By Bill J. Gatten, Author of the run-away best seller, “No Down! No New Loan!” (i.e., THIS author’s best seller that is)
For interest’s sake, the following is a recent letter to network members who suggested that he might want to reconsider using the NEHTrust or PACTrust because it takes longer to facilitate and close than does a L/O or Wrap. Well…being the thin-skinned meek little (sweet) jelly muffin I am, I suggested that if he didn’t want it done right, I couldn’t help him; but that if he did want it done right it would take more time than most other creative financing schemes (L/O/s CFD’s, Wraps, Equity Shares, etc.).
Our motto around here is: You can pick any two (but only two) from the list below, and we'll be your Huckleberry…
1) Have it Done Properly
2) Have it Done Quickly
3) Have it Done Cheaply
So…after it was suggested that we shouldn’t take such criticisms so personally, I responded with the following:
Yup…I do take personally anything that has to do with the safety and well being of your business and/or mine. My business is ME, and my products and services are 100% ME: and [product or service comprises my very alter ego to the nth degree (to the bone, as it were). And, hey, that's not a bad thing though, because that quality within me is what keeps me and all my students and clients out of court and out of jail.
As well (I continued), I do understand your frustration Elmo, (“Elmo T. Flopenenwaller”) and I am willing to work through it with you with any constructive suggestions you might have for improvement: but in the meantime, you MUST understand that certain processes simply may not be avoided or compromised. If we allowed that, we could not hold ourselves responsible for these transactions and keep you and your clients out of serious trouble later on down the line.
The entire process comprising the Third Party Co-Beneficiary Transaction (PACTrust™ or NEHTrust™) is as follows (I have given reasonable time spreads for the number of workdays that might be (could be) involved in each of the steps or phases which comprise the documentation process...variations in mailing and shipping times and weekends and intervening holidays notwithstanding:
1. Fist, your clock starts ticking (though ours doesn’t yet) when you meet with you client and get their acceptance of your proposal – 1 – 2 DAYS
2. Next you obtain all the appropriate information and send it to us (or have us obtain it for you). 1,2 3 OR MORE DAYS has usually gone by since your original contact) – 1 DAY
3. Next, you compile and forward us Appendices 1 through 5 completed (if not completed accurately or fully, add another day or two for us to round-up all the information we need for data input) - 1-2 DAYS
4. Our data input and document formatting is completed (3 or more hours of work), whereupon the initial land trust is created and sent to legal for review and to PAC or Equity Holdings for holding once the signed original is received following COE) - this serves as notice to collections and the trustee that the transaction is in process and entering Escrow within the next 1-2 days, and for them to get their procedures in line to receive the new project when Escrow closes - 1-2 DAYS FOR INPUT AND FORWARDING
5. A Verification of Data (VOD) report is then sent to you (the investor) for review. At this point nothing is sent to the parties until you have personally approved and verified that the figures are accurate and that no information is being given to anyone that shouldn't see or have it (e.g., your acquisition price, mo payments, initial work-out arrangements, etc.). We then have to wait up to 48 hours for a return or acceptance of the VOD: though we will proceed without you if we haven't heard from you in 48 hours - 2-3 DAYS
6. When your VOD has been signed and returned to our office, or when your 48 hours are up, we then draw First Drafts. At that point if no corrections are necessary (‘happens VERY rarely), then the first drafts are individually forwarded to all parties (by regular or overnight mail, unless we are instructed differently): Allow for 2 days to delivery and 2 days for return or verification - 4-5 DAYS
7. When all drafts have been returned with corrections or acknowledged to be OK as is (happens rarely), we then either -- 1) complete and forward 2nd drafts (if corrections were made) – 2-3 DAYS; or 2) proceed to final documentation (if no corrections were required) – 1-2 DAYS. All final documents are forwarded (by overnight mails or PDF computer file) to Escrow - 1-2 DAYS
8. Any additional verbiage in the Rider Agreement or in related documents (other than boilerplate) must be run though our legal department (outside law firm) for review and approval - 1-3 days (depending upon attorney's case load)
9. Following legal review, documents are forwarded to Escrow, who then prepares the Settlement Statements and any other necessary documents simultaneously with their Escrow Instructions for shipping. 2 DAYS
10. At this point Escrow either arranges for a sit-down closing in the client’s area, or (if preferred) documents are sent Over Night for execution in counter-part for return to Escrow for final review and approval of completeness. The documents have then to be signed notarized and returned to Escrow by the US Mail, Fed Ex or UPS – WHOLE PROCESS CAN TAKE 6-7 DAYS
11. When everything is back in Escrow’s hands--if no mistakes have been made—the final title search is run and the deed is sent by messenger for recording in the local area (US Mail, Fed Ex or UPS): all monies are then distributed (checks cut) to the appropriate parties and the Escrow is closed - 1-4 DAYS (depending upon time-of-day materials are received and/or mailed out by Escrow)
12. Upon their receipt by Escrow, all original signed documents are reviewed for correctness and forwarded (Overnight Mails) to PAC or Equity Holdings and to NARS for final set-up of the Holding and Collections files. PAC then sends a Welcome Letter and remittance instructions…and voila, the transaction is finalized - (ANOTHER 1 - 2 days).
Now, Understand CLEARLY that IF at any point along the way a mistake is made and not caught soon enough, it may become necessary to redraft certain documents (e.g., if the MAV were not stated correctly in the beginning, or if payments were not calculated properly, or if a key profit center wasn’t clearly defined in the beginning…or new Rider information were to requested, etc.)
Ways to shorten the processing time or your transaction:
1) Make sure all “I’s” are crossed and all “T’s” are dotted on the original worksheets (Appendices #1 thru #5) when you send them to us
2) Verify and clear all anticipated charges through NARS (Appendix 4) first, before sending in the worksheets (Appendices #1 thru #5).
3) Assure that all start-up moneys (Retainer Fee and Good Faith Escrow Deposit) accompany your order for documentation; and assure that the Retainer Fee Agreement is properly signed and dated when we receive your package. We can not start without a signed and paid Retainer Fee Agreement
4) Provide NARS with a good and valid Legal Description of the property along with your order for documentation and facilitation (full Lot, Tract, Map Book, Page, Plat, Parcel, Assessor’s I.D. Number, etc.) at start. If we have to order it, it can add 2-3 or more days onto the turn-around time.
5) Volunteer to handle the walk-in and recording of the transfer document (deed) yourself once it has been signed and notarized by the transferor (state that you will do that in a note with your documentation order)
6) Handle all mailings by overnight or express mail
7) Be prompt in reviewing and returning VOD’s, drafts, corrections, changes or amendments by Fax. And, above all, be explicit enough in your notation (re. variations from standard documentation) that you do not have to be contacted for clarification
8) Be as brief as possible, but complete (i.e., be succinct) in all written (faxed or E-mailed) correspondence.
9) Volunteer to handle the final signing of documents yourself in your office (must have a Notary standing by) so that clients can’t dawdle and procrastinate.
10) Never be mean to anyone in the NARS documentation department (but do not send candy or flowers alone…cold hard cash and booze bribes seem to work best).
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
Thursday, December 27, 2007
Thursday, December 20, 2007
Big Fat “Lies” To Tell So You Can Have Your Way In The Creative Real Estate Business
By - Bill J. Gatten
Have you ever ridden a roller coaster? Did you ever stop to think why someone would do that just for the thrill of it, but they wouldn't want to ride in a rattling little jalopy going the same speed on a winding mountain road of the same track-width, with sheer 200 foot drops on both sides…while someone they never met did the driving?
Well, the answer is obviously that one is real and dangerous, while the other is real but not dangerous. On the roller coaster you can have the thrill of fear with a predictable safe outcome, rather than experiencing fear with death being a potential (if not probable) outcome. The squeals and screeches emanating from the roller coaster ride are usually articulated through gleeful smiles and feigned contortions of the face, followed with “Wheeeee!” or “Whoopee!” or “Yaaaaagh!” Whereas on the narrow mountain-road in the out of control jalopy, the screams are sincerely generated and followed with a loud tapering-off exclamation, possibly like: “Oh…sh………..…!”
