Group Q & A January 15, 2008
Lou Brown:
Hello everyone and welcome to a brand new year. I’m so excited for you and I’m so excited for me. I think this is going to be a fantastic year. We’re going to see so much available opportunity over the next year. You know it’s just incredible what we’ve seen happen over the last few months. If you just check it out. The ball started rolling back last June.
Then it just got heavier and heavier and as we’ve seen it. I promised there would be an avalanche of properties coming our way. Boy has that started. We’re going to see a lot more of that over the next few months. The banks absolutely are frozen in their tracks like a deer in the highlight. They absolutely don’t know what to do. Most folks that are in these banks today did not survive or were never around for the resolution trust corporation about 20 years ago. So now they’re faced with this new experience and have absolutely no idea what to do. It’s pretty interesting to watch and we’re going to see a lot more opportunity come down the pike over the next few months. I want you to be prepared. I want you to have yourself lined up with money. I want you to get yourself a buyer’s list. I want you to set up your buyers list as I call them you’re A, B, C buyers. Or you’re 90 cent, 80 cent, 70 cent buyers. That means the buyers that will buy at 90 cents on the dollar. The buyers that will buy 80 cents on the dollar. The buyers that will buy 70 cents, and below on the dollar. You need to know what the appetite for your customer is.
Obviously, surgeons and doctors and financial planners and everybody else would love to buy at 70 cents on the dollar. The only problem is they have a full blown practice. There is really no logically way for them to take on 70 cent properties. Now what is a 70 cent property? It’s a property that is in pretty bad shape. It needs a significant rehab. Usually is not in the best of neighborhoods, although that may not always apply. Folks that would be interested in 70 cent properties, those are your full timers. People that are doing this business for a living contractors, rehabbers, renovators, and investors who want to keep the property for long term as well.
Now your 80 cent buyers those are folks that are new to the business they can put up with some moderate repairs, paint, carpet that kind of thing, but no real significant rehab. Your 90 cent buyers those are your surgeons, your CPA’s your full time professionals that make their living doing something else. They just want to have some investments in real estate and know that real estate is the best place to park money. So if you can come to the table with a nice property, nice neighborhood, not too much work, or possibly no work. Then they’d be more then thrilled to buy that for anywhere from zero to ten cents off. So put yourself together a buyer’s list. This is very important in the months to come. Now that’s Lou’s advice for the day.
Now let’s go to getting started.
From Angie Flores who says I am a pharmacist and worked in Florida for 26 years. My dream is to increase my cash flow to support myself and quit as an employee. I am making business cards and flyers. What is the best way to start not as business this process? I am a mortgage broker Florida licensee.
Well Angie, first of all let’s start with a business plan. It’s so important for you and if you have not been to millionaire jump start, I highly encourage you to get there. Our next millionaire jump start is coming up in February. The 15th and 16th of February in Atlanta. I’m encouraging you to get yourself there by whatever means it takes. Because there we actually go through a business plan. We start where you are and design a plan just for you. When I say just for you each of the folks on this call today have a certain amount of time you can devote to this business.
Some of you are full timers and some of you are part timers. Some of you are almost no timers. So based on where you are, where you’re coming from and what your business plan is, then we’re going to have to structure a business around that. If you have plenty of time then we’re going to do some things significantly different then those of you who have almost no time.
The same is true for your budget. We need to put together a budget for your marketing to be able to drive leads. Now Angie, right now you’re saying well geez what should I do first? Well first I would recommend that you get your buying volume one and go through that volume. It is detailed. It is complete. It takes you through the process. Now we do something a little bit different at millionaire jump start where we actually have an automated deal making check list. We do some other things to get you jump started as well. I also encourage you to listen to the CD’s. Hey the CD’s aren’t perfect but they’ve got a lot of great information on them. I really want you to pay attention to that information.
The other thing I want you to do Angie is know what you’re up to. You say that your dream is to increase cash flow to support yourself and quit being an employee. Okay good. How much cash flow is that? How often is that cash flow? Do you need that weekly? Monthly? How many properties would it take for you to get that cash flow? How much money per property would it take for you to get what you need? Then we back into how many leads is it going to take for you to get a deal for you to make that amount of cash flow? Then we back up into what kind of marketing do you need to do to get that number of leads to get the cash flow you need to be able to quit the job. You see it is a process and we need to create a plan before you go forward. This is the legitimate way to do business. In fact bankers won’t even give any business owner the time of day, much less the money, for them to be able to operate, grow or capitalize a business without first presenting a business plan.
Just think about it. Doesn’t that make sense? I want you to sit down, write out a business plan. I don’t mind you submitting it to me. We can go through the process and make sure this is exactly what you need to be doing. Let’s not just haphazardly go out and start quote unquote finding property with some realtor. Plenty of properties available as you know, heck in today’s market all is you can do is find properties. They’re everywhere. So we’ve got to be careful what properties we buy when and where they’re located as well. Those are all parts of your business plan. Everybody on this call challenge you to do a business plan so that you’re going to understand what it is that you’re up to. We go into a much deeper version of the business plan in our business management training event. It’s only given once a year. It will be given again in December. This is for those of you who are growing your business up. MJS has a business plan for getting started. MBA, which is Mastering Business Advancement, is where we grow your business to an entirely different level.
