In an offer to purchase real estate, you include not only the price you are willing to pay, but other details of the purchase as well. This includes how you intend to finance the home, your down payment, who pays what closing costs, what inspections are performed, timetables, whether personal property is included in the purchase, terms of cancellation, any repairs you want performed, which professional services will be used, when you get physical possession of the property, and how to settle disputes should they occur.
Posts by: Lee Arnold
1) Secure Owner-Financing
Easiest way – secure owner financing either in the form of a first trust deed, second trust deed, or a third trust deed. If you can get the seller to participate with you in the financing, everything gets easier. This is the most common way of getting 100% financing, where the current owner agrees to finance all, or some of the purchase price. If just some, you can get the remaining amount from Cogo Capital.
The four types of owner financing that are available are:
Leverage is king. Leverage also means that you’re using other people’s money to dramatically increase your rate of return by purchasing more properties with the same amount of money. With leverage, you can buy more properties. That’s the long and short of it.
If you’re like most people, you want it laid out on the line before you jump in head first. Here are the answers to the top 5 questions we’ve encountered about house-scouting.
Q: What is a House Scout?
A: A house scout is a person who finds and analyzes properties of all types to determine if these are worthwhile properties where a substantial profit can be made. A Property Scout prospects properties for Investors and Brokers. When a Property Scout finds a property which their investor group buys, they be- come a partner on the deal and can get paid a generous finder’s fee for their services.
This is the most common way to get a hundred percent financing. This is where the current owner agrees to finance all or some of the purchase price. If it’s just some, you can get the remaining amount from Cogo Capital or another local private lender in your market. If you have the financial or credit wherewithal, you could also go as far as getting conventional financing.
Common owner financing is where the principal will be paid at a later date, which is called a deferment. You can also defer the interest and stack all of the debt at the end where an exit strategy will occur. That exit strategy can be the sale of the asset or a refinance of the asset with either conven- tional financing or a new private money loan. We actually see this happen a lot in Cogo.
Before structuring the deal, you need to understand the seller’s motivation. Why are they even having this conversation with you? To do this, here are some questions that I want you to make sure that you’re asking. The answers will help you in the negotiation and give you some idea of the terms to put into the purchase and sale agreement.
The difference between banks and private lenders are these. For regulation as it relates to banks, regulation is very high and as it relates to private lenders it’s low. I don’t have a crystal ball and I’m probably going to regret saying this, but I don’t an cipate or foresee much regula on in the private money mortgage market any me soon other than the licensing requirements which we’re already seeing.
I’m wealthy but that doesn’t mean that’s because I work hard, I work smarter not harder. I’m going to go after the easy, or what I’ve heard called the “low hanging fruit” by putting together a marketing plan and generating an easy and consistent steady flow of leads.
A rehab that I completed with cash I got from Cogo Capital made the front page of the Spokesman-Review; the local newspaper in the Spokane market. The property became a known haven for drug abusers and squatters.
The complete article; including before and after pictures of the rehab can be viewed by clicking here.
If you‘re like most people, you want it laid out on the line before you jump in head first. Here are the answers to the top 5 questions we‘ve encountered about house-scouting.