Now take prevarication (lying) as another example…that's another fun and dangerous pursuit more popular with some than others, which invariably wreaks disastrous results (e.g., shame, a whack on the head, a poke in the eye, jail time, loss of respect, loss of friends, destroyed
future, etc.). But have you ever secretly wondered what it might be like to have a “license to lie”…tell big ol' fat bold-faced mendacities all day long…say, for just one day, in order to get what you want out of people, while not risking any damage to your good name or your Karma. Wouldn't it be great to have that privilege, but to know in advance that all the lies you told that day would actually turn out be the God's Honest Truth by the end of the day? Would that be cool, or what?
Well, let's try a little experiment. Here are some of the wildest lies imaginable that one could tell in order to acquire, control, sell or lease real estate. Let's see how many of them could be made to fly (i.e., actually become the truth at the end of the day) via the use of the
North American Realty Services Equity Holding Trust Transfer System™ (the “NEHTrust™). And remember…none of these statements have to be true.
As of right now, there's a day long moratorium on honesty…these assertions are simply what you might say—true or not—in order to get your way. Accept them as flat-out lies, and ask yourself…”What other baloney could I spew to get some houses”; or ”If this lie were in-fact told, would it get me what I want?” Also know that your objective is to acquire that property, or the control of it at any cost…but with no cost to you. Now, remember, in this role you're also flat broke and your credit stinks.
For The Landlord Whose Property You Would Like To Control
Mr. Landlord...I saw your 'For Rent' ad (sign), and if I can have the opportunity to buy the place from you in a few years…
• I'll pay you more than your asking for rent
• I'll pay all your maintenance costs during the rental agreement
• I'll cover all your property tax expense while I rent from you
• I'll cover all your management costs during our agreement
• I'll eliminate all of your negative cash flow
• I'll take 100% responsibility for the property and everything associated with it
• I'll put in a 3rd party tenant for you, and guarantee his rent and performance 100%
• I'll set our arrangement up so that the property and the title are shielded from bankruptcy, tax liens, creditor claims, probate, or marital dissolution legal actions on your part
• I'll eliminate all of your negative cash flow
• I'll put an end to all possibilities for Vacancies
• I'll completely annihilate all landlording woes and headaches for you—forever
• And, sure, you bet I have all the cash needed for the deal
For the 'For Sale By Owner’
Mr. FSBO. I saw your For Sale by Owner” ad (sign), and if you can stay on the loan a while longer, say for a couple years, and leave your equity in until then, I'll buy the place from you today for full value. And not only that, but…
• I'll pay you more for the property than your asking
• I'll even pay more for the property than it's worth
• I'll take over all payment responsibilities without even going on title
• I'll pay you the full value for your home, townhouse or condo and give you all cash
• I'll pay you full price-- 1) all cash, or 2) buy for a higher price on your terms
• I'll preserve and protect all of your existing equity
• I'll pay all maintenance costs
• I'll pay all property tax expense
• I'll buy the property from you today, but let you keep half of my appreciation and principal reduction over the next 5 years
• I'll buy your house and put you into another one with only minimal up-front cost and no credit check
• I'll buy your house and put you into another one with no down payment
• I'll buy your house and give you a letter than will allow you a 100 percent Debt-to-Income Ratio credit on you next mortgage loan
• I'll arrange it so that you can stay on the loan and give me the benefits of ownership without a Due-on-Sale Clause violation
• I'll never need to be on your title
• I'll protect your from any liens, suit or creditor judgment that could befall me
• We can close in a week (if the Escrow and documentation process doesn't slow me down)
• I'll cover all back payments; clear up and re-establish your credit with your lender (re. arrearages, back taxes and penalties)
• And, sure I have all the cash needed for the deal
Bold-Faced Lies You Can Tell A Tenant/Buyer To Manipulate Him/Her As Well
Dear Mr. & Mrs. Tenant/Buyer…thanks for calling. Through me and my special know-how and broad range of brilliant expertise…
• You can lease the property with a full tax write-off
• You can buy the property without a credit application
• You can buy the property without a new bank loan
• You can buy the property without a down payment
• You can put your closing costs on a credit card
• You can be just a renter, but still participate in it's appreciation, mortgage loan principal reduction and tax write-off
• You can own the property without great or even "good" credit
• You can own the property, versus renting, and pay less than you would to rent it
• You can enjoys all the benefits of homeownership without further scrimping and saving
• You can live virtually rent-free, given reasonable appreciation over time
• You can buy now with all benefits of homeownership now, but finance later when/if you feel like it
• You can have 100% of the benefits of Fee Simple real estate ownership, including tax write-off, and never have to be on title (thereby protecting your home from the threat of litigation of all types)
• And, nope, you don’t need a lot of cash for the deal
OK…now, the day is done and the jig's up (a phrase, the origin of which I wonder about a lot)! All your big fat lies have to suddenly become truths now. Well, if you were planning on utilizing the Equity Holding Trust System (NEHTrust or NEHTrust)…then everything said above is in-fact all true…plain and simple!
Go back and check it out: every one of these promises is fulfilled through the NARS Equity Holding Trust Transfer System™ every day.
I'd dare anyone to try to convert ALL the above statements to truths when using any 'other' creative financing vehicle: lease, option, purchase option, wrap, contract for deed, equity share, subject-to, short-sale, etc..
You might want to give this one a lot of thought folks.
Bill
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
Have you ever ridden a roller coaster? Did you ever stop to think why someone would do that just for the thrill of it, but they wouldn't want to ride in a rattling little jalopy going the same speed on a winding mountain road of the same track-width, with sheer 200 foot drops on both sides…while someone they never met did the driving?
Well, the answer is obviously that one is real and dangerous, while the other is real but not dangerous. On the roller coaster you can have the thrill of fear with a predictable safe outcome, rather than experiencing fear with death being a potential (if not probable) outcome. The squeals and screeches emanating from the roller coaster ride are usually articulated through gleeful smiles and feigned contortions of the face, followed with “Wheeeee!” or “Whoopee!” or “Yaaaaagh!” Whereas on the narrow mountain-road in the out of control jalopy, the screams are sincerely generated and followed with a loud tapering-off exclamation, possibly like: “Oh…sh………..…!”
Now take prevarication (lying) as another example…that's another fun and dangerous pursuit more popular with some than others, which invariably wreaks disastrous results (e.g., shame, a whack on the head, a poke in the eye, jail time, loss of respect, loss of friends, destroyed
future, etc.). But have you ever secretly wondered what it might be like to have a “license to lie”…tell big ol' fat bold-faced mendacities all day long…say, for just one day, in order to get what you want out of people, while not risking any damage to your good name or your Karma. Wouldn't it be great to have that privilege, but to know in advance that all the lies you told that day would actually turn out be the God's Honest Truth by the end of the day? Would that be cool, or what?
Well, let's try a little experiment. Here are some of the wildest lies imaginable that one could tell in order to acquire, control, sell or lease real estate. Let's see how many of them could be made to fly (i.e., actually become the truth at the end of the day) via the use of the
North American Realty Services Equity Holding Trust Transfer System™ (the “NEHTrust™). And remember…none of these statements have to be true.
As of right now, there's a day long moratorium on honesty…these assertions are simply what you might say—true or not—in order to get your way. Accept them as flat-out lies, and ask yourself…”What other baloney could I spew to get some houses”; or ”If this lie were in-fact told, would it get me what I want?” Also know that your objective is to acquire that property, or the control of it at any cost…but with no cost to you. Now, remember, in this role you're also flat broke and your credit stinks.
