How We Purchase Properties

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How We Purchase Properties by Mind Map: How We Purchase Properties

1. Cash

1.1. Purchase

1.1.1. Purchase price = 50% of ARV or Market Value

1.1.2. Its not always about finances

1.1.3. Majority will say "no" but a few will say "yes"

1.1.4. We can close in 30 days or less.

1.1.5. We buy "As-Is" with no contingencies except for a clear and marketable title. We pay for all closing costs (taxes are prorated)

1.1.6. Exit: Lease Option to a Tenant Buyer

1.1.7. Compensation comes from the Tenant Buyer's Option Deposit

1.1.8. Use our Purchase Agreement

1.2. Wholesale

1.2.1. Same as above

1.2.2. Exit: We are assigning (flipping) our purchase contract to another investor.

1.2.3. Compensation comes from the Assignment Fee collected.

1.2.4. Use our Purchase Agreement

2. Terms

2.1. Wholesale Lease Option

2.1.1. Purchase price = 85% to 95% of Market Value

2.1.2. Home must be in rentable condition. If it needs major repairs the Tenant Buyer won't be able to secure a loan to purchase the property (paint vs exposed wires).

2.1.3. Monthly payment to seller must be < or = market rent.

2.1.4. Home owner will receive the first month payment as deposit. This is the goal. If seller wants more than the first month as a deposit we have to look at it on a case-by-case basis.

2.1.5. Term = 24 to 36 months, or longer. This allows the Tenant Buyer to fix their credit and qualify for a loan.

2.1.6. Avalon Escrow

2.1.7. Other Paperwork (once Tenant Buyer is located): Seller's Disclosure, Lease Option Contract, Authorization to release Mortgage Information, Latest Mortgage Statement

2.1.8. Exit: Lease Option to a Tenant Buyer

2.1.9. Compensation comes from the Tenant Buyer's Option Deposit

2.1.10. Use Option Memo

2.2. Subject To

2.2.1. We take over the home owner's loan payments (PITI) in exchange for the deed.

2.2.2. Mortgage loan can not be > 85% - 90% of market value. This is our purchase price.

2.2.3. Don't make this type of offer if the mortgage loan is < 85% of market value

2.2.4. If they ask: Subject-To Purchase shows as a "Sale" on homeowner's credit report. Not a debit.

2.2.5. Seller gets zero money, we pay all closing costs, we begin covering the payments as soon as we close on the transaction (typically same day when we secure a Tenant Buyer).

2.2.6. Loan must NOT be in default

2.2.7. "If I pay all the closing costs and you don’t have to pay any real estate commissions, would you sell it to me for what you owe? (if they say “Yes”) "Well, I can buy it. But the only way I can do it is to take over your debt; which means I’ll start making your payments when you and I agree, and sometime in the future I get the loan paid off and out of your name; but in the mean time I’ll buy the house, all responsibilities are mine, you are out, you just sit back, relax until one day you get the notice that its paid off."

2.2.8. Exit: Lease Option to a Tenant Buyer

2.2.9. Compensation comes from the Tenant Buyer's Option Deposit

2.2.10. Use our Purchase Agreement

2.2.11. How it is presented in our website

2.3. Owner Financing

2.3.1. Purchase price = 85% of market value

2.3.2. Term= 5 to 10 years, or longer. "If we can agree on the purchase price and the monthly payment, what's the longest term you would feel comfortable with?"

2.3.3. Down: "May assume you'll sell with nothing down?" If not, "What is the least you'll take that would help you not lose any sleep at night?"

2.3.4. Exit: Lease Option to a Tenant Buyer

2.3.5. Compensation comes from the Tenant Buyer's Option Deposit

2.3.6. Use our Purchase Agreement

2.3.7. Mortgage docs to be drafted by our attorney

2.4. Wrap Around Mortgage Contract

2.4.1. Total loans < 85% of Market Value

2.4.2. Example

2.4.3. Term= 5 to 10 years, or longer. "If we can agree on the purchase price and the monthly payment, what's the longest term you would feel comfortable with?"

2.4.4. There is typically no down payment associated with a Wrap Around Mortgage. If seller wants something, we can look at it on a case-by-case basis.

2.4.5. Exit: Lease Option to a Tenant Buyer

2.4.6. Compensation come from the Tenant Buyer

2.4.7. Use our Purchase Agreement

2.4.8. Mortgage docs to be drafted by our attorney

2.5. Scripts

2.5.1. Scripts

2.5.2. Magic Words

2.6. RE Tutorials

2.6.1. Wholesaling

2.6.2. Lease Options

2.6.3. Seller Financing