Now the next question is on lot purchases of new homes from Velva. What a pleasure it was to see you again in Orlando. It was my pleasure as well Velva. My question recently I was contacted by agent friend of mine to tell me that a builder had dissolved their company. They didn’t file for bankruptcy. But they filed an assignment for the benefit of the creditors, assigning the sale of all debt through a litigation attorney. Three lenders are owed. I hear one investor is making an offer on all 70 houses for less then is owed. I want some of them. No realty has been assigned to handle this yet. I think you mean no real estate company.
My agent friend asked if we could write contracts and the attorney wasn’t sure. I think the contact person doesn’t know much about these things. There are a number of agents trying to get this assignment and write up contracts. That will increase the price. I want to go direct. I don’t have the contact person’s name. I have the list of 70 houses available. The debt owed is anywhere from 50 cents to 75 cents on the dollar. Woo hoo, yeah baby. That’s good stuff. These are completed new houses in three counties. I have bought from this builder before. The attorney is in the negotiation process to get the lenders to accept less then is owed. Could this be a partner deal with your group? Can I go direct to the lenders? Please advise.
Okay Velva, here’s what I want you to do. It really depends on who the lenders are first of all. The lenders some will work with you and do a short sale. Others are going to what to get as many properties sold as they possibly can and in a short period of time. So that’s why the guys talking about offering less then is owed. If you know for a fact that these properties are 50 cents to 75 cents on the dollar, the answer is yes they would work for our group. Yes, we could work with you. You could have first dibs on them. We could give the rest to the rest of our ASG buyers. ASG is Assets Solution Group. That’s a company we’ve formed to buy houses from banks REO’s at significant discounts. So yes we could work with you on this. What I would recommend is you contact the CEO and president of the company. His name is Keith Mock m-o-c-k. You want to call 1-877-MTG-POOL. That’s 1-877-MTG-POOL. That’s 684-7665. Okay, now if you want to pursue this yourself Velva you’re going to need to find out who those lenders are. If you don’t know who those lenders are you might start with your comp whiz program. I think you’re one of our comp whiz clients that you can go ahead, go online look up the addresses of these properties. You say you have a list and it may already be listed. So you have the address. It will show what the taxes assessor has valued the property at. What the size is. All the details about the property. It will also show who the existing lender is. That’s a very important piece of information for us to be able to negotiate directly with the lenders. The answer is it’s very likely that the lenders will negotiate because they also don’t want to go through bankruptcy. The important thing to note is these are Florida properties and the foreclosure process as you well know takes a long time in Florida. So it’s going to very much in the lenders interests to work with anyone that can go ahead and take these properties off their hands. The other thing I would recommend since you know who this builder is, is contact this builder and try to get a contract from this builder. Currently the properties are in the builder’s name it sounds like. Even though the company has been quote unquote dissolved that does not mean that these titles to these properties are not in this company’s name. So I would highly recommend that you get with this lender and get a contract. Excuse me I send the lender. Get with this builder and get a contract to buy these properties. That will give you the right to negotiate directly with the lenders. I would suggest that you put together a package and I can help you with all of that Velva.
Those of you, who by the way, want to partner directly with Lou on any deals you have the right to do that as a Street Smart licensee. You would go to www.streetsmartinvestor.com/lending that l-e-n-d-i-n-g uppercase L and that will solve the problem. Just go there and fill out the questionnaire and once you have provided all the information we need. Which it does detail out the information then you will be able to submit that deal. Of course you can submit it at anytime. But as soon as you get all the information into my staff then they will bring the deal to me and we will work from there.
All right on structuring a deal we have a question from Nathan and Kelly Wit who say can you please advise us on possible ways to structure a deal out of the following situation. The ARV is a $128,000.00 they owe a first mortgage of $97,000.00 with a mortgage payment of $730.00 and a second mortgage of $18,500.00 with a monthly payment of $250.00. That totals a loan balance of $115,500.00. The repairs are $2,000.00 upstairs carpet only. The lender that holds the first has already told the seller that they will discount if they have an offer and has sent them the short sale package. Seller has an attorney that has advised them to file chapter 7 bankruptcy, which they have started. The house is in very good condition. So we are unsure of how helpful the BPO would be. Our situation if short sale is not the way to go would allow us to pay off the second if discounted bringing first current and move in. We’re currently looking for a home to move into; however this property is not our ideal home because of location and neighborhood. But it’s still an option. We have an appointment to see the home Thursday evening. We have very little cash and need to make a deal if at all possible. This would be our first. Lender has said they will commence foreclosure proceedings February 6th. Given your answer could you please advise us what forms we should have completed when we leave the sellers house on Thursday. Thanks so much.
Well Nathan and Kelly it sounds good to me. Sounds like a real possibility. Also, when you are a user, when you are actually you’re a customer. What a great deal you could have going into your own home at a discount. It’s just a fantastic opportunity for you. It would be a great place to start from to be able to take over a property subject to the existing loan. Get rid of this second mortgage through a short sale. Have a place to live. Be able to move in immediately. Have a low payment. Its only $730.00 could really give you a great spring board for your entire real estate career. I have part of my training that we call the sacrifice period. What I recommend is that you do live below your means for awhile. While you’re getting started and building your business and then when we’ve helped you build up your cash flow and build up your cash, then you can move into a really subject to deal. That’s in a really great neighborhood. It makes a lot of sense.
