. Cash Flow - If your monthly payments are less than the monthly rent, the difference goes into your pocket.

1. Option Fee - This upfront fee paid to you by your buyer is what secures the purchase price down the road. If the buyer closes on the home, it would be applied towards the purchase price. If the buyer elects to not purchase the home, the option fee is forfeited and still remains yours. Either way you win. If you were to just rent the home, the tenant would put down a security deposit. The option fee is different than a security deposit. A security deposit is owned by the tenant and can’t be used by the owner, except for repairing damages, unpaid rent and other provisions as mandated under state laws.
2. Eliminates the Burden of the Mortgage Payment - If you have already moved on to your next home and your old house is sitting empty while you try to sell it, then you are saddled with TWO mortgage payments. Hopefully you aren’t in this position, but if you are I feel your pain. Ouch! If the house has been taking a while to sell, you know how fast the money coming out of your pocket adds up. It gobbles up any equity you have at a frightening rate. Placing a rent-to-own buyer that pays that extra mortgage can take away your pain.

As you can see, selling your home as a rent-to-own offers a lot of benefits to you: Higher purchase price, cash flow, higher rent, option fee, selling faster and more! To learn more ways a rent-to-own can be beneficial for you check out my book Rent-to-Sell.

How to Beat the Economic Downturn – A Creative Solution

2010-02-10T13:23:00.000-05:00

I have had the same UPS driver come to my office for the last six years! His name is Darwin, but for about the last six months I have not seen Darwin. I thought he may have hurt his back or had been assigned to a new route, in any case I have missed seeing his smiling face each day around 4:00 P.M..
Last week, Darwin walked into my office and asked to see me. I was delighted to see him again. He began to inform me of how after 25 years of service with UPS he had been laid off!
His SECURITY was GONE!
How disheartening, but yet so typical of Corporate America and of the effects of our beat-down economy. Darwin asked if he could use me as a reference. This told me that Darwin did not have a Plan B in place in case something like this ever happened. You are probably saying to yourself; “Why would he after 25 years of service? Who would have thought he even needed one?”
In a perfect world I would wholeheartedly agree, unfortunately we do not live in such a place or time.
Personally I believe we always need to expect the best but plan for the unexpected.
If you want to make sure that something like what happened to Darwin does not happen to you and your family, get started on your Plan B right now.
Join me on February 11, 2010 at 8:00 PM – EST7:00 PM – CST6:00 PM – MST5:00 PM – PST to check out a multiple stream of income (Plan B) that has worked out very well for me and my family over the last 7 years. This opportunity has provided for us when our other income sources had dried up.
Register today at https://www2.gotomeeting.com/register/553774042
See you on the webinar

Wendy

How to Generate Leads Through Realtors

2010-02-08T16:19:00.001-05:00

When I first started doing lease options it was about two years before I realized that I needed to work with Realtors because of their control over the sellers. Realtors pre-screen everything for you and in general their sellers aren’t in financial trouble. The Realtors control the relationship with the sellers and the sellers tell the Realtors everything, including personal information. That’s one of the key reasons I like to work with Realtors – they control the knowledge base about the seller.
I look for Realtors who can understand lease options and can help their sellers also understand the benefits of lease option, but this understanding can take time. My job is to assist them and help them understand when to call me. Here is how I generate leads for lease options through realtors.
1. Making cold calls to generate leads
If you look in any real estate section of any newspaper, you can find the top listing agents you need regarding potential properties. Many times the agent is unavailable, but that’s not a problem. Just leave a descriptive message about the property that interests you and let the agent know how to contact you. You might want to make yourself a short script with the highlights of the things you need to discuss so that you don’t fumble for words when on the phone. Also don’t be afraid to ask for information from the assistants. They often know as much or more about the status of the home and the seller.

2. Structuring the Deals through Realtors
Tell the agent how you found out about them – butters them up a bit – and let them know that you are willing to give a presentation. Suggest that the Realtor fax you a potential listing. If you have already developed a relationship with the Realtor, you can always “dig” a little during the phone conversation to see if they have a property that is a good candidate for a lease option that they might have overlooked.
A. Proposal – used to put together a mock-up offer to a Realtor that they can then present to the home owner or seller. It will put down the overall terms in writing without the specifics. This saves a lot of paperwork because you only fill out the other paperwork when you have an agreement on the proposal.
B. Letter to get into the brokerage office – I tell the broker what I do and don’t be anxious on the proposals – make it low pressure. When you’re first starting out, you‘ll want more deals to go through because there’s a great excitement in the newness of the game. Don’t get too wrapped up in a deal happening, because a lot of them don’t happen. I probably get about 40% of the proposals I put out- which means that 60% come up empty.

3. Unwanted Buyers
A Realtor will get a pre-approval letter from a mortgage company before they show a home to a prospective buyer. Otherwise they’d be wasting valuable time and energy with a lot of people who are looky-loos and not serious buyers. The Realtors don’t want to waste their time with those buyers, but those are the buyers I want and I need the names from the Realtors. So I send the Realtors a “Garbage letter” which basically says, “Don’t throw those names and numbers in the garbage! I can help the buyers get into a home with lease options. I offer a $1000 finders fee for every name that ends up in a deal.” This is another incentive to Realtors to work with me. I’m not out to steal their business – I’m here to help them and to offer a unique service to buyers with financial history difficulties. I want to help them move their inventory, so I am interested in the buyers they can’t help in traditional methods.

Working with Realtors is key in any lease option deal. For more information about Generating Leads through Realtors check out my book Investing in Real Estate with Lease Options and Subject-to Deals.

View this post from it's original source here: http://www.wendypatton.com/blog/how-to-generate-leads-through-realtors

What is a Cooperative Lease Options

2010-02-05T12:13:00.000-05:00

Learn what a Cooperative Lease Option is and how to make a profit from the deal.

View this post at it's original source: http://www.wendypatton.com/blog/732

How to Make a Profit from a Sandwich Lease Option

2010-02-03T17:47:00.001-05:00

Learn what a Sandwich Lease Option is and how to make a profit from the deal.

View this post from its original source:

http://www.wendypatton.com/blog/what-is-a-sandwich-lease-option

The Perfect Date: Tips for Home Staging on Valentines Day

2010-01-29T13:50:00.001-05:00

Valentines Day is usually spent taking a romantic vacation with your significant other or spending tons of money creating the perfect day. Like many you can end up spending hundreds of dollars for one day. If you are like many couples currently experiencing the difficulties of the recession and trying to sell a home, you just can not afford to do both this year. If this is your situation, I have the PERFECT solution: spend Valentines Day staging your home. One of the great things about staging your home is that it can be done with little or no money. No matter what your budget is, even if it is zero, you can use staging techniques to increase the appeal of your home.

