First, I'd like to thank you for doing the coaching webinar series, they have been very helpful so far. I got a call from a seller who has very little (if any) equity, so I was planning to do a cooperative option with them. Then I found out that the property has been listed with a Realtor for three months. The seller is interested in doing the cooperative lease option, but I'm not sure how to handle the Realtor in this situation. How have you approached this situation before or do you even attempt cooperative lease options with sellers that are already listed with a Realtor?

Answer:

I normally don't work with Realtors for cooperative lease options but I do with sandwich lease options.  It is not that you can't.  If the seller wants to work with you, then the Realtor would still get paid and so would you. It is a bit more complex so lets chat on the phone with your coaching if you want to discuss the exact details. Is there enough room in it for the commission and your profit?  If so, as long as the Realtor is cool then you can certainly do it.   I should say it is not up to the Realtor really, but they are key to getting it through the seller.
Make sense?  Feel free to comment.

I have been looking at a small studio condo (410 sq ft) in a complex right on the beach in Redondo Beach.

It is one I've been looking at for myself, temporarily as my permanent residence... then as a weekend personal hotel spot when I start making real money with your cooperative options course.

Anyway, I'm not sure how to structure a lease option, in this particular case, and I wanted your opinion if it was too far of a reach.

This little condo is way over priced, even now, in my opinion.. and that is why it is sitting on the MLS for 112 days at this price... $275,000, prince falling down from 336,500. I looked at the history and it was purchased in 2007 for 379,000 and gifted to this owner it looks like for $1000 on 6-25-09.

There is another one, model match, that just went pending... 269,000 listed after many reductions, but it was sitting for a long time as well and maybe I'll just have to see if it actually gets sold and for what... or watch it go back on market.

I wanted to find a way to structure an offer that I could pay 900 or 1000 a month on a lease option, maybe for 5-7 years (or 10 or more), with nothing much down. I don't think this owner has any debt since he bought it for 1,000... unless they refinanced to buy toys. Just a guess.

Then there is the HOA issue, that I wouldn't want to pay extra for... $225... unless I paid maybe 675 rent and 225 HOA.

Anyway, I am paying $900 RENT right now for a place about the same size up the beach, and I'd rather have an interest in a property than just pay rent.

Also, I'd like to offer much less than 275,000... because I don't think it's worth that... looking at the few comps that there are. In 2003, it was 225,000. There aren't many of these 410 square foot units, most in this stretch of Condos on the beach are larger, and much more expensive for just a few more feet, so there aren't many comps.

Maybe this is a waste of my time, but I was hoping you could advise me.

Answer:
If condos are popular there then it could be an ok deal. What is the prediction of property values in the next year in that area?
Also I like the idea of you having an interest for your own future home but without having to buy it now. Consider getting the rent of $900-1000 applied each month towards the purchase price and get a long time period. For example: after 60 months you could have $60,000 built up off of the price (therefore you might be able to give them closer to their price) Definitely follow the lease option course on Buying on Lease Options; it will have the step by step guide for you to follow.

Comments? suggestions other ideas?

Question:
Hello Wendy,
I spoke with a prospect this morning. I have had several conversations with her and she and her husband both really like the idea of lease optioning with me. It is my goal to find the right person as quickly as possible. She is very excited.

Now the numbers. She worked for the county where the house is (and where she lives) and helped develop their website. So, they looked at numbers there are trying to find out what neighbors have sold their houses for. I have run the comps for the area. Only one house within a 1/2 mile has sold recently and it is only 16yrs. old, as opposed to hers which is 36 yrs old. Within 1 mile, houses within her age range have averaged to $174K. I think she is looking at getting $170K. Her monthly PITI is $1375. I have attached the Profitability Worksheet I used for this to determine if I could give them what they want. If the terms are right for both of us, I think the deal could be really good. I have put in the worksheet a $500 rent credit for myself because they have owned the house for over 12 years, so they have some equity to work with.
One question: does the Tenant Buyer usually get rent credit? I had been told from someone I could not give rent credits to the tenant buyer because they would want to be building equity in the house and because they did not own it, they couldn't. Is that true? Do you give your tenant buyers rent credits?

By the way, I told you on the phone yesterday that I have had a great time developing a relationship with her very quickly. I told her up front that I was helping a friend find a home, but this home was too much for her, and it is. But I asked her if she would still be interested in Leasing it to me with an option. I explained to her that you are a fellow investor and are teaching me about Lease Options, so if I can't answer a question, I will ask you for help. She is a very nice, hard working woman and I have to laugh. She thinks this is such a great idea, she said, once I learn it, she might want me to teach her how to do this!

God is good and has a way to bring a smile to my face. Thank you, Wendy for your webinars, phone calls and emails. I feel blessed to be working with you and can see the work will pay off. You are, by far, the best coach/mentor I have had!

