How to start with Contracts

Question

I have a general question.  How did most of you who are seasoned investors start out with understanding contracts and how to have the right contract for the deals you were working on?  Is there a good place to learn all about contracts and how they work?  Other than just being able to identify a good deal, its important for me to know how to get everything together properly.  Thanks!

Cary Donham · Answer

oops.... sorry Motiv8td.... I didn't finish your post before my last reply.  My apologies because we are saying the same thing.

Cary Donham · Answer

Motiv8td has a good point here but.....

I have been using my TX state approved contact for 7 years and what's nice about ours is it has everything I need in it..... meaning you can check mark or fill in blanks the way you want to protect you if you're the seller or the buyer.

If you are just starting out you can use what you have available until you close your first deal.

Nick J. · Answer

Vanessa, last thing you want to do is rely on a 'State Approved' contract. You wanna guess WHO the 'state approved' contract protects? not the seller! not the buyer and certainly NOT you!

They protect the Realtors that use them. Anyone who tells you otherwise is either a Realtor or brainwashed(if there is a difference) :mrgreen:

Do you have a business plan?
The reason I ask is this. The best way to make sure that your contracts not only protects you but are the right ones for your business is to complete a business plan detailing what you're going to be doing and have a local attorney who not only specializes in Real Estate but Real Estate Contract law, which is vital b/c some states have specific laws stating size of fonts to be used and whether or not BOLD is to be used.

If you need to get other investors contracts to use as samples along with your business plan then more power to you. But choosing the right attorney will save you in the long run. Choose one by checking out who sponsors your local REIA and ask for referrals from other investors in your area. You don't want an OK or 'inexpensive' attorney, you want the best of the best.

If you can't afford that then consider getting your hands on a contract and do as Cary said and have your title companies legal department review it. They will typically do this for free

Cary Donham · Answer

I forgot to mention how I learned the numbers side of the business.  I called a few of the we buy houses ads in the paper and asked to meet with them for lunch and said I was buying.   I picked the one guy who I felt had more I could learn from.  We met and I said I would birddog for him if he would show me what to look for in a home and how to calculate the repairs.  I wen to 3 homes with him late that week.

I started looking for properties and found 3 for him and made about 1K to 1.5K on each one.

Then I said it was time to find my own homes but I knew that my repairs might cost me more or less depending on my contractors.  I started writing down the phone numbers for every contractor i saw drive by.  I would ask them to meet me at a few HUD foreclosed properties that needed tons of work.

I created a spreadsheet that I then used to estimate repairs.  Took me another month or 2 and I located and closed on my first rehab property.

Cary Donham · Answer

First off you don't need to know everything before you get started.  I didn't even know how to fill out the contract on my first deal.   I just read through our Texas specific contract which is not really necessary to make a purchase and filled in the blanks.  Once at the title company I just asked them to review it and go over the contract with me.  I knew what to look for in the numbers to make sure I had a good deal.  Once you have that all of the other things will fall into place.

Do you know a realtor?  If so I would get with one and ask them to walk you through each section of a standard contract for sale and go from there.

But I would learn the numbers side of this busines FIRST.  You get this down and the rest can come later.