When it comes to selling your home you want it to really appeal to buyers in a positive way. You want buyers to love your home, to look around and go, “Ooh, look at that,” or “Wow, that’s beautiful.” Your home should have some pizzazz, some sizzle. In other words you want to trick your home out and give it some bling!

Here are my tips for home staging:

1. Get Rid of the Clutter

One of the most important things to do when it comes to making the inside of your home look desirable is to get rid of the clutter. After living in our home for a while we tend to accumulate stuff. I have heard professional home stagers recommend that the average home owner clear about 1/3 of their possessions out of the house before putting it on the market. Definitely remove any collections of dolls, spoons, Star Wars figures, or any other dust catchers.

2. Window Treatments

It’s a good idea to have window treatments on every window in the house, if they make sense. A combination of blinds with curtains is best. But here’s the catch, you also want to let lots of light into the house. So the blinds should be raised and the curtains fully open. This creates a nice framing effect on each window.

3. Lighting

In addition to letting in natural light you want to add plenty of artificial light. The trick that home stagers use is to layer the lighting. They use a blend of light from ceiling fixtures, lamps, wall lights and task lights. You want to make rooms bright, without being too bright and not have any single light source overly stand out.

4. Doorknobs, Switch Plates and Outlet Covers, Oh My!

If you are going to go to all of the trouble to make the walls and doors look great, you should finish the job by replacing all light switch plates and outlet covers with new ones. I also recommend replacing all of the doorknobs if they look at all worn, because it’s so inexpensive to do it. The reason this is a pet peeve of mine is that freshly painted walls with painted over switches and outlets looks like a cover up job to me. Replacing all of the switch plates and outlet covers in your home should cost you about $30.

5. Arranging the Furniture

If you’ve ever seen a professional home stager in action they seem to have this great ability to take the existing furnishings you have and rearrange them, sometimes into different rooms and make your home look completely different--and so much better. Because the furnishings you have and the layout of the rooms in your home will be completely different for each person there aren’t a lot of general tips I can give you for arranging your furniture. Look in home magazines. It doesn’t cost anything to go to the bookstore and look at them. They are full of photos that can give you great ideas. HGTV in particular has really come to realize that the housing market has gone soft and they have multiple shows now exclusively focusing on home staging. These stagers share tons of useful tips and tricks for making your home look great. What I don’t recommend doing is going out and buying whole new furniture sets for key rooms in your home just for staging.

There are a few commonsense tips I can offer that apply, no matter what furnishings you have and how the layout of a room is.

1. Don’t leave large dead spaces.
2. Clearing the clutter applies to too much furniture as well.
3. Don’t have everything pushed up against the walls.

6. Master Bedroom

The master bedroom is the ultimate refuge. It is the haven within the home. No matter how large or small your master bedroom is, you want it to appeal to the buyers as a place they WANT to spend their nights. If your master bedroom is cramped, it’s time to move some of the furniture out. Also, closets are a big selling point for houses. Clear out your closets out. If your master bedroom closet is jam–packed, buyers will look at it and decide there just isn’t enough room, even if your closets are huge.

7. Bathrooms

Your bathrooms should be so clean you can eat off the floor (but no need to test it this way!). There shouldn’t be any mildew, soap scum, toilet rings, body hair or anything else that makes the buyers think they are buying your dirt. Make sure the mirrors sparkle.

8. Kitchen

“Kitchens and baths sell homes.” Pretty much any real estate agent in the country will agree with this. Making your kitchen look the absolute best it can is well worth it when you are trying to sell your home. The beautiful thing about staging your kitchen is that you really don’t have to spend any money to do it.

These tips will help to save you money while trying to sell your home and allow you to still spend time with your loved one on Valentines Day. A Well-staged home that is competitively priced consistently outsells non-staged homes, even the fixer uppers. By the way don’t forget the flowers! If you would like more tips for do-it-yourself home staging techniques check out my book Rent-to-Sell by clicking HERE.

WENDY'S VALENTINES DAY SPECIAL OFFER: Purchase Rent-to-Sell before February 14, 2010 for ONLY $9.95.

Enter Coupon Code: VALENTINE to purchase Rent-to-Sell Today! Share this article and coupon code with your friends and they will thank you later.

View this post from it's original source here:
http://www.wendypatton.com/blog/the-perfect-date-tips-for-home-staging-on-valentines-day

Qualifying A Good Buyer

2010-01-22T12:07:00.000-05:00

When qualifying a good buyer for a lease option you are looking for someone that had a blip in their credit and now they are on their way to financial stability. When you look at someone’s credit, see if they are on their way up or not. You can see what they have paid recently and what is still behind. This will show up on their credit report. Learn to read credit reports and get set up on a system that works for you. If you don’t know which system to use, talk to others in your real estate investors group. They will know which companies provide which services in your area. You can also work with a mortgage broker to run credit and do the lease option approvals.

Once you have approved a tenant for your lease option home; all you have to do is draft the paperwork and have them sign it all. You need not give more than 12-18 months to the buyer on an option. This timeframe is most often enough for a good option tenant to get a mortgage. If at the end of the time period they just need a few more months or they want to extend, it is your option to decide if that is what you want to do. This is when you can also renegotiate. Maybe the homes in that area appreciated more than you expected, then you would want to extend, but increase the purchase price somewhat. You could also ask for another $500-3000 option fee, to extend the option. You can also raise the rent slightly. There are times I have given my tenants an extension for free, because of circumstances.

For more information on How to Qualify a Buyer you can check out my book Investing in Real Estate with Lease Options and Subject-to Deals.

How to Screen a Good Buyer

2010-01-20T13:58:00.000-05:00

Screening a buyer for a lease option is extremely important and yet some of us investors still go by instinct or illegal decisions. There are two areas to discuss on screening;

1) Detailed Screening

2) Fair Housing.

‘We liked them’, some investors will say to me. There are too many really good liars in the world and those of you that feel you can ‘read’ people and relying on that are in for a rude awakening. Many of my worst situations came from my own ignorance of believing in people. We should all screen people as if we were blind and deaf. We would then screen them strictly on the facts and not our opinions or prejudices.

Screen a tenant by reviewing the application in my course. Have them fill it out. Check it for accuracy. Make sure they did not lie to you. If someone lies to me, they are denied the occupancy. Check their name – get a copy of their driver’s license. Check their employment – I confirm the pay amount, hours they work and time on the job. Check their banking information, you might need it later. Also check their landlord history , the current land lord may want to get rid of them, but the previous has nothing to hide. Call them both! Confirm it is the real landlord by one of two ways; check it on county records, or call person and say a different amount of rent than on the application.

