3 Keys to Seller-Financing: Key #2: What documents do I need?

0
Comments

 

In my previous four posts, I covered the three main ways to structure a deal with seller involvement. Each of those has their own unique set of documents. In this post, I will briefly explain what is needed.

In a traditional seller-financing deal (notes and deeds), you should always start off with a seller-financing specific purchase agreement, especially when there is an underlying mortgage in place. A typical state-approved REPC and certainly a simple 1- or 2-page purchase contract are not sufficient to cover the disclosures and terms needed in these deals. Sellers will come back and claim that they never sold the property, or that the mortgage was to be paid off, or, in the worst case, the note is called due. Having a really good contract that covers these possibilities is critical. If you are going to invest in these kinds of deals, you should work with an attorney or invest in seller-financing specific documents.

You’ll also need a promissory note (loan agreement) and trust deed (mortgage). The type of note and deed depend on the type of traditional seller-financing you’re doing. You should also get a power of attorney or borrower’s authorization so you can speak with the bank if necessary down the road. An authorization to speak with the seller’s insurance agent can be helpful.

In a lease option scenario, you’ll need a master lea
Read More...


Use These Financial Reports For Business Decisions

0
Comments

 

A lie has speed, but truth has endurance. - Edgar J. Mohn

Some business owners never like to "look under the hood" of their finances, and their accountants or financial partners can sometimes encourage that behavior by keeping them in the dark.

Well, I hope that won't be you.

In fact, you need the kind of insight into financials to make strong decisions.

One way I'd like to help YOU is by pointing out different reports and metrics that you can find in most accounting software, that business owners or their bookkeepers often neglect. Knowing these numbers will help you avoid an embarrassing flub in YOUR business.

Even if you are using some of these reports, I'm sure you'll find a few more to add to your repertoire. Of course, this is just a very basic introduction, but hopefully it'll spark some ideas.

1) Profit & Loss Summary and Previous Year Comparison:Most business owners rely on the Profit & Loss Summary report, but comparing your results to last year can provide quick insight into whether your revenue is growing or contracting--as well as how fast expenses are rising.

Read More...


3 Keys to Seller-Financing: Key #1 Part 4: What kind of deal is it?

0
Comments

 

This final part of Key #1 discusses the contract for deed. As previously discussed, in traditional seller-financing, the investor takes ownership of the property. In a lease option, the seller retains ownership of the property. A contract for deed falls somewhere in between.

With a contract for deed, the seller retains “legal” title to the property. On county land records they will show up as the owner. The buyer gets “equitable” title to the property. This is the same as ownership and it’s not a tenancy like a lease agreement. The buyer gets partial ownership in the house, shared with the seller.

A contract for deed is an installment contract, just like you get when you buy a car with bank financing. The bank actually owns the car and keeps possession of the certificate of title, while the buyer gets to use the car. The buyer makes monthly payments and at the end of the contract, the bank transfers title to the buyer and mails the certificate.

In a contract for deed on real property, the seller keeps and owns the title while the buyer gets to use and occupy the property. The buyer makes some monthly payment and at the end of the contract, then the seller transfers legal ownership to the buyer by recording a transfer deed.

Even though the buyer does not own the house, she does own the equity growth. So, she does have more right
Read More...


How Your Company Can Do More With Less Time

0
Comments

 

To think is easy. To act is difficult. To act as one thinks is the most difficult." -Johann Wolfgang Von Goethe

Many businesses find themselves continually in "scramble mode", taking no chances to slow down and think of ways to get OUT of it.

As is often the case with money, it takes time to make more time.

And it takes the willpower to allow certain other things to (perhaps) fester, while you and your team focus on the most-important tasks.

So, I'm taking some of MY time to give you ideas for how YOU can take more of YOUR time ... to save more time. Got that? Here we go...(who's on first?!?!)

  1. Choose Your "Focus Times"
    Every employee, yourself included, has a different style they like to work in -- we all also have times of the day when we work best. Only your team will know when "focus times" should occur, but I highly recommend intentionally setting these blocks of time in place.

Discuss with your team about which blocks of time, throughout the week, can be blocked off for individual work and individual work ONLY. No meetings, just focus time.

  1. Read More...


3 Keys to Seller-Financing: Key #1 Part 3: What kind of deal is it?

0
Comments

 

Last week we talked about traditional seller-financing scenarios. In those cases, the buyer actually bought and owned the property while the seller became a lender. Lease options are the exact opposite. The seller retains ownership of the property and become a landlord.

Firstly, sellers will need to be comfortable with becoming a landlord. But once that hurdle is overcome, these are great deals. It starts with the seller signing a master lease with the investor. A master lease is one where the tenant (in this case, the investor) can “sub-lease” the property to a standard tenant in a standard lease who will actually occupy the home. Normally, there is a spread in the monthly rent where the investor is making some cash flow.