Answer:
Yes you can give your tenant buyer option credits. I do with sandwich lease options or my own properties that I sell on a lease option.
I think if you can do very long term and make the numbers work with the $500 credit a month, then maybe a sandwich lease option would work, but I would like to see you get a contract in place with her for the 174-175k and keep 4-5k which would still net her what she wants to make (170k). Take your profit of the 4-5k now, since you shared with me you need the cash now!
I hope that helps.

Editor’s Note: This is part 3 in a series of “Competition Killer” video posts that’ll teach you in no uncertain terms how to blow your competition out of the water — SPLOOSH! These insider tips are compliments of my good friend Shaun McCloskey — a kick-butt short sale guy who’s crushing it right now, closing multiple deals in multiple markets all over the U.S. (at an average per-deal profit of $28,500). In case you missed them, here’s Competition Killer Part 1 and Part 2 is here. Enjoy!

So look, when dealing with motivated sellers, one crucial element to the success of your deal is ensuring they don’t go “cheating” on you, right?

What I mean is, they gotta understand in no uncertain terms the importance of not working with any other real estate agents, investors, etc, without talking to you first. You should be their first and only love while you’re together.
But there’s a bit of an art to this, isn’t there? I mean, you don’t want to make it a personal “thing” that says you’re afraid of a little competition. And you sure don’t want it to seem like you’re taking a “strong arm” type of approach.

But the simple fact of the matter is this: If I’m truly looking out for the homeowners’ best interest (and I am), then they really need to understand that it’s in everyone’s best interests (not just mine) that they only deal with me and only me from here on out.

In this third video from Shaun McCloskey’s “Competition Killer”, he explains exactly why this is, and how to go about communicating it in an open, friendly and crystal clear way.

You’ll hear a real life story that illustrates perfectly how to do this. It’s 100% true, and it’s the exact same story he shares on every single appointment he goes on. And better yet, it’s a story you can even have full use of to leverage yourself in your own dealings with sellers.

In other words, please try this at home. It’s a powerful way to gain a huge edge over your competition in each and every deal. Enjoy, and share your thoughts in the comments after you watch…

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PS – Please share your thoughts on this strategy below. Also many smart and sexy people have realized that hitting the “Facebook Like” button on this page gets you free promotion.

PPS – This is the third video in the “Competition Killer” series. I am hosting a private webcast “jam session” with the guy behind the curtain so to speak – my friend Shaun McCloskey. As you have already seen – Shaun is a great teacher and EVERYONE is gonna love learning from him about his impressive multi-state flipping business. He is actually doing BETTER in today’s market than in past year. Join us on Wednesday, September 22 at 9:00 PM (Eastern). CLICK HERE to register now – space is limited so take action now!

Editor’s Note: This is part 2 in a 3 part series of “Competition Killer” video posts that’ll teach you in no uncertain terms how to blow your competition out of the water — SPLOOSH! These insider tips are compliments of my good friend Shaun McCloskey — a kick-butt short sale guy who’s crushing it right now, closing multiple deals in multiple markets all over the U.S. (at an average per-deal profit of $28,500). Enjoy!

Tasty Deals vs. Tail Chasers
Welcome – today’s post is all about how to quickly assess which deals you should run after and which ones you should run away from. Said another way, how focus in on the 20% of deals that will make you 80% of your best profits…

You’ll discover…

• How laser-focusing on the right deals will make you far more money with the least effort, hassle and frustration possible…
• The 1 giant mistake almost every newbie makes, and how to avoid it…
• How to know the difference between a seller who needs your help versus a seller who truly deserves your help…
• Find out which deal types you should avoid at all costs – even if they’re profitable…
• 7 important criteria to quickly filtering which deals you should invest your time in and which will suck you dry…

Enjoy…and as always, your comments are welcome please…

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PS - If you love these videos, then please join me for a live, nothing-held-back webinar with Shaun and I this Wednesday, September 22nd . You can tell from these video, Shaun’s an exceptional teacher, and Wednesday night’s gig will be part teaching, part Q&A with whoever shows up. CLICK HERE to register. Hope you can join us!

REI FACT #1: Now more than ever, your competition is trying feverishly to cut you out, any way they can…
The simple fact of the matter is, there are a lot of other people out there doing what you do. And while I’m as abundance-minded as the next guy, it still stinks to high heaven to watch that crazy awesome deal you (almost) landed, slide sadly out of reach and into the clutches of the next Schlub. Am I right or am I right?

This is the first in a 3 part series of “Competition Killer” blog posts that’ll help you with this very problem. Prepare to learn in no uncertain terms how to blow your competition out of the water. SPLOOSH!

Each of these posts will be a personal video from my awesome friend and colleague, Shaun McCloskey — a kick-butt short sale guy who’s crushing it right now, closing multiple deals in multiple markets all over the U.S. (at an average per-deal profit of $28,500).