For The Landlord Whose Property You Would Like To Control
Mr. Landlord...I saw your 'For Rent' ad (sign), and if I can have the opportunity to buy the place from you in a few years…
• I'll pay you more than your asking for rent
• I'll pay all your maintenance costs during the rental agreement
• I'll cover all your property tax expense while I rent from you
• I'll cover all your management costs during our agreement
• I'll eliminate all of your negative cash flow
• I'll take 100% responsibility for the property and everything associated with it
• I'll put in a 3rd party tenant for you, and guarantee his rent and performance 100%
• I'll set our arrangement up so that the property and the title are shielded from bankruptcy, tax liens, creditor claims, probate, or marital dissolution legal actions on your part
• I'll eliminate all of your negative cash flow
• I'll put an end to all possibilities for Vacancies
• I'll completely annihilate all landlording woes and headaches for you—forever
• And, sure, you bet I have all the cash needed for the deal
For the 'For Sale By Owner’
Mr. FSBO. I saw your For Sale by Owner” ad (sign), and if you can stay on the loan a while longer, say for a couple years, and leave your equity in until then, I'll buy the place from you today for full value. And not only that, but…
• I'll pay you more for the property than your asking
• I'll even pay more for the property than it's worth
• I'll take over all payment responsibilities without even going on title
• I'll pay you the full value for your home, townhouse or condo and give you all cash
• I'll pay you full price-- 1) all cash, or 2) buy for a higher price on your terms
• I'll preserve and protect all of your existing equity
• I'll pay all maintenance costs
• I'll pay all property tax expense
• I'll buy the property from you today, but let you keep half of my appreciation and principal reduction over the next 5 years
• I'll buy your house and put you into another one with only minimal up-front cost and no credit check
• I'll buy your house and put you into another one with no down payment
• I'll buy your house and give you a letter than will allow you a 100 percent Debt-to-Income Ratio credit on you next mortgage loan
• I'll arrange it so that you can stay on the loan and give me the benefits of ownership without a Due-on-Sale Clause violation
• I'll never need to be on your title
• I'll protect your from any liens, suit or creditor judgment that could befall me
• We can close in a week (if the Escrow and documentation process doesn't slow me down)
• I'll cover all back payments; clear up and re-establish your credit with your lender (re. arrearages, back taxes and penalties)
• And, sure I have all the cash needed for the deal
Bold-Faced Lies You Can Tell A Tenant/Buyer To Manipulate Him/Her As Well
Dear Mr. & Mrs. Tenant/Buyer…thanks for calling. Through me and my special know-how and broad range of brilliant expertise…
• You can lease the property with a full tax write-off
• You can buy the property without a credit application
• You can buy the property without a new bank loan
• You can buy the property without a down payment
• You can put your closing costs on a credit card
• You can be just a renter, but still participate in it's appreciation, mortgage loan principal reduction and tax write-off
• You can own the property without great or even "good" credit
• You can own the property, versus renting, and pay less than you would to rent it
• You can enjoys all the benefits of homeownership without further scrimping and saving
• You can live virtually rent-free, given reasonable appreciation over time
• You can buy now with all benefits of homeownership now, but finance later when/if you feel like it
• You can have 100% of the benefits of Fee Simple real estate ownership, including tax write-off, and never have to be on title (thereby protecting your home from the threat of litigation of all types)
• And, nope, you don’t need a lot of cash for the deal
OK…now, the day is done and the jig's up (a phrase, the origin of which I wonder about a lot)! All your big fat lies have to suddenly become truths now. Well, if you were planning on utilizing the Equity Holding Trust System (NEHTrust or NEHTrust)…then everything said above is in-fact all true…plain and simple!
Go back and check it out: every one of these promises is fulfilled through the NARS Equity Holding Trust Transfer System™ every day.
I'd dare anyone to try to convert ALL the above statements to truths when using any 'other' creative financing vehicle: lease, option, purchase option, wrap, contract for deed, equity share, subject-to, short-sale, etc..
You might want to give this one a lot of thought folks.
Bill
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
Thursday, December 13, 2007
Bend with the Trend - The PACTrust™ to the Rescue
Bill J. Gatten
A tough question posed recently by a would-be investor in the East: "Where I live there hasn't been any appreciation in real estate for several years now. If I truly want to pursue being a real estate investor, should I move elsewhere, or wait for the market to turn?
To some this might seem a reasonable question; however, my response was: "Stay put! Empowering such bogus rationale is what keeps the millionaire ranks as low in number as they are."
The key to creative real estate investing is to have a plan that adapts quickly to ANY market…it doesn't matter which direction market dynamics flow, the force is still there: water flows east with the same strength as when it runs west. In a "down" market, there are few willing buyers; but obtainable properties abound, and they're all for sale at the best prices. In an "Up" market there may be fewer "easily" obtainable properties: but there are more buyers, and they'll do just about anything you want in order to get in on the action.
The fact is that market dynamics in creative real estate have always required "thinking outside the box." The true CRE entrepreneur lives with, copes with, and makes his/her living with that fact. Think about it…a fisherman who goes fishing armed only with catfish bait, most probably won't catch trout. All he can expect to bring home is catfish…if they're biting that day. If the catfish aren't hungry the fisherman will be. On the other hand, the serious and well-studied angler, carries a "full" tackle box, so that when the catfish aren't biting, he can hook up for trout, bass, walleye…or a sperm whale, if he wants to…at a moment's notice.
Understand that when real estate appreciation trends are up, a seller's market prevails: sellers set high prices and hang in there till they get them. On the other hand, when appreciation is down or stagnant, that's a buyer's market: fewer properties are available and sales are sparse. It's during these downtimes that most folks are counting pennies and digging in for a long winter, than looking for a new home. In other words, a Seller's market pushes prices and circumstances toward the seller's benefit; whereas a Buyer's Market pulls everything down to suit the buyer's needs. But none of this should be a concern of the well-studied CRE investor. In an up market you sell, in a down market you buy and hold.
During our last major downturn here in California, a common cry was: "Help! Houses are a dime a dozen, but I can't find any buyers." But now that the market has turned, the current entreaty is, "Help! Buyers are everywhere, but I can't find any houses!" And (for the most part) whom do you suppose these two disparate plaintive cries come from? Right! Exactly the same people: those who choose to blame their own shortcomings on market condition, having failed to plan to "bend with the trend (as it were)."
To excel in any market, we need education…and tools that work in all circumstances. In a seller's market, we must be able to attract and serve buyers who would love to climb on the home-buying bandwagon, but who haven't yet saved up the cash or garnered the credit to do so. In a buyer's market, that knowledge and those same tools must attract sellers of no, low, or negative equity properties; fixer-uppers; distress sales; NOD filings; and "hard-to-moves"…while simultaneously wedging us, the investor, into the middle.
This is where the NARS PACTrust™ comes in. The PACTrust™ is a third-party title-holding land trust system, which works virtual wonders in any market (see advertising here in CRE). With this remarkable tool, the existing loan stays in place without a due-on-sale compromise; full income tax write-off is transferred to the tenant (in exchange for much higher payments); the property is shielded from creditor judgements, tax liens, law suits, bankruptcy action and marital disputes. Think of it…no down payment, no bank qualifying; no payments; no expenses. This is creative real estate investing!
Imagine telling a seller who is reticent about "carrying," that he needn't transfer the title to you until you can sell or refinance in the future. Or that he needn't worry about liens, suits, judgements or personal problems ever compromising the property's title while he remains on the loan (nor do you need to worry about such occurrences on his behalf).
The PACTrust™ gives your tenant full tax write-off in exchange for paying (your) full mortgage, property tax and insurance. For a share in future appreciation potential, they'll gladly paying 100% of the (your) maintenance, repair and management costs. In other words:
"Mr. Buyer, if you can afford the payments (which include a few hundred positive cash-flow for me) and a few thousand dollars in closing costs (most of which goes into my pocket)… I'll give you the property. The only thing I want out of it all, is to be assured that you'll refinance in a few years--at which time, if there's been any appreciation, I'd like to split it with you."
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
A tough question posed recently by a would-be investor in the East: "Where I live there hasn't been any appreciation in real estate for several years now. If I truly want to pursue being a real estate investor, should I move elsewhere, or wait for the market to turn?
To some this might seem a reasonable question; however, my response was: "Stay put! Empowering such bogus rationale is what keeps the millionaire ranks as low in number as they are."
The key to creative real estate investing is to have a plan that adapts quickly to ANY market…it doesn't matter which direction market dynamics flow, the force is still there: water flows east with the same strength as when it runs west. In a "down" market, there are few willing buyers; but obtainable properties abound, and they're all for sale at the best prices. In an "Up" market there may be fewer "easily" obtainable properties: but there are more buyers, and they'll do just about anything you want in order to get in on the action.