This takes responsibility for maintaining the property off the hands of the seller, which is the reason most sellers go for this deal. It also provides some cash flow to them, and may defer taxes in some situations.

The second half of this deal is the option to purchase. The option agreement gives the investor the right, through an option fee, to purchase the home sometime in the future. This can lock down a good price in an appreciating market.

A lease option “sandwich” is a deal where once the investor has a master lease and option, he then subleases the property and assigns the option agreement to the tena
Read More...


How Businesses Get More Done With Less Time

0
Comments

 

"If you look at what you have in life, you'll always have more. If you look at what you don't have in life, you'll never have enough." - Oprah Winfrey

Parents and employers take heart: could it be that a rhythm of working a little less might actually make you and your team more productive?

It's a pretty counter-intuitive notion, but the reality is that we business owners entered into this role for many reasons ... and I know that for many of us, prime among them was this notion of freedom.

But this could also be equally true for our team.

That's why the notion of "80/20" (the Pareto Principle) is something worth studying when you are looking at having to cut down your own time, or your team is needing to reduce hours for childcare reasons, etc.

There was a study done about a decade ago that offers
Read More...


3 Keys to Seller-Financing: Key #1 Part 2: What kind of deal is it?

0
Comments

 

Last week we discussed a situation in which an investor partners with the seller on the project, which is one way to have the seller help “finance” the deal. In this blog, I’m going to explain what I call “Traditional” seller-financing because it’s the more common way to structure seller-financing deals.

 Traditional seller-financing is any situation where the investor actually buys the house and takes ownership through a closing. Then, in some way, the seller is helping to finance that purchase. I break traditional seller-financing into 3 sub-categories. Note: These descriptions are how I speak about them. Other investors may use different terminology. I separate them because, structurally, they are different.

The important point to distinguish traditional seller-financing from the others is that the buyer will actually own the property! And, anytime a mortgage is staying in place, there will be due on sale clause risks.

  • True Seller-Financing: This is a deal in which the seller owns the property outright with no mortgage. In this situation, the seller simply becomes a bank and “carries” a note and deed (mortgage) by exchanging his equity for the promissory note. The money doesn’t change hands as it’s all on paper. The seller earns some extra money on the interest. The investor gets a better rate than other lenders. All y
    Read More...


How To Market More Effectively In This "New Normal"

0
Comments

 

"Creativity is inventing, experimenting, growing, taking risks, breaking rules, making mistakes and having fun." -Mary Lou Cook

I'll be honest ... I hate the buzz phrase "new normal".

None of us want this present reality to remain the permanent reality.

That said, I use it because I think you understand what I mean -- the ground has shifted under our feet.

So, what will we be doing about this?

I should state from the outset: I'm not a marketing guru. But, I keep my eyes open and notice what is working!

How do you do that?

1) Share Yourself
Chances are, you're not the only person selling what
Read More...


3 Keys to Seller-Financing: Key #1 Part 1: What kind of deal is it?

0
Comments



When we talk seller-financing, or “creative” financing, we are really talking about a very large number of ways to structure the deal. Each kind of deal is structured differently, has different documents, and has different risks involved. That’s why the first key to seller-financing is understanding all the different options and deciding which is the best route.

There are 4 major types of deal structures (and even these can be broken down). I categorize seller-financing the way I do based on a) who owns the property, b) what documents are needed and c) the risks involved.

Here are the 4 main seller-financing deal structures:

  1. Seller Partnering
  2. Traditional Seller-Financing, or Note & Deed Seller-Financing
  3. Lease Options
  4. Contract for Deed

One common element among all types of structures is the long-term arrangement with the seller of the property. In a typical purchase and sale, the seller sells the house outright at a closing and is never heard from again. But in these deals, you will have some “connection” with the seller that extends beyond the contract or closing—possible for decades. You need to understand that all of these deals are long-term partnerships with the seller. Understanding partnering in real estate is crucial.

The first structure, Seller Partnering, is any de
Read More...


Now is the Time for an Estate Plan

0
Comments

 

“Success is not final; failure is not fatal; it is the courage to continue that counts.” – Winston Churchill

Most of us spend a considerable amount of time and energy in our lives working for our families and accumulating wealth.

But unless you're careful, much of it could go to waste.

That's why a well-crafted estate plan is so critical. It ensures that your hard-earned wealth (including intangible, non-financial assets) can pass intact to those you intend to be your beneficiaries, instead of being siphoned off to government processes and bureaucrats, or even being lost. We all dislike handing over our resources to those who don't have our best interests in mind.

A well-made estate plan guarantees that this will NEVER happen to your family.

"But Janet, what happens if I don't create an estate plan? Doesn't the judicial system have easy
Read More...