All Forum Posts by: William Bronchick

The main difference is a tax one. A lease/option is NOT a sale until the option is exercised, thus if they exercise a year later you have a long term capital gain. You can also do a 1031 exchange.

A land contract is a SALE FROM THE INCEPTION even though title does not pass. Thus, if you held the property less than 12 months it is NOT a LT cap gain. You can't 1031x the balance when they pay you off.

It is generally easier for a buyer on a land contract to refi than a buyer on a lease/opt, so if that's what you are banking on, then go with the LC.

Also, keep in mind that if you held this as a rental for a number of years you've got a recapture of depreciation.

His first mistake was calling his lender. They always say no, but they never do anything.

Exceptions - private lenders, state-sponsored low-income programs, credit unions.

In CA there's another option which is to do a land contract, but instead of recording the contract you record a 3rd trust deed that secures the contract. That way you are still in a protected position, albeit in third.

I agree with Jon's assessment of the choice of state, and would add that IRAservices.com is my choice - cheap and efficient. They are out of the CA Bay area, but everything is done by fax.

Price dropping is generally a big mistake because it shows you are desperate.

Price it to sell in the first place and it will sell.

If you already made the mistake of pricing too high, then remove the listing, wait a month, then take new pictures and create a new listing at the RIGHT price and it will sell.

This looks, feels and smells a lot like a listing agreement. I've run this by my state commission in CO and they clearly said they would go after someone doing this.

On the other hand, a sandwich lease/option would be fine because you are in the middle as a principal.

The main difference is that you are at risk. In the co-op scenario you are putting nothing at risk.

Here's my take.

I started mentoring people 15 years ago so they'd bring me deals, but the thing was that 95% of those people did nothing with what they learned because they had nothing vested. So, so started charging for my time, $500, $1000, and more and more.

I've found that the more I charged for mentoring, the more people succeed because they are VESTED. Sure, there are some exceptions, go-getters who will reward me with a deal for sharing advice for free, but these are in the minority. Very few people will spend the necessary time that one needs to be coached and not expect something in return, and asking for something in return isn't a problem.

Like Bryan said above, people don't expect their doctor, accountant or attorney to work for free, so why would they expect a mentor to work for free?

I've received numerous offers to be mentored in exchange for bringing me 1/2 the profit on their first deal, but I laugh because it just doesn't work that way. I've given away coaching to several people as a door prize and those people all have something in common - they did nothing with it.

You don't necessarily have to join a formal coaching program, but be prepared to pay an expert for their time.

If the LLC was formed a month ago I wouldn't sweat it, but since 2009... that's a bit risky.

Do some title searches - how many deals has this LLC done? What is its exposure? Who are the principals?

I'd ask for a personal guaranty from the member to indemnify you for any lawsuits, debts or pending claims.

I think John Holdman hit in on the head about the short sale and the relation issue. Theoretically if she was never on the loan you could quitclaim her off and sell it back to her, but if the bank finds out they can cry you misrepresented something and try to sue to undue the short sale.

I wouldn't do it, and as an atty I'd say you'd be hard pressed to find an atty to be the middleman as suggested by someone above.

Probate is a VERY profitable area to find deals. You generally find them in the paper because the representative of the estate (the "PR") must advertise a notice in the paper to all creditors. Check your local paper for listings in the legal notices section.

As an attorney I'd say DON'T BOTHER soliciting them. They're pinheads!

MI is one of the few states that require licensing, but investors I've talked to in MI say it's rarely enforced. Read the law carefully, you might get away with a different entity every 5 deals.