The fact is that market dynamics in creative real estate have always required "thinking outside the box." The true CRE entrepreneur lives with, copes with, and makes his/her living with that fact. Think about it…a fisherman who goes fishing armed only with catfish bait, most probably won't catch trout. All he can expect to bring home is catfish…if they're biting that day. If the catfish aren't hungry the fisherman will be. On the other hand, the serious and well-studied angler, carries a "full" tackle box, so that when the catfish aren't biting, he can hook up for trout, bass, walleye…or a sperm whale, if he wants to…at a moment's notice.
Understand that when real estate appreciation trends are up, a seller's market prevails: sellers set high prices and hang in there till they get them. On the other hand, when appreciation is down or stagnant, that's a buyer's market: fewer properties are available and sales are sparse. It's during these downtimes that most folks are counting pennies and digging in for a long winter, than looking for a new home. In other words, a Seller's market pushes prices and circumstances toward the seller's benefit; whereas a Buyer's Market pulls everything down to suit the buyer's needs. But none of this should be a concern of the well-studied CRE investor. In an up market you sell, in a down market you buy and hold.
During our last major downturn here in California, a common cry was: "Help! Houses are a dime a dozen, but I can't find any buyers." But now that the market has turned, the current entreaty is, "Help! Buyers are everywhere, but I can't find any houses!" And (for the most part) whom do you suppose these two disparate plaintive cries come from? Right! Exactly the same people: those who choose to blame their own shortcomings on market condition, having failed to plan to "bend with the trend (as it were)."
To excel in any market, we need education…and tools that work in all circumstances. In a seller's market, we must be able to attract and serve buyers who would love to climb on the home-buying bandwagon, but who haven't yet saved up the cash or garnered the credit to do so. In a buyer's market, that knowledge and those same tools must attract sellers of no, low, or negative equity properties; fixer-uppers; distress sales; NOD filings; and "hard-to-moves"…while simultaneously wedging us, the investor, into the middle.
This is where the NARS PACTrust™ comes in. The PACTrust™ is a third-party title-holding land trust system, which works virtual wonders in any market (see advertising here in CRE). With this remarkable tool, the existing loan stays in place without a due-on-sale compromise; full income tax write-off is transferred to the tenant (in exchange for much higher payments); the property is shielded from creditor judgements, tax liens, law suits, bankruptcy action and marital disputes. Think of it…no down payment, no bank qualifying; no payments; no expenses. This is creative real estate investing!
Imagine telling a seller who is reticent about "carrying," that he needn't transfer the title to you until you can sell or refinance in the future. Or that he needn't worry about liens, suits, judgements or personal problems ever compromising the property's title while he remains on the loan (nor do you need to worry about such occurrences on his behalf).
The PACTrust™ gives your tenant full tax write-off in exchange for paying (your) full mortgage, property tax and insurance. For a share in future appreciation potential, they'll gladly paying 100% of the (your) maintenance, repair and management costs. In other words:
"Mr. Buyer, if you can afford the payments (which include a few hundred positive cash-flow for me) and a few thousand dollars in closing costs (most of which goes into my pocket)… I'll give you the property. The only thing I want out of it all, is to be assured that you'll refinance in a few years--at which time, if there's been any appreciation, I'd like to split it with you."
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
Thursday, December 6, 2007
THE QUESTION:
Because I think it's in the millions, I haven’t called on this ad. It’s been in the newspaper for the last several weeks,
What would you do Bill? Would you call anyway? And if so, how do you deal with that expensive a property?
The ad reads: "Fantastic ocean front property in Del Mar, Ca. 2 owners in 63 years. Illness forces sale. Call now!"
Regards,
Julie
THE GATTEN RESPONSE:
Julie, since when is “what you ‘think," prior to a prospecting call, of the slightest importance? And what if the property IS in "the millions?" Do you honestly have an aversion to owning a multi-million dollar property with no loan, no bank qualifying, no cost to you, no payments by you and no risk?
Immediately call and ask the poor sick seller if he or she would consider--for a full price offer--staying on the existing loan for a while, during which time you and your "partner (your resident beneficiary)" will take over all costs and on-going expenses of payments, management, repairs, upkeep, property tax and insurance...in exchange for being able to retire the loan in, say, 3 to 5 (or ?) years, at the end of which time you will repay the sellers 100% of their currently existing equity. This gets them full price, builds a net egg and defers capital gains taxes (which could be in the hundreds of thousands of dollars if your value assumption is correct).
Sandy, I really need to tell you the following story (I think you’ll see why):
Several years ago a woman was given a brand new free and clear Porsche 911 in a divorce settlement, but a caveat in the settlement was that she was allowed to drive it only for six months. At the end of her allotted time, the six months, she was ordered by the court to sell the car for any amount she wanted to, but she had to turn over 100% of the proceeds to her ex-husband, for whom she apparently harbored some disdain (‘been there, ‘done that…’know the feeling. Even all these year later I am still referred to as what sounds like a “bass pole”…whatever that means…I don’t even fish).
After the woman’s allotted six months were up, she placed an ad in the San Francisco Chronicle that read: "For Sale. One year-old Porsche Targa 911. $1.00. Call now. Won't last."
Sandy, do you know that it took two days before someone finally called on that ad and bought the car for a dollar (about $50,000 worth of car)? At least a half million people saw the ad and didn't call because of having formulated a limiting falsehood in their heads that started out: "...because I 'think'..."
Don't EVER do that again! I know where you live. Don’t MAKE me come over there!
Bill
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
Because I think it's in the millions, I haven’t called on this ad. It’s been in the newspaper for the last several weeks,
What would you do Bill? Would you call anyway? And if so, how do you deal with that expensive a property?
The ad reads: "Fantastic ocean front property in Del Mar, Ca. 2 owners in 63 years. Illness forces sale. Call now!"
Regards,
Julie
THE GATTEN RESPONSE:
Julie, since when is “what you ‘think," prior to a prospecting call, of the slightest importance? And what if the property IS in "the millions?" Do you honestly have an aversion to owning a multi-million dollar property with no loan, no bank qualifying, no cost to you, no payments by you and no risk?
Immediately call and ask the poor sick seller if he or she would consider--for a full price offer--staying on the existing loan for a while, during which time you and your "partner (your resident beneficiary)" will take over all costs and on-going expenses of payments, management, repairs, upkeep, property tax and insurance...in exchange for being able to retire the loan in, say, 3 to 5 (or ?) years, at the end of which time you will repay the sellers 100% of their currently existing equity. This gets them full price, builds a net egg and defers capital gains taxes (which could be in the hundreds of thousands of dollars if your value assumption is correct).
Sandy, I really need to tell you the following story (I think you’ll see why):
Several years ago a woman was given a brand new free and clear Porsche 911 in a divorce settlement, but a caveat in the settlement was that she was allowed to drive it only for six months. At the end of her allotted time, the six months, she was ordered by the court to sell the car for any amount she wanted to, but she had to turn over 100% of the proceeds to her ex-husband, for whom she apparently harbored some disdain (‘been there, ‘done that…’know the feeling. Even all these year later I am still referred to as what sounds like a “bass pole”…whatever that means…I don’t even fish).
After the woman’s allotted six months were up, she placed an ad in the San Francisco Chronicle that read: "For Sale. One year-old Porsche Targa 911. $1.00. Call now. Won't last."
Sandy, do you know that it took two days before someone finally called on that ad and bought the car for a dollar (about $50,000 worth of car)? At least a half million people saw the ad and didn't call because of having formulated a limiting falsehood in their heads that started out: "...because I 'think'..."
Don't EVER do that again! I know where you live. Don’t MAKE me come over there!