Fair Housing:

Fair Housing is an entire seminar in itself. Realtors around the country have half to full day training sessions on this topic alone. Fair housing rights when violated can cost owners hundreds of thousands of dollars. This is not an area where you want to mess up. The bottom line is this: select a tenant on their application alone and nothing else. There are federally protected areas and there may be some state protected categories also. Each state has their own protected areas, so check your state for the details. The way to be really safe is don’t judge anyone by the way they look or talk. This is why I say that we should be blind and deaf to select a tenant. If we would just evaluate on the application process alone, then we would stay out of trouble. Then the selection would be based truly on the facts not our gut feel or our instincts. Besides, many times we think our ‘intuition’ is that someone is ‘good’ and they later are not so ‘good’. Stick with the law and you will be safe.

As you can see screening a buyer for a lease option is highly important. For more information on How to Screen a Buyer and putting your standards in writing you can check out my book Investing in Real Estate with Lease Options and Subject-to Deals. Stay tuned for the next topic How to Qualify a Good Buyer.

View this post from its original source at: http://www.wendypatton.com/blog/how-to-screen-a-good-buyer

Discover the TOP 3 Deadly Mistakes Investors Make in Down Markets

2010-01-13T12:03:00.001-05:00

Down markets are without question one of the best times for real estate investors. Down markets contain the best opportunities and the greatest ability to make money. Any truly successful real estate investor will tell you that they do more deals and make more money in down markets than they do in up markets.

Here is what Billionaire J. Paul Getty had to say about investing in down Market:

“If you want to make money, really big money, you do what no one else is doing. Buy when everyone else is selling and sell when everyone else is buying. This is not merely a catchy slogan. It is the very essence of successful investment.”
J. Paul Getty – Billionaire

While the opportunities are great in down markets, investors need to be aware of some of the deadly mistakes that can occur.
Here are the Top Three:

1. Not Getting Cash Flow
Cash flow is king, especially in down markets. It’s harder to get cash flow in seller’s markets, and even in some areas of the country, in a buyer’s market, because the prices are still too high for area rents. In down markets it’s very important to make sure your properties provide cash flow. You can’t count on appreciation in the short term in down markets. If a property cash flows, you can hold it forever, no matter what the market does. So, if it stays a down market for a while, you are okay because it cash flows. If the market goes back up, you can make money off appreciation too. Sell it then if you choose. The choice is yours then, because you’ve got the cash flow. CASH is KING!

2. Making Excuses
I touched on this before. If you want to succeed in real estate, you have to set aside the excuses and do it. Excuses are typically hidden in reasons why you can’t do it now. “I’m too busy.” Or the fear to take action by over analyzing every deal, “This property makes $5 less per month in cash flow than I really want.”
You’ve got to take action now. Picturing in your head all of the money you’ll make and the better life you’ll have with real estate investing is only fantasizing. If you want to make money in real estate; get started, take one step and then another. No one expects you to do it all at once or even do everything right, just get started.

3. Not Using a Proven System
There are some things in life we have to learn for ourselves. Making every mistake possible in real estate, just to learn the right way to do something is not one of those times. If you try that route, it will take you so much longer to get anywhere. You will literally be years behind, if you don’t give up entirely. A proven system is someone else’s road map that you can use to learn a real estate technique.
Proven systems give you the opportunity to skip the “getting lost” part. They move you forward at a much quicker (and safer) rate than if you tried to do it all on your own. It doesn’t matter what type of investing you want to do; short-sales, rehabs, or lease options, they will save you tens of thousands of dollars in mistakes, legal fees, etc.

View this post at it's original source:
http://www.wendypatton.com/blog/discover-the-top-3-deadly-mistakes-investors-make-in-down-markets

Discover the 3 best ways to Buy Real Estate in a Down Market

2010-01-08T14:38:00.000-05:00

In a recent post I discussed why Soft markets are GOOD rental markets to invest in. Now is the best time to buy Real Estate.
Here are the 3 best ways to Buy Real Estate in a Down Market:

#1 Lease Options
Lease options are Great for down markets. The opportunities are plentiful because there are lots of sellers out there having trouble selling their homes. This means they are looking for alternatives, and what you can offer them with a lease option is a whole lot better than just renting out their home or having to do a massive price cut.
The other great thing about lease options in down markets is that you have extremely low risk. No matter what happens in the market you’ll come out okay, because you aren’t obligated to buy. But even if the market were to go down more you can always try to renegotiate with the seller and get a better deal so you can still close. To learn more about lease option investing visit my website at http://www.wendypatton.com

#2 Wholesaling A.K.A Cooperative Lease Options
Cooperative Lease Options is a safe form of investing in down real estate markets, provided you have end buyers lined up before you close. There will be plenty of opportunities for wholesale deals, but the challenge may lie in finding your buyers.
If you are doing Cooperative Lease Options it’s a good idea to have a strong buyer list lined up. You don’t want to close on the property without an end buyer because you are in a down market. If the market continued going down you would be stuck holding the property as the value declined.
What I really like about wholesaling is that you can keep your risk level low by not having to own the property. You just flip it to your end buyer. Minimizing risk in down markets is very important. To Learn More about Cooperative Lease Options Click Here.

#3 Cash Flow Rentals
Some down markets are positively flush with great cash flow opportunities. Down markets mean that the renter pool has grown as well. If you make sure the numbers work and that the rental market is strong you can do very well with cash flowing rental properties. Passive income every month is a great way to build your wealth.
While there is some risk associated with a rental property in a down market, because you do actually own the property you can easily mitigate that risk by making sure the numbers work before you buy. If a property cash flows you can hold it forever without having to worry about what the market does. To learn about some great cash flow opportunities, the same area that I’m buying in right now, Click Here

To view this post from it's original source:
http://www.wendypatton.com/blog/discover-the-3-best-ways-to-buy-real-estate-in-a-down-market

Investing using Lease Option or Subject To Techniqes

2009-12-30T14:38:00.000-05:00

A lease with an option to buy involves leasing a home from a seller who might not be able to sell it or rent it otherwise. It allows the investor to rent it and then buy it, without having to use money or credit. I was able to do this over and over again. I have bought and sold over 600 lease option (rent to own) homes. The technique of lease with option to buy is what helped me get going “full steam ahead” in the real estate business.

Investing using the subject to technique involves having the seller sign the deed of their home over to the buyer “subject to” the existing mortgage. The seller keeps the mortgage in their name, but the buyer/investor owns the home and is responsible for the payments of the mortgage. The investor does not have to qualify for a new mortgage using this method. The technique of subject to allows the seller to move on and get out from underneath their payments and the investor the ability to buy many homes without using his or her own cash or credit.