Now to answer your question I would say that there is really three different kinds of deals you’re going to have to work on this particular situation. One is your going to have to buy the house subject to the existing loan. So for those forms your would go to page 148 of the land trust book which is volume four. There it tells you exactly what all the forms are for a subject to. Now Nathan and Kelly once you graduate the MAS training, which is Maximum Asset Shield training, we actually give you the subject to forms on auto fill. So all you have to do is fill out one page and it auto fills all your documents. Now why do I give that out at the trust training? It’s simple because you have to have a trust in order to buy subject to safely without the lender calling the loan due. This is very important. So we’re actually going to teach you.
There is a special session that I’m going to do there are MAS next week in fact. It’s the 24th through the 27th of January. I’m going to take you through the process of doing subject to. We’re actually going to do that paperwork right there in class. So you’ll understand exactly how to do a subject to effectively and you’re going to graduate and get auto fill paperwork as well. It’s a marvelous way to jump into this business and learn all the paperwork to do. Now that doesn’t mean you have to come to MAS to be able to do this. Because in your volume four all of the paperwork is there and on your forms disk all the paperwork is there. You will have to go through the process of filling in each one of the blank lines. The guide book gives you filled in versions of each one of the forms to teach you how to fill out the form. So, yes you can do this yourself and no, you don’t have to come to the class to get piece of training. There is so much else that we’re going to do there though that it does make sense for all of you on this call to definitely be present at that training in Atlanta next week.
I said that there were three elements that you were going to need to make this deal work. The second one is the short sales. Now we do have a special package that we send to the lender. We believe in the philosophy of not asking the lender for their package and actually sending the lender our package. Our package is designed to get the discount. So naturally that’s the paperwork that we want to send to the lender, not their paperwork. Their paperwork confirms their position. Our paperwork confirms our position. That’s much more powerful.
Now the third element and by the way if you don’t have that short sale profits package its available from our office for $399.95 and its got a forms disk and its got all of the forms filled in and blank that gives you everything you need to be able to do your short sale package. I think it’s on auto fill as well, the new version, is on auto fill as well.
Now let’s see what you’re going to do when you obtain that package is fill out all the paperwork. Then when you leave on Thursday night you will actually have an authorization to release information, which will allow you to contact that second mortgage lender and try to get that second mortgage reduced down. Now one thing you want to be aware of is that we want to try to reduce that second mortgage down to maybe $500.00 and that will allow you to take over that first mortgage. Now you didn’t mention anything here about them being behind on payments, but that’s another thing that may have to be worked out. If they are several months behind on payments then you’ll also want to do what’s called a forbearance agreement with the lender to be able to try to put those payments on the back end of the mortgage. If not they may work with you to do a workout plan to make up those back payments over time spread out over a period of time. I’d try for 24 months.
You may not be able to get that, but over time I’m going to teach you the skills to be able to say the right words to get the lenders to do things that you’ve never been able to get them to do in the past. That’s part of the process of learning and training through the entire system with one guru. I’m going to recommend all of you get on plan, stay on the plan. Let me train you all the way through how to do this. Remember that part of our goal is stop patchwork quilting this business. We’re not going to patchwork quilt. They said over there, from that form over there, from that concept over there, from some other place we’re actually going to go down one road. Because it’s the right road. It’s the successful road. I’m proud of all of you for being on this call. Because that’s exactly what’s its going to take for you to be a success. Hunker down, pay attention, do exactly what I tell you to do. Now the other thing that you’re going to need is a purchase and sale agreement. Now that is in the short sale profits package. It’s also in your buying volume one and the instructions for it is on page 102 and the form is there as a filled in version as well as a blank version.
Now the other element that you’re going to need is the release from the bankruptcy trustee. If they have started the bankruptcy process then unfortunately we’re going to have to get a release. Their attorney can help with this process. If not then you can go directly to the bankruptcy trustee. The bankruptcy trustee will release the property for sale and you will have to have that agreed to by the bankruptcy trustee. Since the property has very little equity in it and it’s highly likely that the bankruptcy trustee will let it go and especially if it’s being sold to a third party like yourself. So that’s a great question Nathan and Kelly. I think everyone benefitted from the answers to that.
Okay now we’ve got a short sale question from Roger Allen. By the way Roger, welcome to the platinum program. You’ve joined our full coaching program. Roger has the direct Q and A, the group Q and A, the one on one Q and A and the platinum program where he’s joined as an apprentice in that program. Very proud of Roger because he worked his first short sales deal with us. When I say with us I guided him through on our coaching calls and he was able to make a couple of $100,000.00 on that one deal. Wouldn’t you like that to be your first deal coming into this game? I’m very proud of Roger and he’s following the program to the letter. Roger says hello Lou. I am working on a short sale that has two mortgages. What is the most effective way to get the second mortgage company to accept zero money and the first mortgage company to accept a reduced pay off? As always thank you for your help. All the best to you and your staff for a great new year.