After glimpsing inside his real estate business, one of the top questions Shaun gets asked all the time is, “How is it that your deals seem to go so smoothly, with so few surprises from the homeowner?” or, “How come none of your deals get stolen out from underneath you by other investors?”

Said another way, “How the heck are you keeping your competition at bay?”

And this short series of blog posts represent Shaun’s nothing-held-back answers to that very question — time-tested, proven tricks he’s used for years to set himself apart as the Big Fish in whatever pond he’s in. Most people aren’t aware or simply ignore them. Except you, from now on…

But Make No Mistake…
Though Shaun’s specialty is short sales, the sneaky little tricks you’re about to learn can and should be applied to absolutely any real estate investing business, regardless of your niche or focus. Whether short sales, REOs, Commerical, Lease Options, Landlord, Land, Tax Liens, etc. etc…basically if you deal with people, then this is for you.

So enjoy part 1 below…stay tuned for parts 2 and 3 soon…and please share your thoughts in the comments below afterward…

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PS - I love this whole video, but for me, my favorite is the “Listening and Leading” part at the end — where you slyly help them convince themselves to do the deal with you. Sneaky!

If you have tenants in your home, you have certain responsibilities to them.  If you’ve got contracts with them, you need to follow through.  Take care of the house, make sure it’s livable, keep open lines of communication.  You have to view it as if your sellers and your tenants are your customers.  I’m tougher on the tenants because they screw up deals more often, and that’s not really an issue with the sellers, but I still always keep my end of the bargain.

Tenants

Make sure that you’re keeping your Realtors, lenders and others informed at all times. Communication is key!

My goal is to get people to buy and I’ll do whatever I can to help them, but I can’t make them a responsible person or tenant.  I can’t even make them close the deal.  Only about half of my tenants ever get to the closing table, and many will walk away from their option fees after only a few months of tenancy.  I have stopped trying to figure it out.

Excerpt from Investing in Real Estate with Lease Options and "Subject-to" Deals.

1. Check your ego at the door. The best negotiators either don't care or don't show the opposite side they care about who gets credit for making the deal a success. The talent is in making the other side feel like it was their idea to finalize the agreement.
2. Summarize and confirm. At the end of any negotiation it is best to always summarize the points covered and any areas of agreement that you and the opposite side agree on. Be sure that both are in agreement. Do not leave behind loose ends. Wrap the deal up and take your next steps. 

There are many good books and CDs on the market to learn more about negotiation skills.  I encourage you to buy some and study different ideas. It will help you in all areas of life, but is essential in real estate investing.

Excerpt from Top 10 Negotiation Techniques for Buyers and Sellers - Tips for negotiating Real Estate, By Wendy Patton.

Everyone likes to negotiate!  We may say we don’t, but we all do.  Think about this:  If you were to offer a price for something and the seller said “Yes” right away, how do you feel?  Good you got your price, but you are feeling bad because maybe they would have accepted less.  Negotiating is key to getting any good deal in real estate also.  Here are some ideas to help with negotiation:

1. Offer and expect commitment. The bond that keeps deals from falling apart is the commitment to deliver on both sides. This should be offered as a level of comfort to others. Avoid deals where the other side does not show commitment to deliver. Also, if they are not motivated, move on.  I like to say, “NEXT”, if the owner is not willing to negotiate on anything.
2. Don't take on the other side’s problems. In a negotiation you will often hear all of the other side's problems and reasons they can't give you what you want. It is a tactic to get their problems to become yours. It is best to deal with each problem as they are spoken about and suggest ways for the opposite side to solve them.

Negotiating

Excerpt from Top 10 Negotiation Techniques for Buyers and Sellers: Tips for Negotiating Real Estate, Written by Wendy Patton.

Here are some reasons rent-to-own can be beneficial for you:

• Higher Purchase Price – Rent-to-own sales typically command a price premium over traditional saes.  The buyer is paying extra for the flexibility he recieves by not having to do an outright purchase immediately
• Higher Rent – You may be able to charge more for monthly rent in a rent-to-own than you would for just a straight rental.
• Cash Flow – If your monthly payments are less than the monthly rent, the difference goes into your pocket.
• Option Fee – This upfront fee paid to you by your buyer is what secures the purchase price down the road.  If the buyer closes on the home, it would be applied towards the purchase price.  If the buyer elects to not purchase the home, the option fee is forfeited and still remains yours.  Eitehr way you win.  If you were to just rent the home, then the tenant would put down a security deposit.  The option fee is different than a security deposit.  A security deposit is owned by the tenant and can’t be used by the owner, except for repairing damages, unpaid rent and other provisions as mandated under state laws.

Rent-to-Own

Excerpt from Rent-To-Sell: Your Hands on Guide to SELL Your Home When Buyers are Scarce.