Both methods, when done properly, should result in a win/win situation for the buyer and seller. I only teach my students how to use these two methods in a fair and ethical manner. When all parties are treated fairly everyone wins and things work out for the best. I truly believe this is the only way to invest in real estate!

View this post from the original source here:

http://www.wendypatton.com/blog/investing-using-lease-option-or-subject-to-techniqes

How to Determine Your Bottom Line

2009-12-28T11:36:00.000-05:00

As an investor you must determine your bottom line to do a deal. What is the profit you would expect, minimally, to do a deal on a lease with option to buy or Subject to investing technique? For each type of investing technique you might have a different profit amount required. For instance, I will accept less for a rehab than a lease option, because it can be completed and out of the deal within a few months, whereas a lease option I will be in the deal for 12-18 months or more. Is your profit range for a deal $10,000, $50,000 or $300,000? Once you determine your bottom line then you can determine what you will and will not do for a deal. For instance, if your bottom line is $20,000, and a deal comes along that will only provide you with $18,000, then you need to pass that deal up, or negotiate more to get you your bottom line, otherwise, it is not be a win/win with the seller and yourself. You also might be able to wholesale it to someone else who has a bottom line that is less than your bottom line, but you will need to learn to walk away from deals that don’t work for you.

To learn more about determining your bottom line take a look at my book Investing in Real Estate with Lease Options and Subject-to Deals.

View this post from it's original source:
http://www.wendypatton.com/blog/how-to-determine-your-bottom-line

Top 3 Reasons You Should Invest in Hands Off Cash Flow Opportunities

2009-12-23T17:45:00.000-05:00

Soft markets are GOOD rental markets to invest in. In fact, I invest in soft markets all the time. With the current state of the economy many areas in the U.S. are considered soft real estate markets. By this I mean that there are more sellers than buyers. Soft rental markets are often referred to as a buyer's market, because the purchasers hold much of the power in negotiations. As an investor, I tend to target down markets that have strong rental rates. This allows our investors to acquire property at historical lows and hold for long term gain, while realizing monthly positive cash flow. Buying real estate in a down market is one of the best methods to build your portfolio and your wealth.

Here is what Donald Trump has to say about investing in down markets: “You can make more money in down markets than you can in up markets.” Investor Warren Buffet says: “Be fearful when others are greedy and greedy when others are fearful.

Here are the TOP 3 reasons you should invest in Hands Off Cash Flow opportunities:

ALL the work is done for you! All you do is sit back and collect the checks! This means you have nothing to do but collect IMMEDIATE monthly Cash Flow.
Cash Flow – The numbers are analyzed for you. One of the things I teach my students is that purchases should be based on the numbers, not emotion. Your price is based on current monthly rent. Look for properties that create monthly positive cash flow for you from day one.

Upside Potential- When the market turns around, you will have even more equity in the home. Equity is what builds wealth and adds to your bottom line net worth.

Click Here to learn more about investing in hands off cash flow properties.

View this post at its original source:

http://www.wendypatton.com/blog/top-3-reasons-you-should-invest-in-hands-off-cash-flow-opportunities

What’s the difference between Cooperative Lease Option and Sandwich Lease Option?

2009-12-21T15:22:00.001-05:00

Sandwich Lease Option
A Sandwich Lease Option is a technique that has been used for many years but the technique has been overlooked by many. To me it is the hidden gem of the real estate investing world. When executed properly, you the investor will make money with the option fee, the back end and a monthly cash flow. This means you get paid THREE ways. Essentially, you lease a property with an option to buy it, and in turn you rent it out to someone else, also granting them an option to buy it. You are in the middle, hence the reason we call it a “Sandwich Lease Option”.
Here is a picture of a sandwich lease option. Note: On a lease option only the seller is obligated to sell. The buyer has the “option” or privilege to buy, but not the obligation.

And where is the meat in a sandwich? In the Middle. The meat is the best part of the sandwich lease option. This is where we want to focus. How can we make the sandwich more profitable (by getting more meat in the middle)?
Here are some of the terms to negotiate when buying (with the seller) and selling (with your buyer):

Monthly Fee (Rent)
Length of time (Years)
Price
How much of the monthly fees (your rental payment) goes towards the purchase price

When you negotiate good terms with your seller you are making your sandwich lease option better; like adding a piece of cheese (this is more profit to you).

Cooperative Lease Options

Cooperative Lease Options are a technique that I recently began teaching my students. A Cooperative Lease Option A.K.A Wholesale Lease Option is similar to a Sandwich Lease Option except the middle (meat) is removed up-front. Think of it as a sandwich where the meat has been removed. I know, many of you are thinking what is a sandwich without the meat? In other words how will you benefit from the deal?
Basically, you still find the seller and after you have the contract and the option to buy, you ‘take the meat’ and assign your option to purchase to a buyer. In this scenario, you only get paid in one way (the assignment of your option) but you get paid today. You don’t make as much on the deal, but you are done with it. It is quicker and easier money then a sandwich lease option.

It is important to remember when doing a Cooperative Lease Option NOT to find the buyer for the seller. It might sound like you are doing that and in essence you really are, but you can’t describe it that way or explain it that way to your buyers and sellers. You are the buyer and you are “assigning” your contract to a buyer for a fee from them to buy your contract. For example, I usually take the buyers option fee as my assignment fee for a wholesale lease option. This can be anywhere from $2500-$10,000 in my area of the country. Can you use an extra $5000 this month? To find more information on becoming a Realtor you can check out my article on getting your license HERE.

View this post from it's original source:

http://www.wendypatton.com/blog/what-is-the-difference-between-a-cooperative-lease-option-a-wholesale-lease-option-and-a-sandwich-lease-option

Build Rapport and Make a Deal!

2009-12-17T12:16:00.004-05:00

Rapport building is very important and key because you’re asking someone to give you control of their house with little to no money down in both lease options and subject tos. Getting the seller to feel comfortable with you is the most important technique to learn for these techniques. This is equally true with Realtors. If the Realtor likes you, they will translate their like and trust of you to the seller for the lease options.
Here's a tip: When you’re in the seller’s house, tell them what you like about their house, not what you don’t like. For example, perhaps you’ll see something unusual, like older wood work or a nice fireplace. Ask the seller about it. If you see that the seller likes golf, talk golf whether you like golf or not. Always focus on the positives, the interesting things. People like to know that you like their house, and that builds immediate rapport. Sellers will give you a better deal and be more likely to negotiate if they like you.
Check out Chapter 06 of my book Investing in Real Estate with Lease Options and Subject-to Deals: Powerful Strategies for Getting More when You Sell, and Paying Less when You Buy to learn more about negotiating the deal and other steps to buying on Lease Options and Subject Tos.