Okay Roger now lets take a look at this. First of all the second mortgage company to accept zero money is probably not going to happen. You see they in order to get their cooperation you’re going to have to offer them something. I usually start at $500.00 now you can I try not to go past $1000.00 really on that second mortgage. Unless they’re so much equity in the property that it’s pretty ridiculous and there is no way they’re going to play games with me, play ball with me, so to speak. Not play games with me. So I’m going to have to offer them something and even the first mortgage lender has no problem with the second mortgage lender getting say up to a $1000. But when you go past that number the first mortgage lender is very unlikely to agree. Because they’re seeing that any money above that amount is money that really should rightfully go to them as the first mortgage first lien holder. So you want to be careful to do what you can to be able to do this.
Now lets see here to accept a reduce pay off and get the first mortgage company to get a reduce pay off. Well of course what I would do is after having already evaluating the deal, which I know you probably have. You’ve worked through the property acquisition work sheet. You’ve worked through the cost to sell guidelines. Then you want to be careful to use that information to come up with the final number to offer the first mortgage lender. That will actually guide you through the process. Now I would call the second mortgage lender, excuse me I would call the second mortgage lender that’s correct first and see if you’re going to be able to get cooperation there. Then contact the first mortgage lender about a reduce pay off there. Now the way I’d do it is call them as a financial advisor working with the Jones.
Now of course I’ve already got a short sale package signed by the Jones. So I’ve got their full permission to contact the lender. Now when I contact the lender I call them as the Jones financial advisor and say hey how can we work together to work things out for the Jones. We’ve got a situation here and I don’t want to have to recommend to them that they file bankruptcy. What I’d like to do is try to work something out with you as we have with our other creditors. I know that if you will cooperate we can get this done quickly. Good news we’ve found a buyer for the property. Unfortunately, they can’t pay what you’re owed. Would you be willing to work with us to get a short sale? Would you be willing to work with us for a lesser pay off? Usually they say yes and we’re going to need this, that and every other thing. I’d say good news we’ve already got a package put together. What is your fax number? I’d like to get this over to you right away while I’m still on the line with you. So we can review it together to make sure that everything that you need is right there. Then you work with that loss mitigator in the loss mitigation of the bank, the lender on that particular property. They will take a look at it and either tell you usually what they do is explain what their process is and what they’re going to need next from you. That’s they way I’d do it Roger. Just work it backwards from your property acquisition worksheet and your cost to sell guidelines. Put the package together and get it in and I know you know how to do that. Because you’ve already done that once to a great success.
Now lets see we’ve got a land trust question from Gail Carr who says question one. Property under land trust since April 2005. Regions is saying that they won’t allow me to refinance rather I’ll have to do a purchase loan because of titling issues. They said I’m not on title. Yet a tenant with an option to buy got a refinance loan after a year in one of my properties without being on title. What gives Lou?
Well the answer is it really is quite interesting. The challenge that you’ve got is that the lender whom ever you’re working with and let’s say the clerk that you’re working with really doesn’t understand what’s going on. Explain to the clerk that this is no different then a living trust where the property is transferred from the person, the individual’s name into their estate planning trust. They have the individual as the beneficiary. Explain to them what usually happens in situations like this is that is shown to the lender and the lender says oh I see you do own the property therefore a refinance is just fine. Now if you can’t get that concept or understanding through that person’s brain. Then you ask to speak to a supervisor. You explain exactly what I just said. If that still won’t fly you go higher. Explain that you can and will go someplace else and take your business to someone who will recognize that as a refinance when they understand that money is about to walk out the door. That’s usually when people get sense. Let them know that there’s some money on the table that they’re about to tell you to take a hike on. That usually gets some attention.
Now you’ve got question number two Gail and it says how do I get insurance on a property if I own the mortgage but not the property? Want my interest protected.
Okay let me see if I understand Gail. It sounds like you have actually sold a property and carried back a mortgage. Or you’ve purchased a mortgage on a property. If you own the mortgage then the owner of the property is required to put insurance on the property. When they put the insurance on the property they have to name you as a mortgage lender on there. So if there were a loss then the insurance company would issue a check both to its policy holder and to you as owner of the mortgage. That will make sure that you get protected no matter what happens if you own the mortgage. Now if you meant Gail instead that you owe the mortgage then that’s a different story. If you owe the mortgage then you want the insurance policy to name you personally ATIMA as their interest may appear. So there just to make sure we’ve got that question fully answered. If you own the mortgage but not the property then you’ll need to get the owner’s of the deed that’s the people who own the property to actually name you on their insurance. If they refuse to or fail to depending on the terms of your mortgage and depending that your mortgage does have an insurance requirement in it, which it usually does. Then you would be able to foreclose on the property because they are not abiding by the rules of the mortgage. That usually would get some attention to cover your problem.
Let’s see here I want to jump to another land trust question while we’re on land trusts. By the way guys be sure that you get yourself to the Maximum Asset Shield next week. Because it is just going to be chock o block full of information on trusts. We’re going to go over the 30 different benefits of trusts that you cannot get from any other entity. Not a corporation. Not an LLC. Not a limited partnership. That you can only get from trusts. Some of them are hidden and secret benefits that are really incredible. We’re also going to go over moving your properties, your vehicles into trusts. We’re going to set up your trust bank account, while you’re in class.
