All Forum Posts by: Seth Williams

Hi Harri,

You can accomplish all of this with a standard land contract (or "contract for deed") template.

1. Yes, you can keep the deed until the property is paid off (this is how a land contract works)

2. Whatever dollar amount you want per month, you can back into this number if you have a simple amortization calculator (I can send you one if you don't have one). You don't need to charge interest if you don't want to (although I'm not sure why you'd want to avoid this money-making opportunity... I always charge 9.99% interest and people will gladly pay it).

You can specify who is responsible for taxes, utilities, insurance, etc in your contract. It's pretty simple.

What state are you doing business in? The state laws may affect the language of your paperwork, but all in all, this sounds like a pretty straightforward deal. I'm happy to help you out in any way I can - let me know what I can do.

This boils down to my personal opinion... but in my mind, ABSOLUTELY I would hire a management company.

Here are a few reasons why:
- With a management company, I don’t have to deal with any of the tenant headaches. My management company screens each tenant and they are experts at this. They handle the time-consuming part of the job and send me a check in the mail every month. Showings, screenings, house visits and evictions are all handled by them while I am out living my life.
- I don’t have to be a handyman (and believe me, I'm not). Management companies know who to call and how to fix things quickly and inexpensively (at least, mine does). Generally speaking, your management company will know more about these things than you will ever be able to learn on your own.
- With a management company running your rental business, you can invest in properties anywhere in the world. Logistically speaking, if you live in New York, there is no reason you can’t buy a property in California and turn it into your own personal cash cow. Just because you can’t drive by and see it every day doesn’t mean it can’t produce a significant stream of income AND be managed better than you could ever do it by yourself.
- Management companies can bring a ton of value to the table and can actually help you make better investment decisions. Every time I buy a new rental property, I have many ongoing conversations with my property manager, getting TONS of free consulting from an expert who knows the neighborhood better than I do. They tell me what kind of rent revenue I can realistically expect to make, what kinds of issues and costs I can expect to deal with, what the neighborhood is really like, and if they think I’m getting it for a reasonable deal. This information is a HUGE benefit that I wouldn’t have access to if I was trying to manage this whole operation on my own.

I'm in this business to grow it - not to screw around with tenant problems. The 10% fee I pay to them is absolutely worth the cost (in fact, I'd probably stick with them even if they jacked the price up).

Great point Glenn. It's funny to read your post, because I actually still have a box FULL of 500 business cards from when I started my business. All in all, I've probably given out 8 of them since I started...

All said - I completely agree. Focus on delivering value from the start and the business will take care of itself.

Hi Hart,

The seller having the "right to sell the house" as you referred to above is called the "first right of refusal". I don't include this provision in my standard contracts unless the seller demands it.

When I do include it, the language looks like this:

First Right of Refusal: The buyer and seller agree that the seller retains the right to keep this property on the market and to accept other offers on said property. If the seller desires to accept another offer, seller must notify buyer or buyer's agent by email at ___________ or by mail at ______________. The buyer will have 14 days from receipt of seller's notice to exercise this Option and provide evidence of their ability to perform the terms of this agreement (i.e., confirmation from the bank as to financing, proof of bridge loan, accepted purchase contract on buyer's property). If buyer cannot supply such evidence, then this agreement is voidable at the option of the seller. If the seller voids this contract, then the option consideration will be returned to the buyer within 14 days. Time is of the essence as to this provision.

For marketing the property to tenants, I generally use postlets.com and post several ads to craigslist.com and backpage.com. There are some pretty helpful listing headlines you can use to find tentants, for example:

"STOP Throwing Away Your Money on Rent. RENT TO OWN!
Awesome Properties, Amazing Neighborhoods, No Qualifying"

Anyway... this post is getting long - I should stop now.

I've never done this exact scenario with my self-directed IRA, but I believe if he is selling the property to a third party (no relation of any kind) and putting seller financing into place via a note, then my understanding is that YES, he can hold a note on the property.

However, he should probably check with the custodian of his IRA and ask the question directly to them (as they are the real experts).

I'm curious (to anyone who feels inclined to answer), what is your typical response rate on these mailings? For every 100 mailers that are sent out - how many of these recipients will respond?

Does the response rate increase or decrease on the 2nd, 3rd, 4th time you mail them?

I follow the one-and-done strategy, so it'd be interesting to hear what all of your results are vs what mine typically are.

My contract is pretty simple (1 page). It includes only the basics, and leaves room for us to get out of the contract "if seller fails to mention any material fact about the property". I typically pay all closings costs (this is part of why they agree to sell for 10% - 20% of market value). This contract is very straightforward, it's almost impossible to get confused by it, and it allows us to blast out dozens and dozens of offers on and ongoing basis (without inadvertently committing ourselves to a bunch of bogus deals).

Alex - can you get more specific? What kind of memorandum are you referring to? Memorandum of land contract? Memorandum of option? "Memorandum of Contract" is a pretty vague title, it might help if we knew exactly what you were trying to do.

Vacant land parcels are actually very easy to find - in fact, that's almost exclusively what I deal with on a weekly basis. I don't do a ton of business in CA these days, but I do in many other areas of the country.

My method isn't a quick explanation per se, but it isn't difficult either. If I have the time - I'll work on creating a blog post in the next week or so explaining how I work my process. It's easy to target any particular county in the U.S. I think you'll find it to be a lot simpler than it seems.

Michael B. is correct. I have my self-directed Roth IRA through Equity Trust, and you definitely CANNOT do business transactions with any person or company even remotely related to yourself. You have to be buying and selling to a completely unrelated party - and you don't want to test the IRS on this. Making a mistake here could be detrimental to your retirement account, so be very careful.