View this post from its original source here: http://www.wendypatton.com/blog/build-rapport-and-make-a-deal

Negotiation Tip: Name your Location

2009-12-14T18:42:00.000-05:00

Here's another negotiation tip from Rent-to-Buy:

Whenever possible, you want to be the one selecting the location for your negotiations. Buying a home is almost always an emotion-based process. Once you find a home you like, you become emotionally attached to it. Emotional attachment can cause you to make unwise decisions when making an offer, handling negotiations, and so forth. Once you’ve fallen in love with a house and visualized it being your home, you’ll start to do WHATEVER it takes to make sure it becomes your home.

For instance, if you are making an offer to the sellers and are staring out the window at that swimming pool you fell in love with, how strong do you think you’ll negotiate? The answer is: not very. You’ll do whatever it takes to get the home because your emotions are controlling your negotiations.

You might be better off meeting with the seller on neutral ground to make your offer. This will help you keep your mind focused on buying the rent-to-own home without being so emotionally attached to it.

If you are working with a real estate agent, you won’t be meeting with the seller in person to make your offer. Your offer will be submitted through the agent. This way you don’t have to worry about the location of negotiation.

View this post in its original source at:
http://www.wendypatton.com/blog/negotiation-tip-name-your-location

Some Advantages of Buying on Subject-To

2009-11-25T23:45:00.000-05:00

A Subject To is getting the deed to a property without getting a new mortgage. Instead, the seller signs over the deed to his home ‘subject to’ the existing mortgage. The buyer makes the mortgage payments on the seller’s existing loan, but does not take out a new mortgage to acquire the home.

Knowing when to use one is very important. Many times, investors try to fit one technique into every situation. That can be a very dangerous approach. You must know which technique – Lease Option or Subject To – to use with each seller, to protect not only yourself, but your tenant/buyer as well. Knowing which technique to use for your seller and their situation can save you tens of thousands of dollars in profit. There are many advantages of Subject Tos (some are the same as an option)

1. Minimum or zero down. Usually you only need to pay the seller a small amount to sign the deed over to you. If they owe more than you are willing to pay, then there are times that they will pay you to take the deed from them.

2. No financing required. When you do a subject to you don’t need to get a mortgage because you are taking over the seller’s mortgage payments. Technically, you are not assuming the seller’s mortgage. You are just making the payments on their existing mortgage.

3. Ownership. The day the seller deeds the property to you it is yours. You are the true owner of the home.

No income or credit checks. Not once has a seller ever asked to look at my income or check my credit. They are more worried about their situation and how to get help from you.
The Seller will love you! You will be making a positive difference in someone’s life.

You'll also want to read my article, Subject Tos-The Risks and How to Avoid Them. To learn more about Subject Tos and the advantages you can read my Investing in Real Estate with Lease Options and Subject-to Deals book.

View this post in its original source here: Some Advantages of Buying on Subject To

Rent to Buy now available

2009-11-06T08:54:00.001-05:00

Is this you?

You’ve seen tons of homes for sale on the market. You know it’s a buyer’s market. You either owned a home previously or you are a first time buyer. If you owned a home previously you might have lost it to foreclosure, either due to a job loss, divorce or your mortgage rate adjusting upwards.

Now is the time to buy! After all, you keep hearing in the news about how BAD things are for sellers, and prices are the lowest they’ve been in years. This is true and it is to your advantage. For most of us, home ownership is our single, biggest source of wealth. It not only puts a roof over our heads that we can call our own, but it also builds security for our futures by paying down the mortgage and building up equity. For most people, their home is their single greatest asset.

Probably the first thing you did was to start looking on the Internet or checking the local newspaper for homes for sale. After that, you called a Realtor® and he told you that he would love to help you, but you needed to get approved for a mortgage first. Ugh…you know you don’t have the best of credit and you are not sure if you should even call a mortgage lender.

You decide to make the call to a mortgage lender. You know what the outcome will most likely be in advance, because of your financial situation, but you do it anyway. After gathering tons of information from you all the way down to how many times a week you floss, he finally tells you that based on your current credit, income, down payment, inadequate amount of time spent brushing after meals, etc. you aren’t currently qualified to get a mortgage. Well, duh! You could have told him that in the first place. Do not despair.

Rent to Buy is now available. Rent to Buy is your hands-on, step by step, guide to buying your next home as a rent to own. You can get your next home NOW without having to qualify for a mortgage until later. This is the solution you need until you can qualify for a mortgage. This is the solution home sellers need because they can't find mortgage qualified buyers. Rent to Buy is a great option in our current real estate market. Check it out!

View this post at it's original source at http://www.wendypatton.com/blog/rent-to-buy-now-available

Realtors - Finding buyers in today's market

2009-11-05T08:02:00.001-05:00

In today's real estate market mortgage-qualified buyers can be a real challenge to find which makes it difficult for us real estate agents to make a living. In reality there are lots of would-be buyers out there right now if you are a little more creative. You see, the real hang up comes with the mortgage-qualified part. Lots of would-be buyers out there (in fact, I would say the majority) can't qualify for mortgages right now.

Most real estate agents turn these people away saying, "I'm sorry, I can't help you."

But the truth is, if you are a little bit creative, like I teach in my book Rent-to-Buy, you can turn all of those buyers into full commissions by finding them a lease option home. Not only that but you can collect buyer leads from other agents who turn away those not-mortgage-qualified buyers too!

How do I do that? I have this letter that I send out to other agents called my garbage or $500 letter. It goes something like this:

Dear Agent Name,

Have you ever had a potential buyer come into your office and not be qualified to get a mortgage? Don’t throw away their information. Refer them to us, and if we end up renting to them, we will send you $500!

So, is it a piece of garbage, or $500?

Please call us at (phone number) to get more information, but don’t throw away your potential buyers that we might be able to work with. This offer is valid until (date).

Sincerely,

Your name

Very simple and straightforward, but very powerful. Most real estate agents turn away non-mortgage qualified buyers. Get them to give them to you instead and they'll see a payout instead of a lead that is garbage.

The buyers are the gold in today's real estate market. If you are creative and help non-mortgage-qualified buyers find lease option homes you can earn a TON of money in commissions right now. For more on how to do lease options as a real estate agent and how to help buyers find homes check out my new book, Rent-to-Buy.

View this post at it's original source at http://www.wendypatton.com/blog/realtors-finding-buyers-in-todays-market

When to do lease option?

2009-11-04T08:03:00.001-05:00

Let me give you an example situation where you as a real estate investor, or if you are a Realtor, when you can suggest a lease option to the home seller. As a real estate agent our responsibility to our home seller is to get their home sold, and sometimes conventional methods just don't work. That's when we can offer the home seller the alternative of a lease option as a means to get their home sold. Remember, any time a seller suggests that they might have to rent their home if they can't sell it you know they are prime candidates for lease options.

