Have Locke Book Buy Still Unclear?
In my haste I may have read too quickly but I am still unclear why anyone would agree to have a home for 2-3 yrs with equity and sell it for a few thousand dollars. I feel like I would have to talk to a complete idiot to get someone to do this. Having their credit ( loan) out seems like a an incredible risk! Are there that many desperate people out there? Plus there are so many :" I buy Homes" ads in my area it seems like that market in South Florida may be saturated. Any truth to that?
~Chantynicole
First, the "we buy houses" ads. They don't matter. There will be enough deals to go around. In fact, I'd call all those ads and ask them to send you any leads on properties they don't want. Why? First, they'll get money from a deal that would not otherwise, whatever their reason for not doing it (you'd pay a finder's fee). Second, frequently those ads are place by beginner investors who have little to no experience in actual deals. It's simply what the course said to do. Most would jump at the chance to make some money from all these leads.
Let's determine what equity really is. You've got a property whose fair market value is $100K and has a $90K mortgage. FMV means what an average person should be willing to pay for a property that has been advertised and marketed for a reasonable period of time (an average of 6 months in most cases).
So, to sell your house for FMV, you'd have to market it with a RE agent for 6 months. Here's the break down.
6 months x $650(monthly payment) = $3900
6% commission to agent = $6000
3% negotiation reduction = $3000
3% seller closing costs = $3000
Rounded total = $16K or you'd have to pay $6K to sell the house. Not alot of equity and not too good.
If you give the sellers in this case $1K for their "equity," you bought the property for $91K ($1k down + $90K mortgage).
Yes, a seller putting their credit on the line may be a little risky for them. Better to do that than to have bad credit for sure due to a foreclosure or late payments, etc.
Roger
chantynicole,
It amazes me to that thousands upon thousands of those complete idiot sellers are doing Subject To deals.
Why they all must be crazy to even think about doing that, I know they would rather wait for the Sheriff to show up and evict them in front of their neighbors and friends.
Or maybe they would rather ruin their credit for seven years with a reposession on their credit. Maybe they shouldn't get divorced because it takes two incomes to make the house payments, then they can stay in the house and call each other names all day long.
I know don't take the job transfer to a different city making twice what they are making at their current job and stay in the house they weren't able to sell. This one makes sense.
Yes, it just amazes me why some people would even think about us solving their problems and having us help them.
Almost forgot about one of my students from South Florida that made $27K off a Subject To deal recently. I should have warned him about all those I Buy Houses ads and signs. Maybe he wouldn't have done that deal.
Get your conventional hat off and start thinking creatively, you haven't talked to a seller, made an offer and you are still unlear, I don't blame you at all for your current thought process.
You with the Sub -2 training you have are the best at what you do, get out there and clear your mind.
John $Cash$ Locke
The truth about a true motivated seller.
Many have exhausted all resources and the realazation has set in.
THEY ARE IN A HOPELESS SITUATION.
John's tried & proven method gives the investor everything to close deals.
There are sellers at the point of hpoelessness that would do anything that works anything to get the weight of the world off their shoulders.
If the investor blew every part of the presentation, without literally confusing the seller the seller would not let him go without buying!
If you haven't seen this with your own eyes, it may be hard to swallow. If you are diligent you will se this.
The truth about non- coventional buyers
With no bank qual, the only numbers that matter to these buyers are down payment and monthly payment. The sell price is simpley a blank on the contract.
Investing is that simple stay in focus no need to complicate anything.
If it works all the time, it will work for you. No need to re-invent the wheel.
Dave
Dave,
When you say the sell price is a blank on the contract do you mean that literally?
How do they then know if the future sales price could be within their means? How do you also set their monthly payment and decide on a down?
Sorry for all of these hand-holding type of questions!
~Chantelle
Chantelle,
No, Dave meant that buyers looking for owner financing will not really care what the end price of the property will be. The important points to them are the down and the monthly. The price still shouldn't be set unreasonably high or the buyers' may not be able to get more conventional financing within the term, and that would defeat the whole purpose.
By contrast, most conventional buyers will only be worried about the price of the property. They have usually already been qualified for a dollar amount on a loan, so any reduction in price to them gives them more house for the price.
Roger
Roger,
When you say owner financing.. a person only finaces the property until the buyer decides to ( really purchase) put the mortgage in his/her name. You are not financing the life of the loan.. Correct?
If you follow the book and setup a contract for deed with the buyer, you are acting as the bank for that buyer. The buyer as "really" bought the property.
As far as the "life of the loan" goes, following John's manual, you'll setup a CFD with a 15yr to 30yr term, AND a 2 yr balloon (remaining principle and interest due in lump sum). The life if the loan is 2 yrs.
Roger
Roger, Roger Roger,
Sorry buy I must ask this again to gain some understanding!
OK here we go.. I get a deed using the subject to method. I am responsible for the payment until I get a tenant/buyer is in the ****Must Reach Senior Investor status before posting URL's*** so far?
ok..I find a buyer that wants the house-He/she agrees to a 2 yr l/o deal. He has not bought the property yet. Basically he is a renter. So-there is no closing and no tax benefit for him to take advantage of at this point correct? Hopefully I can get this answered before my next probe!
Hi chantynicole,
So I can better help you, could you site the page number in the manual you are asking about, in reference to your “tenant/buyer” and “2 yr l/o deal” question?
Thanks in advance
John (LV)
Page 40-41. Talks about a balloon payment and such. Since you ( person holding the deed) are really responsible if a tenant buyer does not make the mortage payement then how would a home ever get forclosed on?
Am I correct he is talking about a L/o deal? You do not do any type of closing on a lease option deal do you??
Help-I was clear but now I seem to be lost again! I ownder if I am in th middle of 2 different concepts! I'm almost embarrassed to sign my name to all these questions!~Chantelle
Page 40-41 talks about when your buyer must refinance and how to make it happen.
You buy the house Subject to and sell the house on a Contract of Sale.
You must be confusing our program with someone elses course, as we do not use tenant/buyers and we normally resell and not L/O.
John (LV)
John ( LV)
Ok-So you are simply taking the deed and reselling the house correct? Then why do you even need to worry about a down payment. Are you not getting the spread between the mortgage and the selling price.
I do not understand the no- qualifying stuff is if the buyer simply has to get a loan. What the H#$ am I missing?
One of the advantages and benefits of purchasing our course is being able to pick up the phone and call us for an answer.
I just talked to $Cash$ and he would like you to call him so we can get you the answers you are looking for.
He is sitting by his phone right now awaiting your call.
John (LV)
The no qualifying means you are selling on land contract or Contract for deed with a balloon payment in 24 months, meaning that your final payday is in 2 years. In effect, you are the lender to your buyer, but after 2 years they must refinance and get a different lender thatn you, and the new lender pays all underlying debts against the property including you in the form of a cashiers cheque.
Good Luck,
Shawn(OH)
Thanks John. I just off the phone with $CASH$ and he really helped!
~Chantelle