Bill
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
Thursday, November 29, 2007
Foreclosure Bailouts Revisited
By Bill J. Gatten
8/17/2007
In answer to a recent question by a Network Member regarding percentages of splits with potential seller-prospect in Foreclosure, I though others might benefit from my answer. It went like this:
Dear Bob (Not his real name for anonymity’s sake…his real name is Earl Halderson),
When working foreclosure bailouts as an investor in any state, when you plan to leave the borrower in the property you must be extremely careful to deal only at Fair Market Value, avoid creating a debtor’s lien on the property, and make your deal fit well within the increasingly more stringent laws concerning foreclosure consultants and specialists. Be especially careful with regard to regulation concerning Usury, Fraudulent Conveyances, illicit conversion and Bankruptcy Fraud. The Civil Code Regs in California are the tightest of any state and they provide a good guideline to follow in order to stay out of trouble (in any state) when dealing in foreclosures (See Ca. CC Sec. 1695 and 2945 http://www.leginfo.ca.gov/calaw.html).
Most importantly though, be aware that the biggest problem with “foreclosure bailouts” across the board is in-fact a weird medical condition known as “Pernicious Post Recovery Amnesia.” It affects most of the population and can wipe investors out like flies. The symptoms of PPRA tend to set-in when Mr. and Mrs. Eternally Grateful get back on their feet financially and try to sell, or borrow against the property and find you in the way. It’s then that their memory fades and they determine that even though you were once their veritable “Angel Ascended from Heaven,” you are now a warty, spittle-dripping, greedy old troll, bent solely on capitalizing on that momentary lapse of consciousness in the foggy distant past. And, even worse…when the situation is brought before a judge, it’s amazing how contracts--no matter how carefully drafted—suddenly are found to mean nothing anymore. “After all” Judge Jones determines, “these poor folks were down and out and not in their right mind: you were rich and greedy…you lose! Next case! What? You saved their home for them only ten minutes before they lost it at the auction? Oh that’s nice. You still lose…and shut up or you’ll go to jail! Next case! Wait! You owe these innocent victims quadruple damages! Pay up…AND go to jail! And I hate you! Next case…”
So how does a NEHTrust™ (PACTrust™) help in these situations?
Well, the idea is for the owner in default to get out of default first (with your help), and then make sure the property is not sold or transferred beyond the owner’s own inter vivos (living) trust. The owner merely vests its ownership (legal and equitable) with a trustee for a land trust, and then leases the property back from the trust…with you, his new best buddy, as a silent co-beneficiary. You now have a vested interest in the trust and a silent agreement to share in the proceeds of the--now “income”--property when it is ultimately sold or refinanced at a specified time in the future.
With this system, you offer the owner in distress full Fair Market Value with the right to challenge your assessment of value at any time (with an appraisal at his expense). You also make a provision in your contract that: should a subsequent default occur, you would buy out the defaulting party’s equity at Fair Market Value...again determined by you, but wholly challengeable by the defaulting party by means of a an MAI (Member American Appraisal Institute) appraisal…following payment of a $2,000 Default Fee, and the cost of the appraisal. Should the defaulting beneficiary prove that more money is owed than was offered by the investor, he is paid the full amount (less late payments, late fees, charges, penalties, interest and unpaid insurance and taxes) via an UN-secured promissory note. Therefore one would offer the loan amount plus, say, a dollar. Even though the recourse is there, once the defaulting party is out of the property its interest in causing problems fades fast…unless he or she really IS being cheated out of what’s rightfully theirs: then, in such case, the recourse process serves him quite well.
Be certain as well, before you get involved with a bailout, that the loan/s is/are no longer in default, and that no recorded notices or clouds on title relative to the default are extant (i.e., open a silent Escrow to hold all executed documents, check title and disburse a cashier’s check to the lender following receipt of its Reinstatement Quote). Though not mandatory, we think it wise that, at least in the beginning, the borrower’s continuing payments are not more than what he has been paying historically: the NEHTrust payments (triple net lease obligation) might, however, be scheduled for an increase in six months or so, and perhaps for periodic increases after that.
So, how about the structure relative to being fair to all concerned, and to not being seen as taking advantage of anyone.
Here let me suggest going in 50:50 with the defaulting borrower. In other words, the borrower is left with 100% of its existing equity (that which still exists after we've reduced the MAV to an amount equivalent to the low-side of FMV, less anticipated costs of closing, and remarketing. The investment that was made to cure the default is then added into the Investor Beneficiary Refundable Contribution. That is to say that the amount to be refunded to the investor at termination prior to any other distributions of proceeds, can be that amount actually expended, plus maybe ten or twelve percent per-year of the agreement (I.e., $5,000 spent up front on a 5 year NEHTrust(tm)…the Refundable Contribution would be stated as $7,500 to $8,000 and returned to the investor prior to participation in all the other profit centers and division of net proceeds).
Once the trust is established, the formerly defaulted borrower of record leases the property from the trustee and becomes the Resident (lessee) Co-beneficiary, thereupon being under penalty of a simple eviction in the event of further missed payments or other default. The eviction is by the trustee, as directed by the co-beneficiaries…one of whom is the defaulting party himself…kind of hard to argue out of that one (“Judge, I’m kicking myself out, and it’s just not fair!”).
The profit centers for the investor in the above scenario are:
1) Positive cash flow (but be sure you don't impose a positive CF for, say, six months; and even then don't increase the aggregate monthly rental by more than perhaps 10% (not a “rule,” just a safety measure);
2) Half of the equity extant at start above your adjusted MAV
3) Half of the mortgage principal reduction;
4) Half of any future appreciation that is over and above the MAV at inception;
5) That amount that was added to the initial investment to create the Investor Beneficiary Contribution (the part that says “Thanks for saving us from foreclosure”)
What if a borrower in default wishes only to get out from under the burden and just walk away?
Then you are free to acquire the property via the co-beneficiary land trust transfer system (or any other system) for whatever you can. If you need to offer an incentive to someone who may have considerable equity, perhaps you could offer to leave at least half of his or her equity intact to be repaid when the trust terminates and the property is disposed of at termination. In this regard, however, even if you had to leave the owner with, say, 75%, or even ALLl the equity, it would likely still be a good deal…IF most or some of the above profit centers are still there and you can get a seven to ten year (or so) term.
Is this a cool way to make a living, or what?
Bill
*If you don’t have our Quick Start Success Pack or don’t belong to the NARS National Network already…it might be a real wise decision to become a part of what we do. This is only a tiny peek at the whole picture.
Give us a call at 1 800 207 4273 or go to our website at www.landtrust.net.
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
8/17/2007
In answer to a recent question by a Network Member regarding percentages of splits with potential seller-prospect in Foreclosure, I though others might benefit from my answer. It went like this:
Dear Bob (Not his real name for anonymity’s sake…his real name is Earl Halderson),
When working foreclosure bailouts as an investor in any state, when you plan to leave the borrower in the property you must be extremely careful to deal only at Fair Market Value, avoid creating a debtor’s lien on the property, and make your deal fit well within the increasingly more stringent laws concerning foreclosure consultants and specialists. Be especially careful with regard to regulation concerning Usury, Fraudulent Conveyances, illicit conversion and Bankruptcy Fraud. The Civil Code Regs in California are the tightest of any state and they provide a good guideline to follow in order to stay out of trouble (in any state) when dealing in foreclosures (See Ca. CC Sec. 1695 and 2945 http://www.leginfo.ca.gov/calaw.html).
Most importantly though, be aware that the biggest problem with “foreclosure bailouts” across the board is in-fact a weird medical condition known as “Pernicious Post Recovery Amnesia.” It affects most of the population and can wipe investors out like flies. The symptoms of PPRA tend to set-in when Mr. and Mrs. Eternally Grateful get back on their feet financially and try to sell, or borrow against the property and find you in the way. It’s then that their memory fades and they determine that even though you were once their veritable “Angel Ascended from Heaven,” you are now a warty, spittle-dripping, greedy old troll, bent solely on capitalizing on that momentary lapse of consciousness in the foggy distant past. And, even worse…when the situation is brought before a judge, it’s amazing how contracts--no matter how carefully drafted—suddenly are found to mean nothing anymore. “After all” Judge Jones determines, “these poor folks were down and out and not in their right mind: you were rich and greedy…you lose! Next case! What? You saved their home for them only ten minutes before they lost it at the auction? Oh that’s nice. You still lose…and shut up or you’ll go to jail! Next case! Wait! You owe these innocent victims quadruple damages! Pay up…AND go to jail! And I hate you! Next case…”
So how does a NEHTrust™ (PACTrust™) help in these situations?