So let's look at an example situation where a home seller might be a good lease option candidate:

A doctor has built a new home for himself. His old home is worth $200,000 and he owes $125,000. He has $75,000 of equity. He is not behind on payments, and he did not need the $75,000 in cash to build the new home. His old home is now sitting vacant and it hasn't sold yet. He qualified for both house payments at the bank and he can technically afford both, but who wants to make an extra house payment for a home that's sitting empty?

Although he is motivated to sell because he's paying out of pocket every month to own a vacant property, this type of seller isn't going to just walk away from the home. No way is he going to give up all of his $75,000 in equity and no way are you going to pay that much cash out of pocket.

When you lease option this house, he gets most of his equity back - although it won't happen until the lease option buyer you find closes on the property. The deal might work like this: You, as the real estate investor, option the property for $190,000 and make payments to the seller that equal his total mortgage payments with 100% of that amount applying towards option credits (let's say $1,200 per month). You then sell the property to a lease option buyer on an 18 month lease option for $200,000 with a monthly rent of $1,350 (which is the going rate in rent for that area). You, as the investor would make about $34,000 on the deal.

The doctor will get the remainder (less real estate commissions) of his equity back plus he doesn't have to worry about property management or a home sitting vacant. Anyone who has had a home sit vacant knows how stressful it can be a what a relief it can be to not have to worry about that.

View this post at it's original source at http://www.wendypatton.com/blog/when-to-do-lease-option

Private Money Webinar Tonight

2009-11-03T08:16:00.001-05:00

This is a very hot topic! After all what real estate investors couldn't use some private money to fund their deals?

I'd like to call this one, "How a 15 Year Old got $6 Million in Private Money to Close 127 Deals." Lol, it's kind of funny, but our speaker tonight looks like he's only 15! But you certainly can't argue with his success. If the private money is rolling in like that, funding so many deals for him.

This webinar is tonight, November 3rd :

8 PM Eastern
7 PM Central
5 PM Pacific
3 PM Hawaii

You can register at https://www2.gotomeeting.com/register/770886891

Our private money speaker tonight will have a special gift for everyone who attends tonight's webinar. A free PowerPoint Presentation (the same one he uses) to get private money deals. plus you'll get the exact speaking scripts that he created and still uses too. Is that incredible? Just for attending tonight's webinar.

Private money is one of the best and easiest ways to fund deals in today's market. Banks are almost impossible... hard money is too expensive.

And you'll never have your credit pulled when you use private money... and don't have to pay points or high interest rates.

A lot of people think it's tough to get private money. It's not... when you say the right things, use the right templates and forms, and target the right people as you'll learn how to do in tonight's workshop with an everyday investor just like you and me... who figured out how to get private money easily. Just think, if a guy who looks like he's 15 can inspire the credibility to get over $6 million in private money you shouldn't have any problem either. Especially when he is going to give you his PowerPoint Presentation and script for free. But you must attend the webinar to get those so make sure you don't miss out tonight.

Register now at https://www2.gotomeeting.com/register/770886891

View this post at it's original source at http://www.wendypatton.com/blog/private-money-webinar-tonight

Rent to Own Negotiating Tip

2009-11-02T08:04:00.001-05:00

Here is a tip on negotiating from my book Rent to Buy, which will be released on November 10th. Rent to Buy is a hands on guide to buying a home on lease option from the home buyer's perspective as well as the real estate agents who serve them.

One of the great things about buying a home as a rent to own is that you have a broad range of terms to negotiate when putting together the deal on your rent to own home. This means that you can get creative and put together a deal that is good for you as the home buyer, or the real estate agent who is assisting their buyer, as well as still be good for the seller too. If it's a win-win situation you'll have a much better chance of getting the home.

So here is one of the negotiating tips I talk about in Chapter 12 of Rent to Buy:

Don't Give Away Anything without Asking for Something in Return

This tit-for-tat technique helps ensure that even if you are giving your sellers a key aspect that they want; you are getting something in return. A good way to handle this is with a question, "If I agree to your asking price, how much per month in option credits do you think is a fair exchange?"

Or, you can ask for exactly what you want, "If I agree to your asking price, would you agree to give me $1,000 per month in option credits?"

By asking a question, you give the seller a chance to voice what they think is a fair exchange for what they are asking for. It may turn out to be MORE than what you would have asked for. If it isn't enough, you can always negotiate up from their proposal.

By stating what you want, you are more limited. The seller may even try to negotiate you down from this position. However, if there are a few key things that you really want out of the negotiation, this is a good time to go after them.

View this post at it's original source at http://www.wendypatton.com/blog/rent-to-own-negotiating-tip

Wow - Last night's webinar was amazing!

2009-10-30T10:56:00.001-04:00

If you missed my webinar with Kris Kirschner last night you missed out on some super powerful information about what to expect from the real estate market from now until 2013. Kris shared information from top economists and I was blown away.

What was clear from last night is that the way we invest in real estate needs to change for the next few years. The old strategies of buy and hold won't work. As a real estate investor you need to be focused, for the short term, on strategies that minimize your risk and minimize using your own cash and credit. Lease options and subject to investing, like I teach, are 2 great ways to do just this.

The fact of the matter is that expert economists are predicting that real estate is still several years away from recovering and many areas will still decline. You can't just buy and hold real estate because you're going to be upside down. Kris talked about 3 great strategies for real estate investing, from the short term to the long term for retirement.

If you missed last night don't worry! Kris Kirschner and I will be doing a 2 day training event November 7th and 8th in Livonia Michigan. We'll be training you in how to invest in today's real estate market. These strategies we'll be teaching you apply to our current real estate market as well as our coming real estate market.

If you want to keep investing in real estate you need to know the right strategies. And with a price of only $59 for both days of training you can't afford to miss this. I don't know if Kris and I will be repeating this event so you definitely want to attend this one.

To learn more or to register for this 2 day training on November 7th and 8th go to http://www.wendypatton.com/schedule/nov2009event.php

You must pre-register for this training to get the $59 price and space is running out so don't delay!

View this post at it's original source at http://www.wendypatton.com/blog/wow-last-nights-webinar-was-amazing

How to invest in down markets

2009-10-29T13:27:00.002-04:00

For the last couple of days I've been posting about my upcoming webinar tonight with Kris Kirschner about our current real estate recession.

