One book=Enough knowledge to invest?

[MichaelQuarles]

Hello

An option typically clarifies rights by the seller and the buyer... I like a purchase agreement which allows the BUYER to remain able to purchase a property for up to 12 months without having to perform in the event t he seller finds a new buyer in the interim..

Basically a 12 month exclusive right to buy... Without performance clauses...

As investors we need to be in control of the outcome not the other party...

Here is the clause I include in my agreement.

IV.   CLOSING DATE: This transaction shall be closed and the deed and other closing papers delivered in 60 days following the date of final acceptance or on _________, 20____, unless extended by other provisions of Contract, or by written agreement of the Parties and also at the sole option of the buyer.

The Buyer shall have the option to extend the closing date for up to 365 days from the Contract For Purchase And Deposit Receipt date upon receipt by the Seller or Sellers Closing Agent of a consideration amount of one hundred dollars ($100.00), amount to be classified as additional fund, and shall reduce the purchase price by said amount. The right to extend the closing date is the sole right and option of the Buyer and does not require Sellers approval.

Happy house hunting

Michael

[JJ Blayde]

Well that pretty much solves my problem. Thanks

So basically an option stipulates specific performances that must be taken by both parties while a normal purchase agreement doesnt stipulate that you actually have to perform while the seller must?

Still a lil confused. Maybe im just dense. Maybe it just hasnt been explained in terms that i understand yet. Any extra help is always nice.

Though i do find it funny how far off topic this has gotten lol.

[moellerryan]

The best way to learn something is by doing.  You can read and understand theory but applying that knowledge is what counts.  This post should help you tremendously.  Exercises that will teach you many of the skills you need to be successful in real estate and very fast.

http://www.reiclub.com/forums/index.php/topic,45728.0.html

[JJ Blayde]

Yep but often times applying those steps can be difficult. No worries though, ive got a plan, a "do" plan.

Are there really alot of deals on craigslist? I keep hearin about it but havent looked into it.

[justin0419]

Craigslist can be good in some areas and garbage in others.  Some areas have high CL traffic.  Some are almost non-existant.  There are so many houses out there for sale right now.  Many of them aren't really advertised beyond just a sign in the yard.  There is so much competition and the prices are compared against the REOs. 

[moellerryan]

Sure you can find deals, but let me be more clear.  The exercises to Buy Right and Sell Right is using Craigslist just for the exercise to develop the skills and understanding.  I am not recommending to use only Craigslist.  To Buy and Sell you must use all effective and appropriate sources.  

Most beginners never learn to find motivated sellers, play the numbers game and cherry pick from tons of deals that meet their criteria.  They compromise or give up after evaluating 3 deals.  Many make costly mistakes selling too.  By doing the exercises I recommend beginners can quickly learn vital skills and avoid costly mistakes on their way to successful investing.  I have much more detail on the exercises on my blog on my site.

[davewindsor]

Well that pretty much solves my problem. Thanks

So basically an option stipulates specific performances that must be taken by both parties while a normal purchase agreement doesnt stipulate that you actually have to perform while the seller must?

Still a lil confused. Maybe im just dense. Maybe it just hasnt been explained in terms that i understand yet. Any extra help is always nice.

Though i do find it funny how far off topic this has gotten lol.

No, Michael is talking about a clause that allows the buyer to extend the closing date inside of a normal purchase agreement.  It makes sense because a lot of lenders these days can't make up their minds and you don't want to end up in situation where you've reached the closing date and have no money to complete it.  I've had hard money lenders do that to me before and walk off with my application fee and luckily I got the vendor to give me an extension so I could find another hard money lender, even though it wasn't written in the offer.  It's not an escape clause to cancel the agreement if the lender bails on you.  You still have to complete the agreement or you can get sued for breach of contract.

When people talk about option vs. lease option to purchase, they are in a sense talking about the "option" as an escape clause to cancel the offer to purchase if you can't get the money together to buy it or you just changed your mind.

[ShortSaleArtisan]

Wholesaling Real Estate is a good business to get into. In fact this is what I do FULLTIME. This is my ONLY source of income, I don't sell books, mentoring or anything like that.  I know I am missing out on a good source of income but I can't get myself to do it.  I have been burned many times with these guru courses and burned about $25,000 on various courses, and mentorships.  I'm going to have a "biased" attitude towards gurus and courses so I just wanted to forewarn everyone ahead of time.  I do realize that some people have been successful with these programs but I have not so I'm going to speak based on my experiences.

If you are considering wholesaling real estate it's a lot of work in the beginning but once you created your "network" (What I mean by network is Real Estate Agents, Lawyers, Contractors, Your buyers, your leads...etc) You will start to do well.

For starters PLEASE, build a buyers list first.  Don't listen to those gurus who say go out and find a deal first and THEN look for buyers.  I did that and I got burned! I got burned because I founda deal and then I had a 30 day window to find a buyer.  I tried everything and long story short I didn't find a buyer and I had to use my inspection clause to get out of the contract because the seller got impatient.  I will never forget the the look on his face when it didn't work out.  He wanted to relocate and he couldn't because I didn't come through.  That will never happen to me again.  LEARN from my mistake and Find buyers FIRST!!!

Rolyn - awesome tips, great informative post I love stuff like this - the "real deal" 

[MichaelQuarles]

Hello everyone..

My escape clause is fairly simple...