Well, the idea is for the owner in default to get out of default first (with your help), and then make sure the property is not sold or transferred beyond the owner’s own inter vivos (living) trust. The owner merely vests its ownership (legal and equitable) with a trustee for a land trust, and then leases the property back from the trust…with you, his new best buddy, as a silent co-beneficiary. You now have a vested interest in the trust and a silent agreement to share in the proceeds of the--now “income”--property when it is ultimately sold or refinanced at a specified time in the future.
With this system, you offer the owner in distress full Fair Market Value with the right to challenge your assessment of value at any time (with an appraisal at his expense). You also make a provision in your contract that: should a subsequent default occur, you would buy out the defaulting party’s equity at Fair Market Value...again determined by you, but wholly challengeable by the defaulting party by means of a an MAI (Member American Appraisal Institute) appraisal…following payment of a $2,000 Default Fee, and the cost of the appraisal. Should the defaulting beneficiary prove that more money is owed than was offered by the investor, he is paid the full amount (less late payments, late fees, charges, penalties, interest and unpaid insurance and taxes) via an UN-secured promissory note. Therefore one would offer the loan amount plus, say, a dollar. Even though the recourse is there, once the defaulting party is out of the property its interest in causing problems fades fast…unless he or she really IS being cheated out of what’s rightfully theirs: then, in such case, the recourse process serves him quite well.
Be certain as well, before you get involved with a bailout, that the loan/s is/are no longer in default, and that no recorded notices or clouds on title relative to the default are extant (i.e., open a silent Escrow to hold all executed documents, check title and disburse a cashier’s check to the lender following receipt of its Reinstatement Quote). Though not mandatory, we think it wise that, at least in the beginning, the borrower’s continuing payments are not more than what he has been paying historically: the NEHTrust payments (triple net lease obligation) might, however, be scheduled for an increase in six months or so, and perhaps for periodic increases after that.
So, how about the structure relative to being fair to all concerned, and to not being seen as taking advantage of anyone.
Here let me suggest going in 50:50 with the defaulting borrower. In other words, the borrower is left with 100% of its existing equity (that which still exists after we've reduced the MAV to an amount equivalent to the low-side of FMV, less anticipated costs of closing, and remarketing. The investment that was made to cure the default is then added into the Investor Beneficiary Refundable Contribution. That is to say that the amount to be refunded to the investor at termination prior to any other distributions of proceeds, can be that amount actually expended, plus maybe ten or twelve percent per-year of the agreement (I.e., $5,000 spent up front on a 5 year NEHTrust(tm)…the Refundable Contribution would be stated as $7,500 to $8,000 and returned to the investor prior to participation in all the other profit centers and division of net proceeds).
Once the trust is established, the formerly defaulted borrower of record leases the property from the trustee and becomes the Resident (lessee) Co-beneficiary, thereupon being under penalty of a simple eviction in the event of further missed payments or other default. The eviction is by the trustee, as directed by the co-beneficiaries…one of whom is the defaulting party himself…kind of hard to argue out of that one (“Judge, I’m kicking myself out, and it’s just not fair!”).
The profit centers for the investor in the above scenario are:
1) Positive cash flow (but be sure you don't impose a positive CF for, say, six months; and even then don't increase the aggregate monthly rental by more than perhaps 10% (not a “rule,” just a safety measure);
2) Half of the equity extant at start above your adjusted MAV
3) Half of the mortgage principal reduction;
4) Half of any future appreciation that is over and above the MAV at inception;
5) That amount that was added to the initial investment to create the Investor Beneficiary Contribution (the part that says “Thanks for saving us from foreclosure”)
What if a borrower in default wishes only to get out from under the burden and just walk away?
Then you are free to acquire the property via the co-beneficiary land trust transfer system (or any other system) for whatever you can. If you need to offer an incentive to someone who may have considerable equity, perhaps you could offer to leave at least half of his or her equity intact to be repaid when the trust terminates and the property is disposed of at termination. In this regard, however, even if you had to leave the owner with, say, 75%, or even ALLl the equity, it would likely still be a good deal…IF most or some of the above profit centers are still there and you can get a seven to ten year (or so) term.
Is this a cool way to make a living, or what?
Bill
*If you don’t have our Quick Start Success Pack or don’t belong to the NARS National Network already…it might be a real wise decision to become a part of what we do. This is only a tiny peek at the whole picture.
Give us a call at 1 800 207 4273 or go to our website at www.landtrust.net.
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
Thursday, November 22, 2007
BAD CREDIT, NO CASH -- END OF THE WORLD? NO WAY!
By Bill J. Gatten
Can you buy real estate and get wealthy despite having ‘No,’ ‘Marginal’ or even ‘Bad,’ Credit? How about compounding the problem by having no cash either?
The answer is a resounding “Yes”: but only if you have lots of other stuff: drive, determination, sincerity, maturity some modicum of sales ability and a burning desire to achieve. If you are missing any of these qualities, you chances of success are minimized proportionately with each missing element.
Without disrespect to those who have sacrificed, scrimped, and saved to maintain perfect credit, I'd like to say that I couldn’t express the degree of respect I have for them and their achievement (and no small degree of jealousy). However, I have never been blessed with a lot of money and perfect credit at the same time. Throughout the many phases of my financial development, I have had both…just not simultaneously. Nevertheless, even without an abundance of cash and/or credit, I have managed to acquire a few million dollars worth real estate, and absolutely none of it has been acquired with, or because of, credit (or cash). And now that both attributes are greatly improved, I still prefer to acquire property without a cent out of pocket and without a mortgage loan and with any monthly payments (they’re FREE that way).
For anyone who has damaged his or her credit, reestablishing it is necessary, to be sure. However, don't forget that one's not "using" their credit (the American Stoic approach) is far worse than one's not having any…and many of tend to do alright without it.
In my own case, I filed a business BK in 1989, and gave away and spent everything I had ever owned in my life (everything) in order to pay off my creditors. It took a while, but I did it, and I didn't suffer much in the process. However, within a month of having gone through the BK ordeal, I acquired a beautiful $520,000 home without a penny out of pocket and without the tiniest need for credit. I even gave the seller, a Mr. Gil Burrell of Granada Hills, California; now of S.D. Ca. (for the benefit of J.T. Reed if he’s checking) a full credit report (it was 4 feet long and horrible). I also gave Mr. Burrell all the data re. my bankruptcy. He didn’t care…I got the property solely based upon my sales ability, my demeanor, a plausible explanation for the BK and bad credit; and because of the sincerity that I portrayed and my offer to provide my plan for correcting the problems. Credit was NOT an issue.
Since that time we have continued to do reasonably well in acquiring a modest amount of other real estate by the same means...and wholly without credit, and with very little if any cash (usually none).
Without ANY apparent “credit worthiness,” I have managed to acquire credit cards (secured and unsecured), and to financed several automobiles. Over the years, I have felt little pain because of the absence of credit; and as a matter of fact, I'm sure my credit restrictions following the BK allowed me to avoid some temptations and maybe some mistakes I might have had to endure otherwise..
The point? One should do everything in his or her power to get their credit back in order: but in the meantime, never let its absence negatively interfere with, or affect, your investment pursuits. You don't need cash OR credit to be a successful real estate investor…assuming you know how, and assuming you have a good source for information, education and encouragement.
Following--in the order of their overall importance--are the 12 tools you need in the No Down, No New Loan, real estate investing business.
1. Dissatisfaction with the status quo
2. An honest need for increased abundance
3. A burning desire to achieve
4. Tenacity: the ability to stick-to-it, no matter what
5. Resiliency: the ability to shrug off a failure and move on with undiminished zeal
6. Selling skills: Acquired and/or natural sales ability (the ability to listen and think at the same time, while not talking until its necessary)
7. A professional and business-like demeanor
8. A good business background or sense (…or a partner with same)
9. A solid understanding of Real Estate and Real Estate Finance
10. Good Credit (or not)
11. Plenty of available cash (or not)
Without at least the first five in the above list, you are destined for failure in the business.