We are going to cover a lot of good information tonight and you don't want to miss it. But that's really just the tip of the iceberg. If you want to get in on proven techniques that work in down real estate markets Kris and I will be holding a 2 day training event November 7th and 8th here in Michigan. http://www.wendypatton.com/schedule/nov2009event.php

Two days packed with information from myself and Kris on how to do techniques that work in flat and declining markets. What would you expect to pay for this kind of training? 2 days, jam packed with education and proven knowledge for today's real estate market? Probably hundreds of dollars.

Not this time! Kris Kirschner and I are offering this special 2 day training event for only $59 if you pre-register now. $59! That's like 1 dinner out with your family. With information that will change how you invest in real estate. This training event may never be repeated so you don't want to miss this opportunity.

When you've been investing in real estate as long as I have you want to see other investors succeed. I've been teaching this long because I want others to experience the same kind of success I have. But in today's real estate market we are facing unique challenges. You must adapt to succeed. Make sure you attend our 2 day training on November 7th and 8th to learn how to invest in flat and declining markets. It can truly change your life. To learn more or to register go to http://www.wendypatton.com/schedule/nov2009event.php

-Wendy Patton

Space is limited so please don't wait.

View this post at it's original source at http://www.wendypatton.com/blog/how-to-invest-in-down-markets

Are you Really Going to Miss This?

2009-10-29T09:17:00.001-04:00

You are probably thinking, "Why the heck do I keep bringing up this recession and how it can impact you succeeding in real estate?" Well it does, and I'm not sure when the market will recover; but what I am sure about is that if you're ready to make more money and you want to do it fast, you need to understand how to profit in a flat or declining market.

My good friend, Kris Kirschner, will be on a webinar with me tonight to discuss the current real estate recession we are in now and exactly what you can do to make money, part-time - even if you live in a declining market, have no experience and very little money or credit.

This is a one-time only webinar with critical information that you will not want to miss. You already know that if you work for a living or own your own business it doesn't get easier, it gets harder. The real question you need to ask yourself is, "What will I do if unemployment hits 15% and more and more businesses continue to go under?"

Listen, I am not trying to scare you but there is so much you should be aware of to protect yourself and your family during this economic recession. Join the webinar tonight and listen very closely for 55 minutes because Kris will be teaching you 3 strategies and exactly how to profit for the next 36 months!

The webinar is free - you will not want to miss it. To register go to https://www2.gotomeeting.com/register/582785938

The webinar is tonight, October 29th, starting at 8 PM EST

View this post at it's original source at http://www.wendypatton.com/blog/are-you-really-going-to-miss-this

The Great Real Estate Recession Still Coming

2009-10-28T08:58:00.002-04:00

This is Kris Kirschner, doing a special post in Wendy's blog. I am not writing this to ask you to part with any of your money. I asked Wendy if I could forewarn you about an urgent matter that a lot of investors are talking about that if you don’t understand it, it’ll affect you, your family, your friends and your future.

There’s a lot of serious talk about another real estate bubble from a lot of economists and in Harry S. Dent’s book “The Great Depression Ahead.” Although the information can be frightening, I want to hit it head on and tell you what no one else has or wants to talk about. It’ll seem crazy, but let me assure you that there is a sure-fire way to use this recession to your advantage. Everybody agrees that the greatest wealth is created during down times; so here’s what I mean.

As a result of the current economic depression and expected continued increase in foreclosures we may see a 2nd real estate bubble or real estate recession. Because of that, I have permanently changed the way I invest in real estate and you should too. In fact, Wendy and I are doing this “teaching only webinar” with you to share the solution to what many investors wrongfully believe is a no-win situation. That couldn’t be further from the truth.

I do have to tell you that I am making some major adjustments as a result of what I have learned from the economists and my intention is not to frighten you. Here are just two of the changes I am making for a 36 month period. I am selling my personal residence in Georgia that I did not intend to retire in as soon as possible as well as my land on the Gulf of Mexico before 2010.

If you're wondering why I would do that and what I'm talking about, here it is in a nutshell. This email from me is to forewarn you that a few very reputable economists (like Harry Dent) are predicting a longer recession and real estate bubble starting 6 months from today and lasting close to 3 years!

It will initially look like everything in the economy including the stock market is getting better but I have looked at all the facts and statistics and I have to agree with them that after an initial positive outlook, the market and real estate will make one last CORRECTION, especially in certain markets and certain aspects of real estate investing! You need to know what these are!

During the Great Depression of 1929 there were 7 spikes where everyone thought all was well and on the way back but there continued to be crashes from 1929-1933. The good news is that a whole lot of millionaires were made during that time because they knew exactly what to do and how to profit! We’re in a similar situation now because we have real estate, commodities and the stock market (yes, just watch) all about to deflate simultaneously so you need to make some real adjustments RIGHT NOW!

Don't get me wrong, there WILL be ways to prosper in real estate but not if you don't know what they are and what to do. As a result, I have decided to permanently change how I invest in and teach real estate and I asked Wendy if I could share with you exactly what the economists’ say is going to happen and what you should do right now to profit. Wendy and I will be doing a special webinar on the Great Real Estate Recession Ahead exclusively for her guests on Thursday October 29th at 8:00 p m EST. This will be 100% content webinar and you’ll want to sit and listen very closely for 55 minutes. Keep reading for a quick recap of what I’m talking about.

Those real estate investors that work for a living or own their own business are praying the economists are wrong and that the market doesn't continue to fail because if they lose their jobs or their businesses in the continued recession ahead they won't have a way to support themselves or their families.

Worse yet, they may have made a few bucks when the real estate market was good, but they never learned how to prosper in a declining market. That's not good because if the economy doesn't recover and unemployment hits 15% they won't be able to fall back on real estate for fast cash either.

Tens of millions of people are reducing their spending habits (you probably are too) employers are reducing their payrolls, and the demographics and age of the baby boomers makes our economy ripe for another real estate recession. I know you might be thinking that it's a little late for this warning but that can't be further from the truth.

We have just witnessed the greatest housing bubble in more than a century, and possibly ever, in the United States and major cities around the world. Some, including me believe this upcoming real estate bubble may continue to deflate until most single family houses get back to their original values that they started increasing at in 1996 just like what happened in Japan not too long ago.

That means there will be an incredible impact not only on the banking system as projections call for thousands of banks to go under, but also many other specific parts of your real estate investment business that you should know about now; even if you work for a living or own your own business and are not a full-time investor.

I don’t want you to miss what I’ll tell you on this one-time only webinar Thursday at 8:00 pm EST that you have to do immediately because I believe it is 100% true! Worst case scenario, the economists and I are right and you were well prepared and know exactly what to do and how you can still profit while foreclosures continue to skyrocket and the market values drop as predicted; best case scenario, it the market stays flat and you become an expert at how to make money in a flat or declining real estate market.