We’re also going to set up a land trust while you’re in class. You’re going to bring a deed with you to class and while you’re at your desk you’re actually going to follow along with me and move the property right into trust. You’ll be able to record it when you get home from the class. The other thing that we’re going to do while we’re there is I’m going to go through subject to as I mentioned earlier. We’re also going to cover LLC’s, corporations, limited partnerships and how they fit with this beautiful thing called land trusts and personal properties trusts. We’re even going to cover the layered trust strategy and some really neat twists that you’re going to learn as we go through the benefits of trusts as well.
So I’ve got a question here from Jim Brown. After having reviewed this question Jim says he’s the potter. So I know exactly who he is. I met him in Florida just a couple of weeks again. He says good afternoon. Hope all is well with you and yours and you’re enjoying the beautiful day. I guess that depends Jim where you’re from. There some people up in the north that aren’t enjoying such a beautiful day today. People in Florida have it so nice. Okay so number one in buying a mobile home park, excuse me a mobile home in a park not real estate but private property. Or any real estate do I have the seller set up and put into trust before I purchase. This will get around the sales tax on the mobile home and closing costs on the real estate will it not?
Well Jim, actually you’re absolutely right. You can do that once you move the property out of the owners name and into the owners trust. You have the owner as the beneficiary and that is appropriate recorded, then yes it’s absolutely true that that is now out of the owners name and into the owners trust. Now if you quietly take over that beneficial interest in the owners trust with out recording that anywhere. Which you don’t have to record anywhere, then is there a tax due? Well you know that’s up to you. You decide but the trust of the matter is that is a way to transfer assets without having to pay high what do you call it property taxes or sales taxes.
So I’m just telling you what you could do. I’m not telling you to do that. As long as you know that it’s not likely to be reviewed, then it’s not likely that that tax would have to be paid in the future. You go on to say for a quick and easy way to do this I fill out all the trust paperwork for the seller. List the seller as both the beneficiary and the trustee. Then I purchase the trust and change both? No Jim I wouldn’t do it that way. I would list the seller as the beneficiary but not the trustee. I would place your beneficiary as the trustee. I said your beneficiary. I mean I would place your trustee as the trustee and the seller as the beneficiary of that trust. Then after you do the proper consideration and paperwork with the seller. Then I would do a transfer and assignment of beneficial interest in trust. That’s in volume four land trusts. You’re absolutely right no one would see the transfer.
Now next question you say on the above I use quick claim form and buy all the beneficial of the trust. Do I need anything else?
Well Jim you might want to do a closing statement just to clarify all the numbers to make sure that’s its clear exactly whose getting what and when. It also reminds you about prorations of property taxes. Prorations of any other taxes that might be due on the property. It clarifies who got what down payment money, or earnest money. It clarifies everything and gives you a clean ownership transfer.
Number three you say when you put something into a trust a home; a car etc. how this affects borrowing money against it, selling or trading the car. Do you simply remove it from the trust and the trust dies?
Well it depends on what you’re doing. Are you borrowing money? Are you selling the car? Or are you trading the car? Because each one of those has a different answer. For example if you were borrowing money then no you could simply take the title to the vehicle and pledge it to the lender. The lender would turn over on the back of the title and put their loan information on there. Have that recorded with the state and boom the lender is handled in terms of them getting paid if there is a sale of the vehicle. Lets see now trading the car is simply the trustee of the trust signs it over to the new buyer. Selling the car the same is true. You don’t have to remove it from the trust you can leave it in the trust and then sell the vehicle right from the trust. Now after the trust is vacant what you’ve got is a naked trust. You’ve got trust with no assets in it. You can use it again or you can simply shut it down.
The way you would shut it down is with the termination of trust form that is included in your personal property trust book volume five. Why did I say personal property trust? Because we’re now talking about vehicles. By the way, earlier we were talking about your mobile home in a park. That is personal property. It is not real estate. So therefore you would use the personal property trust, not the land trust. So I did misspeak in the earlier answer. I said volume four land trust. It’s actually going to be volume five personal property trust. Because you’re going to transfer and assign a beneficial interest in the personal property trust.
I know this is going over some of your heads and that’s one of the reasons we give the in depth training to be able to take you by the hand and guide you through this process. So that we all know that you got it. By the way, when you graduate that event you also get auto fill documents a special piece of software that allows you to auto fill all of your trust paperwork. Not just subject to, but everything. Isn’t that a neat thing? You don’t want to miss this. By the way, we’ve got a special it’s running right now, especially for our coaching students. Its $19.95 for one or $29.95 for two. So if you’re coming alone its $19.95. That’s such a deal.
Okay, lets see I am in Florida do I use your forms on the disk? Or do you have forms for Florida that are different i.e. Florida land trust? If I wanted to use your forms as is made up for Georgia can I file the trust in Florida but use Georgia law? Advantages and disadvantages.
The answer is that we want to take my forms just as they are but alter them for Florida. So what I recommend that you do is go to my special web site that I’ve set up for you and you’ve asked about that later. So I’m going to tell you how to do that a little bit later. But I’ve got all of the notarization requirements for Florida there. So you’re simply going to use my paperwork, but you’re going to change it at the bottom for the notarization. The rest of the trust is fine. I’ve reviewed Florida’s law and everything that Florida talks about in the Florida land trust is already built into my land trust. So we’re fine. Those of you on the call who are from other states don’t worry about it. Because I’ve done that for the whole nation. We’ve made sure that the provisions that maybe represented in a few states are already in the trusts. So it’s represented for all the states. Whether it was required there or not. That’s good for you for several reasons. If the law changes in your state I probably already have it covered in the existing documents you already have. Isn’t that a good thing?
