#2 Wholesaling A.K.A Cooperative Lease Options
Cooperative Lease Options is a safe form of investing in down real estate markets, provided you have end buyers lined up before you close. There will be plenty of opportunities for wholesale deals, but the challenge may lie in finding your buyers.
If you are doing Cooperative Lease Options it’s a good idea to have a strong buyer list lined up. You don’t want to close on the property without an end buyer because you are in a down market. If the market continued going down you would be stuck holding the property as the value declined.
What I really like about wholesaling is that you can keep your risk level low by not having to own the property. You just flip it to your end buyer. Minimizing risk in down markets is very important. To Learn More about Cooperative Lease Options Click Here.

#3 Cash Flow Rentals
Some down markets are positively flush with great cash flow opportunities. Down markets mean that the renter pool has grown as well. If you make sure the numbers work and that the rental market is strong you can do very well with cash flowing rental properties. Passive income every month is a great way to build your wealth.
While there is some risk associated with a rental property in a down market, because you do actually own the property you can easily mitigate that risk by making sure the numbers work before you buy. If a property cash flows you can hold it forever without having to worry about what the market does. To learn about some great cash flow opportunities, the same area that I’m buying in right now, Click Here

Investing using the subject to technique involves having the seller sign the deed of their home over to the buyer “subject to” the existing mortgage. The seller keeps the mortgage in their name, but the buyer/investor owns the home and is responsible for the payments of the mortgage. The investor does not have to qualify for a new mortgage using this method. The technique of subject to allows the seller to move on and get out from underneath their payments and the investor the ability to buy many homes without using his or her own cash or credit.

Both methods, when done properly, should result in a win/win situation for the buyer and seller. I only teach my students how to use these two methods in a fair and ethical manner. When all parties are treated fairly everyone wins and things work out for the best. I truly believe this is the only way to invest in real estate!

Here's a tip: When you’re in the seller’s house, tell them what you like about their house, not what you don’t like.  For example, perhaps you’ll see something unusual, like older wood work or a nice fireplace.  Ask the seller about it.  If you see that the seller likes golf, talk golf whether you like golf or not.  Always focus on the positives, the interesting things.  People like to know that you like their house, and that builds immediate rapport.   Sellers will give you a better deal and be more likely to negotiate if they like you.

Check out Chapter 06 of my book Investing in Real Estate with Lease Options and Subject-to Deals: Powerful Strategies for Getting More when You Sell, and Paying Less when You Buy to learn more about negotiating the deal and other steps to buying on Lease Options and Subject Tos.

]]> http://www.wendypatton.com/blog/build-rapport-and-make-a-deal/feed 0 http://www.wendypatton.com/blog/subject-to-investing-seller-objections http://www.wendypatton.com/blog/subject-to-investing-seller-objections#comments Thu, 09 Jul 2009 14:01:50 +0000 Wendy Patton http://www.wendypatton.com/blog/?p=247 Earlier this week I did a post on Lease to own training - seller objections, today I want to look at Subject To Investing and seller objections. Here is a common seller objection when it comes to subject to investing: "Why should I give you the deed and control of the property when I'm left]]> Earlier this week I did a post on Lease to own training - seller objections, today I want to look at Subject To Investing and seller objections.

Here is a common seller objection when it comes to subject to investing: "Why should I give you the deed and control of the property when I'm left on the hook for the mortgage?"

This is a legitimate question and one I would certainly be asking if the roles were reversed.  It demonstrates why it is so important to build rapport with the seller and make them feel comfortable with what you are suggesting (rapport is important whether you are doing subject to investing or lease options).  Remember, subject tos will not work with everyone. To answer this question you might want to offer references or testimonials from other sellers.  Here is an answer one of my students gives to their subject to sellers -

"I can understand your concern, and I would probably feel the same way if I were in your shoes.  All I can tell you is this:  The bank will not let me assume your mortgage, and in order for me to make a fair return on this deal, I can offer you$X.  I'll be glad to buy it right now at the price I've quoted, but then how would you cover the difference to pay off your current loan?  You are actually being very savvy and getting top dollar for the property by letting me take over your payments; we both save all the costs that we'd incur - commissions, closing costs, and so on - if I were to just buy it from you.  The minute you okay this paperwork, I kick into owner mode.  I will be doing everything possible to sell this house as quickly as I can, using my expertise.  I've spent thousands of dollars on training to do this business, legally and morally.  It would be futile for me to let this property go back to the bank just because I didn't make the payments."

Remember, when a seller raises an objection either in a lease option or subject to investing deal it means they are considering your offer.  Learn to love those objections!

1. Order Pretitle Work - you need to look at the seller's title to see if there are any clouds or other things that would prevent the seller from selling to you

2. Check IRS/State Tax liens - usually these will show up on the pretitle work.  But the home can't be sold without paying off these liens

3. Check if the Mortgage is up to date - get a signed bank authorization from the seller to allow you to verify that their mortgage is current. It's also a good idea to verify the amount of the mortgage payment, because if the payment is higher than your agreed upon rent the seller will have to cover the difference.

4. Check if the property taxes are paid - The seller won't be able to sell the home without satisfying these debts too so you need to make sure they are being properly taken care of.

Not only is it a good idea to verify these things before you sign the deal, but it's not a bad idea to check up on some of them during the deal as well.  You want to make sure that the seller is going to be able to sell you their home when it comes time.  When you are doing lease option investing, or rent to own investing due diligence is a step you don't want to ignore.  For more on due diligence see my book, Investing in Real Estate with Lease Options and Subject to Deals.

Certainly not all of my deals are zero down investing deals.  Sometimes I have lease option deals where I put a small amount of money down or even spend a little in repairs.  But I will tell you that without question it is possible to do zero down investing!  You have to choose the right strategy however, like lease options.

There are two ways to do zero down investing with lease options.  The first is setting up a sandwich lease option with a home seller in which you pay the seller an option fee, but you don't start the lease option until you find a lease option buyer and they pay you their option fee.  That way you can pay the seller their option fee from what the buyer paid you and hopefully have some left over.  You've just set up a sandwich lease option with no money out of your own pocket.

The second way is to not pay the seller an option fee at all.  Many times they won't ask for it or even know to ask for it.  Again don't start the lease option with the seller until you find a lease option buyer.  That way the option fee you collect from the lease option buyer is yours to keep entirely.  That's zero down investing!  As a matter of fact, you are actually getting paid money at the beginning so it's even better than zero down investing.

One thing I want to stress because it is Very Important.  Even though you are doing zero down investing lease option deals you still absolutely want to have cash reserves!  Your reserve funds will carry you through if something goes wrong, like the buyer moves out or even worse you need to evict the buyer.  During those times you are still obligated to pay the seller the monthly rent while you find a replacement buyer.  Having those cash reserves gives you protection and peace of mind.  There is nothing worse than having something go wrong and not have the money to carry you through.  I recommend at least 3 months of reserve funds.

In this clip Mack talks about how he has benefited from my lease options course.  He talks about little or no money down investing, creating a win-win-win situation for the buyer, the seller and the investor (and the real estate agent too!)  In fact Mack will be closing on one of his lease option deals very soon, to the tune of a $20,000 plus payday!  Not only that but it was a zero down investing deal on his part.  That's right, no money down.

When doing lease option investing it's important to calculate your numbers as the beginning, this includes any repairs the property might need.