Wendy and I will be doing this special 55 minute call one-time only this Thursday October 29th at 8:00 pm EST so I can explain it all to you. On this call you'll see exactly what will be impacted by the continued recession ahead, what you need to do right away and where the silver linings and greatest opportunities are for you to succeed as you invest in real estate.

Be there on Thursday,

Kris Kirschner

P.S. – This is a 100% content call only.

Click here to register now for the FREE webinar

https://www2.gotomeeting.com/register/582785938

Thursday, October 29
8:00pm - 9:30pm - Eastern
7:00pm - 8:30pm - Central
5:00pm - 6:30pm - Pacific

View this post at it's original source at http://www.wendypatton.com/blog/the-great-real-estate-recession-still-coming

The Great Real Estate Depression - Now What?

2009-10-27T08:05:00.001-04:00

What can you do in today's real estate depression? How can you still make money as a real estate investor? What works?

I know a lot of you are probably wondering about the answers to these questions. The nature of real estate investing is very different than it was just a few short years ago.

If you want to find some answers and learn how to do profitable deals in this market you should check out this webinar this Thursday night at 8 PM EST. I will be talking with Kris Kirschner about the current real estate market.

We'll be looking at what techniques actually work RIGHT NOW and what you can do in this market.

There will be no sales on this webinar - it's all about info.

This is a very special webinar and one you don't want to miss. Kris Kirschner is a genius in real estate who knows what is working right now in the market and how to invest even if you have no experience at all.

Space is limited for this webinar, so you'll want to register now. The webinar is free so if you are interested in real estate investing in today's market you don't want to miss this. It's this Thursday, October 29th at 8 PM EST. To register go to https://www2.gotomeeting.com/register/582785938

See you there! - Wendy

View this post at it's original source at http://www.wendypatton.com/blog/the-great-real-estate-depression-now-what

2 day Lease option and subject to training event - only $59!

2009-10-26T08:04:00.002-04:00

If you could pick up a $300,000 home for 10 bucks, would you do it?

November 7th and 8th I'm holding a two day live training event on lease options and subject to investing.

Here are some of the things we'll be covering:

How to scoop up motivated sellers - signage, scripts and offers... and where to find them
The secret to evaluating true profitability on any property
How to whip up a strong lease option agreement that puts cash in your pocket - and keeps everybody involved happy
What you must know about working with Realtors
Each and every step you'll take to buying and selling on lease options - from the start until you cash your final check

As an added bonus I've asked Kris Kirschner to join us. If you don't know who Kris is I can tell you that he may very well be a real estate genius. He went from zero to becoming a millionaire in just 23 months - and he did it buying and selling houses with no credit and none of his own money. He'll reveal his secrets that are a breeze to put to work for you. In Kris' training session you can listen as he calls live sellers and actually proves you don't need experience and that you can do this even if you:

Have no credit
Have no financial backing
Have no idea where to begin

These combined trainings from Wendy Patton and Kris Kirschner are worth hundreds of dollars but you can sign up right now for only $59 for both days! You can get Wendy's lease option and subject to investing training and Kris Kirschner's training for only $59. Space is limited and filling up fast for this two day training event on November7th and 8th. To learn more or register just follow the links in this post. We're in one of the best real estate markets ever for real estate investing so don't miss this.

View this post at it's original source at http://www.wendypatton.com/blog/2-day-lease-option-and-subject-to-training-event-only-59

Why Realtors should consider Lease Options

2009-10-22T08:26:00.001-04:00

I've trained real estate agents across the country in lease options, teaching them how to help their clients. But I still run into agents who don't want to do them. That's okay, but sometimes agents just need to learn a little more about lease options to open their minds.

Lease options can be great both for home buyers and home sellers. They aren't the perfect solution for every situation, but there are many cases, especially in our current real estate market where an agent could significantly increase their commissions by putting together lease option transactions and help their clients. Let me give you some example situations where a lease option could be good for a Realtor and increase their commissions:

Have you ever had a potential buyer come to you who has not tried to qualify for a mortgage yet so you refer them to a mortgage broker and then never hear back from them? Let's face it, a lot of would-be buyers out there can't qualify for mortgages right now, but they still want to buy a home. These are perfect lease option buyers. Just because they can't qualify right now doesn't mean they won't be able to qualify later. Why not tap into this pool of buyers and get paid instead of turning them away and watching another commission check walk out the door. And it's only going to get worse. The new rules for credit scoring are being implemented that is making it harder for some people to qualify right now. Plus the credit card industry is tightening things up. I know of one buyer who could have qualified for a mortgage two months ago that can't now because the credit card companies have changed so much. He had one account closed on him and two others where they reduced his available credit to just above his current balance. That had enough impact on his credit score that he could no longer qualify for a mortgage. And he never even so much as had a late payment with any of those credit cards! So instead of having to be stuck renting, this would make a great lease option buyer.
What about the sell side? Do you have any listings where your client has told you that if they can't get their home sold soon they are going to have to rent it? This makes for a perfect lease option seller. You already know that they are considering renting their home plus you know that they really want to get their home sold. How much of a commission do you make if all you do is find a renter for someone? Squat! With lease options you can still get your full commission!

This is just 2 examples of why Realtors should consider lease options and two ways that any agent can increase their commissions right now. If you want to learn more about lease options take a look at my books Rent to Sell and Rent to Buy. They are a great resource for any real estate agent.

View this post at it's original source at http://www.wendypatton.com/blog/why-realtors-should-consider-lease-options

Lease Option Contracts

2009-10-21T08:53:00.001-04:00

In real estate we want to control our risks, either for ourselves, or if you are a real estate agent you want to control the risks for your buyers and sellers. The best way to control risks is by having contracts and clauses that offer protection for you and your buyers and sellers. Most contracts are pretty generic. If you are doing lease option deals, it's a very smart idea to have contracts or clauses that relate to lease options, in other words lease option contracts. I offer contracts (and relevant clauses) for both real estate agents and lease option investors.

We always hope that nothing will go wrong in a transaction but in the event something does, that's where you want the proper lease option contracts to cover your rear and protect either your home buyer or home seller. In many states now there is a required sales contract that real estate agents must use. If this is the case you can always add addendums to that contract to include the clauses that offer your home seller or home buyer protection in a lease option transaction.

Let me give you an example of a clause that you would want to have in a lease option contract or add as an addendum to a generic contract that would give a home seller additional protection in a lease option transaction:

Default

"In the event of default by Purchaser, Seller may, at his option, declare a forfeiture thereunder and retain the deposit. In the event of default by Seller, Purchaser may, at his option, demand, and be entitle to, an immediate refund of his entire option deposit in full termination of this Agreement."

View this post at it's original source at http://www.wendypatton.com/blog/lease-option-contracts