Okay, now so we’re going to change a notarization and then you say you talk about using birddogs since it is against state laws in Florida to pay any fees to anyone that does not hold a valid Florida real estate license. How do you handle this?
Well the answer Jim is that they could receive a one percent interest as an owner. So lets say that they’re lead is their consideration. They bring you the lead. You give them a one percent interest in the property and then you buy out their interest in that property at closing for say $250.00 or $500.00 or whatever. Now you’ve just by past what that is. Because they’re not acting as a realtor, they’re acting as a principle in the deal. They’re actually are going to be a principle and you even could leave them in. That would even save you the cash outlay of the $250.00 or $500.00 or $5000.00 whatever may be what they’re bringing to the table. Isn’t that a good thing? Then I understand man Jim you have asked a billion questions. But I think everyone on the call is really benefiting from your questions. Because these are so apropos everybody on the call. So I’ll let that slide.
You say I understand that these Q and A’s are recorded but are they also live? How could I get into them?
Well we used to do that Jim and we just found that with technical glitches and people’s phones and the phone ringing here at the office and everybody trying to call in after we already got started. We found that it was really better if we just went ahead and recorded it and then loaded it to the Internet. You will be able to sit at your computer and listen. Or you can download it to your MP3 and listen to it anytime. That’s exactly what we’ve designed it for so that you guys can stay connected and stay involved in the program.
By the way, if you’re nearing the end of you’re quote unquote free calls with me, you’re free coaching calls with me. You absolutely, positively want to make sure that you do not get cut off. We do not charge your card automatically. If you want to stay in the program you have to let us know. So you want to call 1-800-578-8580 even if you’re time has not expired we will simply begin your sessions, your paid sessions after your free sessions have ended. We’ll put it into the computer so that you don’t get charged until we actually move you over into the paid sessions. How much is it? You’re getting two calls a month. Two hours with Lou for only $49.95 a month. What a bargain. If you don’t think that’s a bargain you simply don’t know what the power of the information is that we cover on these calls. I want you to listen in and know what the true value is. This will be something that once you use it you won’t be able to put down. You’ll be anxious every week. We have people callings us saying when’s the next call, when’s the next call. It’s always every other Wednesday you’ll receive an e-mail from us saying that we have posted the call and where the code for that call and how you can download it. We do that every other Wednesday as I said. We record them on Tuesday’s and we usually load them on Wednesday’s.
Then the next question is how do I get into the full web site? It says to use the code on the disk. I cannot find any code on any of the disks.
Well Jim, if we were standing together that’s we’re talking about the forms disk, not the audio CD’s. So you want to look at your forms disk and on the outside of your clamshell if you’ve got volumes one thru five. Which is the whole enchilada junior right on the outside of your clamshell preprinted on your cover of that clamshell holding the forms disk is a forms number. That is your serial number. That serial number was given especially to you. That is your copyright protected forms number. In other words you can use it for your business, but you cannot give it or sell it to anybody else for their businesses. Also right and printed right on that disk is your special serial number as well. So you’ll put in WEJ and then whatever the numbers are after that. Don’t put the dash in just WEJ and the other numbers. That will open up the backside of Louis Brown.com, where you will find all the state laws for all fifty states. You’re going to find the notarization laws for all fifty states. The landlord tenant laws for all fifty states. A copy of a mortgage for all fifty states. Copy of a deed for all fifty states. All kinds of great information including foreclosure information, everything. We’ve loaded there to make our system easily usable and applicable for you in your state.
Another thing that we’re working on and I’m so excited to announce is that we are creating mini me’s. Mini me’s all over the country. These are successful Street Smart students that are and these are licensees of our system that have been using the system and have built their own business right in your backyard. They’re going to become coaches and mentors of you in your own backyard on how to do the business. If you’re interested in finding out who the leader for your area is be sure to e-mail us at streetsmartjim@louisbrown.com. That’s streetsmartjim@louisbrown.com and all you have to say is I would like to know who the leader is for my area thank you. Jim will get back to you with information about who that leader is or if there is not a leader in your area he will let you know that. We are looking for folks that have been successful. So if you know other folks in your area that are Street Smart students and attribute their success to our system. We definitely want to hear from them. To show them how they can become a leader in their area. We thank you for your help on that as well.
Wow are we covering some ground today or what? This is a ton of stuff guys. You guys are just so knowledgeable. Can you imagine what its like for guys that aren’t on this call and they don’t have all these answers. What kind of pain and suffering they’re going to go through to try to figure out what to do? But you where smart enough to invest in this system and invest in your time and getting in on these calls. So I want to commend you for that.
Just like Kody Merk from Sachse, Texas he says hi Lou thank you for taking my question. I am 16 years old and I am using your system to become a real estate investor. My parents bought the first five volumes of your Street Smart program and attend your MJS conference you had in Las Vegas in November. I live in Texas and my parents have a house that they are letting me sell. We have purchased Drew Perry’s course on selling houses on eBay so I want to sell it as an owner finance and auction the down payment on eBay. Let me pause for just a second so everyone on the call can catch up with you. One of my licensee is named Drew Perry.
