All Forum Posts by: David Moore

Robert Leonard,

I couldn't agree with you more.  It sounds like you've run across a lot of bad apples out there.  Remember I posted about integrity in the business community.  Part of that means when you do a LO, you are still doing due dilligience to check the renter, to make sure they have the  ability to purchase.  In my market, homes appreciate slowly, but that may not be true in all markets.  My point is, don't take advantage of the renter...it is bad business.  Don't want them to fail...want them to succeed.  A happy, satisfied customer is worth the referrals for a lifetime.  Part of my strategy is to buy low and sell LO so that the house will appraise for the renter during the term.  Also, let's not overly complicate what an option is.  It is a rental agreement with an option to purchase at a pre-set price.  It is then in the renters interest to keep the property in great shape, to ready for his/her purchase date.

I advise anyone to learn, learn, learn.  Lease options are just one tool in the tool belt. 

Ryan,

Have you ever tried to acquire the property from the seller before getting to the courthouse, before the foreclosure date. I'm in a similar situation. There is a home with a, get this, over $100K ARV that basically needs nothing, being foreclosed for 51K. I am marketing to the homeowner to try to get an option contract in place before the court date. Have you done this as a method to avoid bidding wars at the courthouse. Have you ever had a bidding war at the courthouse/

I would suggest speaking with someone in your local REIA. Our REIA president has read through Dodd Frank and most of the bill applies to companies that have over $2 billion a year in mortgage business. I lose no sleep over Dodd Frank.

My posts are messed up. I keep trying to say I wouldn't adhere to the advice offered by JC Gauthier, because it is bad business. You want to be known in the community, by realtors, investors and the like as having integrity. But the idea of a lease option might work here. The tenant/buyer is someone with less than perfect credit, and cannot get a loan from a bank. You sell an option to purchase in the next three years. Set a price that the property will appraise to in three years. Let the tenant/buyer maintain and improve the property to the ARV target. Your concern over repairs is warranted, but it could be a great opportunity for a tenant/buyer with home improvement skills. For good info on lease options, I like Wendy Patton's book "Investing in Real Estate with Lease Options and Subject To Deals".

Congrats Dawn.  I assume it will be a rental.  Did you get this north of the 2% rule?

The key on your post, to me, is when you say "they are asking". Who are they? I check out property tax records and cross reference other homes they own. I look at tax assessed value. Then I go to Zillow and see what it last sold for. I know Zillow has old info, but it will have prior sold prices. Finally, if all looks good, require a 10 day inspection window, and get an inspector to look it over. I had a slam dunk recently, a light rehab. My contractor had been there, estimated a repair. I had my exit strategy and rent analysis done. The deal was a no-brainer. It was the worst house in a gorgeous neighborhood. Everything was yes, until my inspector found a water egress problem with a pending 15k fix. The seller would not negotiate, and we walked away.

I found a small community lender is much more reasonable, personal, and willing to take a chance on you. On my 2nd deal, Wells Fargo was willing to go 75% ARV, but points and closing costs were three times what the community bank offered. Ask other investors where they get financing.

Thanks, Wendy. As a realtor, then, I can just buy for my LLC? Do they teach you that stuff in the classes?

It helps a lot. Don't you think the listing agent has more to gain from me making offers direct through them? A 6% commission must sound better than a 3% commission. It seems that in my case, sellers agents work harder to get your deal in. Sure, you don't build up relationships as good, but if my negotiations are fair, my checks and closings go smooth, won't my LLC still get a good reputation with realtors? Your idea of writing out expectations are good. We expect to close on a property once every 3-4 months.

Dustin, I don't mean to sound blunt, but it is your business. It doesn't matter if it doesn't sound like good business. I agree with several commenters here...just go to the listing agent. And learn, learn, learn. That is why I love real estate investing....there is so much to learn. I'm not a big fan of buyers agents, or working with one agent.