With #1 through #5, along with any one of #6 through #12, your chances of success are almost assured.
With all of #1 through #9, you’re success is unavoidable.
With all of #1 through #10, abundant wealth is already yours and you need only reach out for it. You are truly on top of the world.
With all twelve…you OWN the world and everything in it.
Bill Gatten
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
Can you buy real estate and get wealthy despite having ‘No,’ ‘Marginal’ or even ‘Bad,’ Credit? How about compounding the problem by having no cash either?
The answer is a resounding “Yes”: but only if you have lots of other stuff: drive, determination, sincerity, maturity some modicum of sales ability and a burning desire to achieve. If you are missing any of these qualities, you chances of success are minimized proportionately with each missing element.
Without disrespect to those who have sacrificed, scrimped, and saved to maintain perfect credit, I'd like to say that I couldn’t express the degree of respect I have for them and their achievement (and no small degree of jealousy). However, I have never been blessed with a lot of money and perfect credit at the same time. Throughout the many phases of my financial development, I have had both…just not simultaneously. Nevertheless, even without an abundance of cash and/or credit, I have managed to acquire a few million dollars worth real estate, and absolutely none of it has been acquired with, or because of, credit (or cash). And now that both attributes are greatly improved, I still prefer to acquire property without a cent out of pocket and without a mortgage loan and with any monthly payments (they’re FREE that way).
For anyone who has damaged his or her credit, reestablishing it is necessary, to be sure. However, don't forget that one's not "using" their credit (the American Stoic approach) is far worse than one's not having any…and many of tend to do alright without it.
In my own case, I filed a business BK in 1989, and gave away and spent everything I had ever owned in my life (everything) in order to pay off my creditors. It took a while, but I did it, and I didn't suffer much in the process. However, within a month of having gone through the BK ordeal, I acquired a beautiful $520,000 home without a penny out of pocket and without the tiniest need for credit. I even gave the seller, a Mr. Gil Burrell of Granada Hills, California; now of S.D. Ca. (for the benefit of J.T. Reed if he’s checking) a full credit report (it was 4 feet long and horrible). I also gave Mr. Burrell all the data re. my bankruptcy. He didn’t care…I got the property solely based upon my sales ability, my demeanor, a plausible explanation for the BK and bad credit; and because of the sincerity that I portrayed and my offer to provide my plan for correcting the problems. Credit was NOT an issue.
Since that time we have continued to do reasonably well in acquiring a modest amount of other real estate by the same means...and wholly without credit, and with very little if any cash (usually none).
Without ANY apparent “credit worthiness,” I have managed to acquire credit cards (secured and unsecured), and to financed several automobiles. Over the years, I have felt little pain because of the absence of credit; and as a matter of fact, I'm sure my credit restrictions following the BK allowed me to avoid some temptations and maybe some mistakes I might have had to endure otherwise..
The point? One should do everything in his or her power to get their credit back in order: but in the meantime, never let its absence negatively interfere with, or affect, your investment pursuits. You don't need cash OR credit to be a successful real estate investor…assuming you know how, and assuming you have a good source for information, education and encouragement.
Following--in the order of their overall importance--are the 12 tools you need in the No Down, No New Loan, real estate investing business.
1. Dissatisfaction with the status quo
2. An honest need for increased abundance
3. A burning desire to achieve
4. Tenacity: the ability to stick-to-it, no matter what
5. Resiliency: the ability to shrug off a failure and move on with undiminished zeal
6. Selling skills: Acquired and/or natural sales ability (the ability to listen and think at the same time, while not talking until its necessary)
7. A professional and business-like demeanor
8. A good business background or sense (…or a partner with same)
9. A solid understanding of Real Estate and Real Estate Finance
10. Good Credit (or not)
11. Plenty of available cash (or not)
Without at least the first five in the above list, you are destined for failure in the business.
With #1 through #5, along with any one of #6 through #12, your chances of success are almost assured.
With all of #1 through #9, you’re success is unavoidable.
With all of #1 through #10, abundant wealth is already yours and you need only reach out for it. You are truly on top of the world.
With all twelve…you OWN the world and everything in it.
Bill Gatten
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
Thursday, November 15, 2007
AVOIDING THE DUE ON SALE CLAUSE
By Bill J. Gatten
DUE-ON-SALE CLAUSE: The clause (Para. #17) in virtually all mortgage loans, which permits a secured mortgage lender (federal, state or private) to call the entire unpaid loan balance Due and Payable immediately should the property securing the loan be sold, transferred, traded, gifted or otherwise disposed of without the lender’s prior written consent (and without giving them the opportunity to charge more money or say “No” to the transfer).
Despite the due-on-sale clause and its implications in the creative real estate financing business, it is quite possible for one to take over the payments on a non-assumable mortgage loan without needing to fear, or even to be concerned with, a DOS Violation…without violating it.
In order to effect such a take-over without an unauthorized transfer, one simply assures that the property is, in-fact, NOT being sold, traded, hypothecated or transferred in any ‘unauthorized’ manner. In other words, since placement of real estate into the borrower’s revocable living trust for asset protection purposes is fully allowable under the law (12USC 1701-j-3; and since appointment of a co-beneficiary is a prudent thing to do anyway: a would-be seller need only place its property into such a trust, and then deal with the interest in the trust, rather than dealing with the property itself. At this point, the buyer (of beneficiary interest: not real estate) gains virtually 100% of the same incidents and benefits of Fee Simple Real Estate ownership that he or she might have under a traditional transfer of the property’s title.
The only caveat here is that the living trust that is utilized for this purpose must be an Illinois-type, title-holding Land Trust. Such a trust is fully revocable and it is an inter-vivos trust; however, land trusts by nature are directed by their beneficiaries, not the trustee: and all “legal” title, as well as all “equitable” title, is vested with the trustee. Beneficiaries of land trusts own no real estate, only personal property…and even though they retain all the benefits of an owner, the property has not been sold, transferred or hypothecated.
The trust term of the agreement is decided upon by beneficiaries and stipulated in the contract. Such terms generally run for from 1 to 20 years, with the understanding that, at the end of that time, the trust will be terminated and the seller's interest (as little as 10%) will be forfeited to the co-beneficiary (buyer). Such forfeiture merely needs to be in consideration of some future act by the buyer (e.g., prompt payments; strict adherence to contract terms; a share in appreciation or overall profit; etc.). Often times, however, beneficiaries might mutually agree to share profits at termination in proportion to their respective beneficiary interests (50:50, 90:10; 75:25, etc.).
It is most important to understand here that the verbiage of a lender’s Due-on-Sale clause doesn't always convey exactly what we or our attorneys THINK it does, or what the lender expects us to believe it does (a little trickery here)…irrespective of whether a lender's exercising its rights under a DOS clause are "real," "false" or indifferent. What the DOS does infer is: “UNLESS PROHIBITED BY APPLICABLE LAW…” the lender has a right to foreclose, if the title to its security is transferred into a trust, and if a beneficiary interest in that trust is sold or transferred." Well...make no mistakes about it! Such action ‘IS’ indeed prohibited by “applicable law.” The Law (The Federal Depository Institutions Act of 1982) strictly prohibits ANY lender from taking exception to a borrower's placing its property into its own inter-vivos (living) trust (such as a Title-Holding Land Trust) and appointing a 2nd party to function as a co-beneficiary or remainder agent. Further, there is nothing to prevent those same co-beneficiaries from leasing the property out to any one they may choose…say, to the 2nd co-beneficiary, for example.
Overall, the process described here creates what is tantamount to a legally constructed, and very safe and well-shielded ‘Wrap-Around Seller-Carry’ device. Since the original owner of the property has named the second party as a beneficiary in the trust and leased to the property to him or her under a triple-net lease (i.e., net, net, net lease, wherein the tenant pays mortgage interest, property tax and handles all maintenance), the resident beneficiary (or investor co-beneficiary) has obtained all the benefits of a sale… without there actually having been one.