Drew has put together a program on how to use my stuff and how to sell the Street Smart way on eBay. If you’re interested in that program just call our office at 1-800-578-8580. We can get you connected on and get you that program. It’s a really neat way to have an additional outlet for getting your properties moved. Drew walks you step by step through the process and shows you exactly how to do it. Now you go onto say I live in let’s see here. I have tried to figure out the laws in Texas to owner finance or lease option and my mom Colleen and I are a little confused as to how to do this. Can you tell me how we own finance it? Or do we do it as a lease option? Which form do I use and which volume would I find it in? If we lease option this how long do you set the lease before the owner is able to start qualifying to buy it from us?
Well Kody, here’s exactly what were going to do. Now always think of yourself you say what am I doing today. Am I buying or am I selling. According to your write up here you are going to be selling this program. So you would go to volume two selling and holding for all your documents for selling property. This is going to allow you to sell it for cash or sell it on lease option. Or sell it on agreement for deed. In fact the form you asked to know what form it is, the form is the lease option form on page 53 or the agreement for deed form on page 60. Now if you want to go by if you don’t want to sell on a lease option for cash, in other words forcing your lease optionee buyer to have to cash you out. Then we’ve got another version in the expanded lease option program, which is volume 9. That version actually builds in the way for your client to move from your lease option program into your owner finance program, by merrily building in all the details of your owner finance program into your lease option. Telling them exactly what is going to be under what circumstances etc that they can covert from your lease option into owner financing. But you do have the quick start version, which is on page 53 of the lease option. The quick start version of the agreement for deed which is owner financed on page 60.
Now if you want to do it the Street Smart way Kody, what I recommend is you sell your property without giving them the deed to the property. You just sell it with owner financing. But using what we call a contract for deed, or agreement for deed. Now you’re absolutely right that Texas has some pretty restrictive laws. That unfortunately got set up before we had set up our lobbying arm. Now through nary we have a nationwide lobbying arm for all of us to try to strike down these kind of ridiculous laws before they ever get past. So in Texas you’ve got some interesting restrictions. One is when you sell on a lease option you can do so for six months and not three years like I like to do it. So what you do is in Texas you’re going to have to do a lease and then come back 30 days later and do an option. As long as the lease and the option are not done at the same time, then you can have an option for as long as you want. I’ll teach all that to you, but the bottom line is those are the forms you can use.
Then let’s see to answer the rest of the question. How long do you set up the lease before the owner is able to start qualifying to buy it from us? Well you might do the lease for as little as a month. Then if they pay their first lease payment on time they qualifying to begin buying it from you. Therefore you’re going to fill out the option paperwork at that time. Because congratulations Mr. and Mrs. Jones you paid your first lease payment on time. Therefore we’re going to give you a 3 year option to buy this property. Boom you’re covered.
You go onto say I turned in my homework from the MJS conference and I have not received my certificate. Could you just into this as I am going to add it to my portfolio. I am being home schooled and I will be able to take credit for this. Well Kody, I am very proud of you. Very proud of your mom and dad too. Because it’s just terrific that they gave you the gift of home schooling. We did that for a while with both of our kids and it’s just what a terrific opportunity and what a terrific gift that they’re giving you. You can’t help but win as a home schooler. Its just amazing all of my home schoolers that come to my events, just how bright they really are. It’s amazing how much you get from home schooling as opposed to the traditional channels that people learn from. But I am very proud of you. I just know you’re going to sell this house quickly and it’s going to be a great learning experience for you. I am so proud of you being an entrepreneur at the age of 16. You’re going to be building a life for yourself and your family that’s going to be like none other. You’re going to be the envy of all your friends too. Because it’s going to be amazing how rich you’re going to be at such a young age.
You go onto say p.s. Lou my family is putting all of our vehicles, our house, our ATV’s, RV, in separate trusts. My little sister wants to know if she can put each of her show dogs in a trust? Kody, she certainly can. She can put each dog into its own trust and in fact it would be a personal property trust. On the declaration’s page that says the exhibit of what’s included in that trust she would name that dog and its pedigree and all the different information. The certificate number of license of the dog and all that information just included that in the trust. Absolutely, she can even name in the trust who she wants to get that animal. Now recognize that anyone under the age of 18 years of age in our country is recognized as not quote unquote of age. Therefore while the trusts would be her trusts it would actually have to be your parents that would be the guardians over that trust. Until she becomes 18 years of age. So, she can be named the primary beneficiary in there, but your parents would be the guardian of her during that period of time. I’ll teach you a lot more about that at the MAS as well. Oh and I don’t think I answered your question about your certificate. The answer is I am definitely going to check into that to make sure that you do receive your certificate. So as far as I know all of those have gone out since the event, but we will definitely make sure that you get yours. We’ll follow you up on that and send you an e-mail on it.
Also you say in your cc 90 coaching team. I am taking the 90 day coaching with Mike, Greg and Dutch and they asked me to cc them as this is part of my assignment. Well Kody, another brilliant move on your part and your parents part to be part of the coaching program. You know it’s just so powerful to have this kind of support and information. I am looking forward to many, many more questions from you as you build your business.