IX.   INSPECTION OF PROPERTY: Buyer shall have until the close of escrow to complete all Buyer investigations of the property, approve all disclosures, and other applicable information, which buyer receives from seller and/or persons hired to inspect property on behalf of Buyer; and approve all maters affecting the property, including but not limited to, the marketability of the property, the elevation, grade, and topography of the Property and to conduct engineering and soil boring tests as the Buyer deems necessary in order to determine the usability of the Property. Buyer may in Buyers sole and absolute discretion, give notice of termination of this Agreement at any time prior to the expiration of the inspection period, and upon such termination, all deposits held in escrow shall be returned to Buyer.

Do not use this as a seller...

And then I have

XXXIV.   DEFAULT BY SELLER: In the event that Seller should fail to consummate the transaction contemplated herein for any reason, except Buyer's default; (i) Buyer may enforce specific performance of this Agreement in a court of competent jurisdiction and in such action shall have the right to recover damages suffered by Buyer by reason of the delay in the acquisition of the Property, or (ii) may bring suit for damages for breach of this Agreement, in which event, the deposit made hereunder shall be forthwith returned to Buyer, or (iii) declare a default, demand and receive the return of the deposit. All rights, powers, options or remedies afforded to Buyer either hereunder or by law shall be cumulative and not alternative and the exercise of one right, power, option or remedy shall not bar other rights, powers, options or remedies allowed herein or by law.

XXXV.   LIQUIDATION DAMAGE CLAUSE: If Seller decides to terminate this transaction at any time prior to close of escrow, he/she needs to give written notice of intention to cancel to Buyer.  Upon receipt, the Buyer has the option of enforcing any one of the following three alternatives.   By his/her signature herein below, Seller’s specifically agrees to the provision stated in this paragraph: (1) Buyer may cancel this contract,  (2) Buyer may insist upon the specific performance of the Seller under this contract, or  (3) Buyer shall be entitled to receive from Seller a total sum of  $50,000 or 25 percent of the contractual price, whichever one is greater.   

Dont use those either...

I think I have been laughed at for a 12 page agreement... Well maybe it is foolish maybe not... I look at these deals as a divorce... That first kiss is great however if youre not prepared to go to war then you cant start a fight... Well written contracts save time adn money..

Good house hunting

Michael

[JJ Blayde]

Wow you guys are amazing. This stuff is much better then the books.

So would anyone recommend an option over a normal purchase agreement with good clauses? Whats the pros and cons to using them really?

I absolutely agree with shortsale. Plain amazing advice from rolyn. Advice that is immediately applicable.

Also those excercises that you posted ryan are great. Gonna look into them more.

Also great advice as always from michael.

Has anyone made a good deal from craigslist?

[RolynRealEstate]

Hello,

We live up here in the Northwest where technology is pretty much accepted here.  Craigslist does well up here so we have a multitude of buyers and sellers here. To reiterate what justin0419 said some places Craigslist does well and some places it doesn't you have to find out if it does in your location. So to answer your question yes I have done deals from Craigslist but that is not my ONLY source of deals.  You have to have multiple places to get deals.  Those locations will come from your marketing, (Like I mentioned previously) Business cards, word of mouth, door knocking, Bandit Signs, driving around..etc.

If I remember correctly you were thinking about becoming an agent rather than having a set wage (Walmart?).  Now this is just my humble opinion being a Real Estate agent is good but I wouldn't jump right into being an agent rather than having a set wage.  If you are use to having a set wage, mentally, you are going to have to get use to NOT having a set wage.  What do I mean by that? I mean that every friday you will get that paycheck in your hands and every friday it comes in like clock work if you have a set wage whether you perform or wasted your time by the water cooler.  If you don't have a set wage that is NOT going to happen.  All of these Real Estate Investors on this forum can tell you.  If you DON'T perform YOU DON'T EAT!! Especially if you do it fulltime and don't have a set wage.  If you are going to become an agent great but do it part time and ease into it if you have a set wage already.  Learn the business from an Agent's perspective, (Laws, Ethics..etc) and continue to learn the business from an Investors standpoint so you will know how to deal with Agents when the need arises. (Because it's a totally different mentality..Agents vs Investors)...Speaking of eating..I have work to do...(Smiles).

[JJ Blayde]

Again great advice rolyn.

Im not used to a set wage. This is my second job and first job out on my own. However i deff agree with being an re agent part time. I wasnt meaning id quit my job and be an agent. Its a step by step process and im not gonna take it too fast. I just need to get extra income and find a way to get out of the 9-5 normal working world. Im just an entrepreneur by heart.

Pretty much all of the advice youve given me rolyn i agree with. And plan on doing.

And i wont depend on craigslist for houses. I know better then to just do only one kind of marketing

thanks so much rolyn!!!

[MichaelQuarles]

Hello y'all

As a broker I would say having a license is ok however not required... It certainly makes research more convenient however the cost associated with obtaining and hanging a license would be better spent in marketing and doing deals... And frankly the people I help who are real estate agents "fight" with themselves a lot over how to do deals. 

Cost I pay annually to have a Brokers License

State license fee 300.00
Board of Realtor fee 550.00
MLS fee 780.00

Lock box fee Priceless... sorry

Not to mention the cost of fingerprinting classes and testing

[ShortSaleArtisan]

Has anyone made a good deal from craigslist?

I know lots of people that drive lots of work from Craiglist. I've had limited success with it myself.

[RolynRealEstate]

JJ Blayde, I forgot to mention:

  You are more than welcome to PM me but I rather you post and then we can all comment on it. I'm sure I can answer all of your questions but that would take away the purpose of this website also there are a LOT of Investors on this site that has done more deals then I can ever do.  Not only that I can learn from them as well and get some insight that I never even thought of. Multiple minds going in one direction is much greater than two!  Good Luck, and again if you have any questions post it and we will answer it for you.