All Forum Posts by: Aaron Lathan

Welcome to BP. Network, network, network to build your buyer list. Attend local investment clubs too. Join a service organization that has movers and shakers (Rotary, Kiwanis etc). Get involved in local politics. You'll meet plenty of buyers. 

NEVER break your word. NEVER try to 'screw' these buyers; always show them a fair deal. You make some money, they make some money. Never you make all the money, and the buyer is screwed.

ghost leads and networking with get you plenty of cash buyers. Would you mind helping me with my DM marketing to absentee owners? 

Texas lease options and Texas wraps and Texas subject to's are well explained here

Www.LoneStarLandLaw.com

The thing about buying a property subject to or wrapound mortgage and getting on title is 

you need to do something quickly with the property because of the due on sale clause

The Texas Lease option laws you need to understand them because many Texas RE attorneys don't

@John Jackson of leasingtobuy.com it's probably the best resource for Texas

Just a further point about the "due on sale" clause.  It is generally an option the bank has.  This means they may  choose to exercise the option or not choose to exercise it.  Generally if they don't exercise it when someone else takes over making the payments, the mortgage documents still allows them to exercise it later without any penalty.  It is not a use it or lose it  situation for them, so they are quite willing to acept payments on anyone's mortgage from anyone else.

The two get confused by many people. Buying subject to the existing mortgage has been around a long time. It is often coupled with an exit strategy of selling under a lease option. The reason for the coupling is the property has no or very little equity and is not a "deal" as you commonly hear the term used. You will only be successful on a "subject to" buy if you have a very motivated seller who needs to move on because, they will stay on the Mortgage as the primary obligee ,while you have promised in your contract with them to pay their mortgage. This is their "least worst option" (with apologies to Phil Grove). They really don't have any other choice as the property simply isn't "sellable". The advantage to the investor is that they have no skin in the game and have control over the property. Usually, the property really can't be "sold" as the mortgage payoff & closing costs exceed the current ARV. The only really viable exit strategy is to find someone who currently can't qualify for their own mortgage and lease the property to them on terms that pay the existing mortgage and if possible add some cash flow for you. Also you take an upfront payment for the option, which gives you the cushion if the lease doesn't work out. That's the gist of it. Don't try it without proper legal counsel, as the uninitiated can get burned, if the paperwork isn't properly done. It is a strategy I employ and is very viable in the current market.

 You can't change any lease terms until the current lease is up, and you and your tenants sign a new one.

To know if a property is a dump or needs repairs, you should go see it in person.

Not giving legal advice. Have you seen the leases? If there isn't a clause in the lease allowing the owner to terminate the lease upon a sale, the lease runs with the land and you have to honor it.

Getting the rent paid to you is relatively easy. The PM will collect all leases and other contracts associated with the property. He should prepare a packet explaining the property is under new ownership, along with the necessary contact/emergency information, and an explanation of the new rent payment process.

Very important: Be sure all security deposits held by the previous owner are transferred to your PM's trust account.

And yes I have seen those "do not disturb tenants" in listings many times and it drives me crazy. I suspect it has less to do with disturbing the tenant and more to do with not letting the tenant know that the property is on the market.

Hello Aaron,

We just bought our third occupied multiplex, so now have 10 units total.  You will have to honor the existing leases (unless there is a clause in them stating otherwise), so you will want a copy of those prior to making an offer or once your offer has been accepted.  Study them closely, you never know what you might find.  We had one tenant who was supposed to be paying $500/ month buy had prepaid his rent at the rate of $430/month, which we did not discover until we got the leases.  We received the prorated amount for the time from when we took possession, but our offer had been based on the higher rent.

So far it has worked out well for us, but we almost always have seen every apartment before making an offer.  One tenant refused access on 1 occasion and the key was missing on the second try (likely a realtor trying to make sure there was less competition), but we made an offer based on the other two units.

Some areas have mandatory rental inspections, so I would check to make sure the property is current.  There should be an inspection clause in your offer giving you time to hire a reputable company to go inspect the property for you, and they should have access to everything at this point.  If they find anything that needs to be fixed, you can negotiate to lower the price or have the seller fix it, or you could walk away at that point if you can't come to an agreement.  You'd lose the cost of the inspection, any money you have paid to obtain financing, and possibly your earnest money, but that might be a lot better than buying a dump!

Good luck,

Kelly