Now we’ve got a question here from Kurt and Sabine Johnson and they say we have a buyer who would like to buy one of our homes. But they only money they have $10,000.00 to $15,000.00 to put down is in their 401K. They tried to take it out of the 401K previously to do a lease purchase as required. We ran into the same problem with another buyer in October and another requirement was that they would have to close within 180 days. It might not be possible and would be a bit risky to do an agreement for deed because the purchase price of our home is $229,900.00. They only have $10,000.00 to $15,000.00 in their 401K and they are trying to keep their payment below $1100.00 per month, for now even though they make $73,000.00 a year.
Whoa, well let’s back up. First of all the 180 day rule lets talk about that for just a second. If they were to require that they do buy a house within 180 days I honestly doubt that the plan would really follow up on that. Did they really buy a house. Now if the plan requires a copy of a closing statement, guess what with an agreement for deed you can produce a closing statement. We have that included in our program. It’s called a HUD one closing statement and that’s the federal document that’s used for closing and we’ve got it right there that you can fill in. So if that had to be produced I guess you could produce that. Because an agreement for deed is like a sale and they are going to be entitled to tax benefits for doing it that way. Now you go onto say the payment they’re trying to keep their payment below $1100.00 a month. Absolutely, positively not. $229,900.00 I like the fact that you get your $10,000.00 or $15,000.00 down but that’s still not good enough. They’re going to have to grow up and learn that that’s practically less then rent and it’s certainly less then rent would be on a $229,000.00. So, what we’ve got to do is be very careful about this and explain to them that the amount that they’re proposing is really a rent payment and it’s not a mortgage payment. That most folks who have a mortgage pay anywhere from $600.00 to $800.00 a month more for the mortgage then they would pay for rent for the very same house. But they get all the tax benefits and they are paying down and paying off their loan. They’re securing the price of the house without appreciation so they absolutely have a benefit to go ahead and commit to the property now. That should help you through that process.
Let’s see here you go onto say I looked at the agreement for deed graduated interest calculator and I think it would still put them out of reach. Everyone on the call what they’re talking about is a calculator that we provide to graduates of our MPI training, which is Massive Passive Income. Another one of our in depth trainings we’re we go deeper, much deeper into the process of selling and owner financing property. One of the deeper concepts that are a grown up version of selling property is to do either graduated payments or graduated interest rate. So you can start someone at a lower payment and graduated them up over time. We give you the calculator, the amortization schedule, the process, the paperwork. We give you everything to be able to do that when you graduate that class.
You say that you did put it through the graduated interest calculator and even at $221,450.00 financed over 40 years including 3 points at 10.99 percent with only 6 percent for the first 2 years their payment would be $1219.00 per month plus taxes and insurance. The balance in 2 years would grow to $242.00 and the payment would change to $2252.00 plus taxes and insurance. Well that would really depend Kurt, would it change to that at only it could be a graduated interest rate. So it could change say a ½ percent every six months and continue to ratchet up that payment until you get it up to where you need it to be. So lets say that we start them now at 6 percent and then in six months 6 ½ percent in six months 7 percent and so on. With the $73,000.00 per year that they’re making now they can afford a lot more then they’re letting on to you that they can afford. Because my goodness their making what is that about $6000.00 a month. So they certainly can afford a payment of at lease a 1/3 of that. They can afford at least $2000.00 a month. That’s the least. So we’re going to have to ratchet your customers on up there to where they really need to be. By the way, that’s probably going to meet exactly the number you need for an agreement for deed. Just by merrily resetting their thinking.
You go onto say I thought I heard of a lease purchase agreement of something in which they would sign a purchase and sale agreement and a lease agreement no option must purchase. So that they could qualify to take their funds out and keep their payment low until they can fix their credit and qualify for a traditional low interest loan. But even if that is possible one more requirement the previous 401K company of our previous October buyer had was to close within 180 days. Have you heard of this type of agreement? Or do you know of any other way to get them in the house. Well Kurt, just make sure that you can get the money, but you can always put a stipulation in the contract. So lets say you do a purchase and sale agreement and do a separate lease agreement. The purchase and sale agreement would have a clause at the end of the contract in special stipulations that’s says that you are awaiting those down payment funds from their 401K in order to close on the transaction. The employer who has the 401K plan doesn’t even have to know anything about the lease. But again you want your lease payment to be high enough to convert over to the mortgage payment if they do qualify. If they don’t qualify you’ll be satisfied with the lease payment.
Okay it’s a very nice house that we rehabbed less then 2 years again but strangely not been able to fill it even at $3000.00 down since our previous buyer moved out in August. We are primarily interested in getting someone in there as fast as we can and any thoughts on how we can make this work would be greatly appreciated. Well I’m going to also say call all the realtors and all the mortgage brokers in town. They have people who can’t qualify traditionally and this would be absolutely a great opportunity for them. But you’re going to have to put your working shoes on and really go out there and make things happen. Don’t wait for things to happen, make things happen. Make the outbound calls, make the contact. I guarantee you if you make enough calls you’re going to find somebody that has a customer that’s going to fit with your program beautifully. We’ve just proven this over and over and over again.
