All Forum Posts by: Ellis San Jose

I would consider a duplex so that he can learn how to manage tenants in the other unit.

The California Association of Real Estate purchase & sale agreement has a "subject to" section.

The most important issues are to proper disclosures to your seller so they understand the pro's & cons of entering into this type of agreement. Which these contracts won't include.

You should definitely consult an attorney to fine tune the contract addendums.

You can also see templates for common real estate forms on the firsttuesday website.

The best success I have had with seller financing is to listen first to the sellers problem before proposing a solution.

Typically a seller finance transaction involves :

1) Purchase & sale agreement

2) Note

3) Recorded deed of trust or mortgage depending on your state.

Turn your perceived challenge into your advantage. If you are in a fairly rural area I would imagine there aren't a lot of investors marketing to your area. You have an automatic edge.  Search property data for properties with high equity & perhaps out of area owners or elderly owners & contact them to introduce yourself as a local hoping to find another rental property.

There is no "normal" with seller financing. It's what terms both parties will agree. 

Do you agree to pay fixed $3,000 per month? $10,000 quarterly? payment based on performance?(gross, net) combination of fixed plus?

Payment of $x until total amount of $y is paid? Payment of x for first 3 year then increase to z yrs 4-8.

The possibilities are literally infinite.

One of the biggest misconceptions I see from beginners (I'm guilty too) is that you set an ambitious goal & then search for the magical city or the MLS listing for a property that matches your goal.

Best motto I heard from my mentors "Great deals are created not found." 

Understanding how to uncover the potential opportunities by solving the seller/owners problem then engineering them to profit takes time & skill. 

One of my good buddies started buying mobile homes & then resold them with financing making a monthly $500-$600 profit. Now he owns mobile home parks.  He focused on solving the problem of lack of financing for mobile home buyers & sellers.  Ask yourself the question, "What problem am I solving in order to create a profit?"

The basic main components are: Payment amount, how often, how long, total purchase price.

I focus on the payment amount not the interest rate. Will the asset support the agreed upon payment?

This is definitely attorney territory.  I'm not an attorney but, my suggestion is to have both parties write out what their roles, responsibilities & expectations. Discussing potential profit splits & what happens in a loss situation, liability, stalemates on decisions etc. are valuable topics to discuss. Then have an attorney assist in drafting the needed documents & agreements.

My personal preference has been to have one person hold title & the other hold a recorded option or lien position depending on their roles & needs. 

Co-mingling  title can get messy when there are disagreements & conflict.

With that level of capital you could acquire & manage the assets & tax issues without the restrictions of the REIT structure. LLC or LLP or combination could be a much better fit.