When proposing that a seller remain on the existing loan for you: if you really want to be assured of 'getting the deal,' its important that you make it sound so good for the seller that he can't refuse. To do that, you’d suggest that for his own safety and peace of mind, you'll pay to put the property into a neutral trust (if he prefers), and that he needn't ever transfer the property’s title to you at all…until you've proven yourself, by eventually refinancing or selling the property and paying off his loan. Explain that you'll consent to merely becoming a co-beneficiary in HIS trust until his loan is retired in, say, 6 months (or 3, 4, 5 or 20 years…or more).
Note that this arrangement (i.e., a "NARS PAC Trust™") gives you, as the buyer, 100% of the tax write-off (See IRC § 163(h)4(D)); 100% of the use, occupancy, possession; 100% of the equity build-up (from principal reduction); full rights to all rents; and other profits upon the sale or other disposition of the property. As well, you also have any and all of the other rights ordinarily only available under the so-called "Bundle of Rights" in any form of Fee-Simple Real Estate ownership.
In a NARS PACTrust™, the seller needn’t ever take any chances with you; and you don't have to take any chances with the seller either. By virtue of the structure of the NARS PACTrust™, the trust property is protected from liens, suits judgments, divorce actions or claims, bankruptcies or anything else you can think of…on both sides…including state and/or IRS tax liens. Moreover, the due-on-sale clause becomes pretty much a non-issue in that the property has not been sold; the title has not been transferred (other than to the borrower’s authorized trust); and there is no consideration for a ‘purchase of real estate’ per se. Furthermore, the commodity being transferred (beneficiary interest in a trust) is characterized as Personalty (personal property), and not Realty (real estate), and is therefore not subject to the same creditor rights as would be real estate. And…the transaction has not infringed upon the lender’s foreclosure rights, or compromised its security interest).
In closing, do note that for maximum safety, it recommended that at least 10% of the trust's Beneficiary Interest and 50% of the beneficiary’s Power of Direction should be retained by the seller, with an agreement to forfeit that interest to you upon disposition of the property at the trust's termination. However, also note that the Settlor Beneficiary’s fifty percent Power of Direction can be given to you by means of either an Assignment of Power of Direction, or by a Revocable, Limited, Power of Attorney. The reason for the seller’s retaining a percentage of beneficiary interest is to satisfy the requirement that if the seller places his property into a revocable trust, he must be and remain a beneficiary of that trust. The reason for keeping the 50% Power of Direction intact, is that most county jurisdictions will not re-assess the property for property taxes, or require transfer fees, when transferring the property to a living trust, so long as no more than 50% of the “voting rights” are conveyed.
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
DUE-ON-SALE CLAUSE: The clause (Para. #17) in virtually all mortgage loans, which permits a secured mortgage lender (federal, state or private) to call the entire unpaid loan balance Due and Payable immediately should the property securing the loan be sold, transferred, traded, gifted or otherwise disposed of without the lender’s prior written consent (and without giving them the opportunity to charge more money or say “No” to the transfer).
Despite the due-on-sale clause and its implications in the creative real estate financing business, it is quite possible for one to take over the payments on a non-assumable mortgage loan without needing to fear, or even to be concerned with, a DOS Violation…without violating it.
In order to effect such a take-over without an unauthorized transfer, one simply assures that the property is, in-fact, NOT being sold, traded, hypothecated or transferred in any ‘unauthorized’ manner. In other words, since placement of real estate into the borrower’s revocable living trust for asset protection purposes is fully allowable under the law (12USC 1701-j-3; and since appointment of a co-beneficiary is a prudent thing to do anyway: a would-be seller need only place its property into such a trust, and then deal with the interest in the trust, rather than dealing with the property itself. At this point, the buyer (of beneficiary interest: not real estate) gains virtually 100% of the same incidents and benefits of Fee Simple Real Estate ownership that he or she might have under a traditional transfer of the property’s title.
The only caveat here is that the living trust that is utilized for this purpose must be an Illinois-type, title-holding Land Trust. Such a trust is fully revocable and it is an inter-vivos trust; however, land trusts by nature are directed by their beneficiaries, not the trustee: and all “legal” title, as well as all “equitable” title, is vested with the trustee. Beneficiaries of land trusts own no real estate, only personal property…and even though they retain all the benefits of an owner, the property has not been sold, transferred or hypothecated.
The trust term of the agreement is decided upon by beneficiaries and stipulated in the contract. Such terms generally run for from 1 to 20 years, with the understanding that, at the end of that time, the trust will be terminated and the seller's interest (as little as 10%) will be forfeited to the co-beneficiary (buyer). Such forfeiture merely needs to be in consideration of some future act by the buyer (e.g., prompt payments; strict adherence to contract terms; a share in appreciation or overall profit; etc.). Often times, however, beneficiaries might mutually agree to share profits at termination in proportion to their respective beneficiary interests (50:50, 90:10; 75:25, etc.).
It is most important to understand here that the verbiage of a lender’s Due-on-Sale clause doesn't always convey exactly what we or our attorneys THINK it does, or what the lender expects us to believe it does (a little trickery here)…irrespective of whether a lender's exercising its rights under a DOS clause are "real," "false" or indifferent. What the DOS does infer is: “UNLESS PROHIBITED BY APPLICABLE LAW…” the lender has a right to foreclose, if the title to its security is transferred into a trust, and if a beneficiary interest in that trust is sold or transferred." Well...make no mistakes about it! Such action ‘IS’ indeed prohibited by “applicable law.” The Law (The Federal Depository Institutions Act of 1982) strictly prohibits ANY lender from taking exception to a borrower's placing its property into its own inter-vivos (living) trust (such as a Title-Holding Land Trust) and appointing a 2nd party to function as a co-beneficiary or remainder agent. Further, there is nothing to prevent those same co-beneficiaries from leasing the property out to any one they may choose…say, to the 2nd co-beneficiary, for example.
Overall, the process described here creates what is tantamount to a legally constructed, and very safe and well-shielded ‘Wrap-Around Seller-Carry’ device. Since the original owner of the property has named the second party as a beneficiary in the trust and leased to the property to him or her under a triple-net lease (i.e., net, net, net lease, wherein the tenant pays mortgage interest, property tax and handles all maintenance), the resident beneficiary (or investor co-beneficiary) has obtained all the benefits of a sale… without there actually having been one.
When proposing that a seller remain on the existing loan for you: if you really want to be assured of 'getting the deal,' its important that you make it sound so good for the seller that he can't refuse. To do that, you’d suggest that for his own safety and peace of mind, you'll pay to put the property into a neutral trust (if he prefers), and that he needn't ever transfer the property’s title to you at all…until you've proven yourself, by eventually refinancing or selling the property and paying off his loan. Explain that you'll consent to merely becoming a co-beneficiary in HIS trust until his loan is retired in, say, 6 months (or 3, 4, 5 or 20 years…or more).
Note that this arrangement (i.e., a "NARS PAC Trust™") gives you, as the buyer, 100% of the tax write-off (See IRC § 163(h)4(D)); 100% of the use, occupancy, possession; 100% of the equity build-up (from principal reduction); full rights to all rents; and other profits upon the sale or other disposition of the property. As well, you also have any and all of the other rights ordinarily only available under the so-called "Bundle of Rights" in any form of Fee-Simple Real Estate ownership.
In a NARS PACTrust™, the seller needn’t ever take any chances with you; and you don't have to take any chances with the seller either. By virtue of the structure of the NARS PACTrust™, the trust property is protected from liens, suits judgments, divorce actions or claims, bankruptcies or anything else you can think of…on both sides…including state and/or IRS tax liens. Moreover, the due-on-sale clause becomes pretty much a non-issue in that the property has not been sold; the title has not been transferred (other than to the borrower’s authorized trust); and there is no consideration for a ‘purchase of real estate’ per se. Furthermore, the commodity being transferred (beneficiary interest in a trust) is characterized as Personalty (personal property), and not Realty (real estate), and is therefore not subject to the same creditor rights as would be real estate. And…the transaction has not infringed upon the lender’s foreclosure rights, or compromised its security interest).
In closing, do note that for maximum safety, it recommended that at least 10% of the trust's Beneficiary Interest and 50% of the beneficiary’s Power of Direction should be retained by the seller, with an agreement to forfeit that interest to you upon disposition of the property at the trust's termination. However, also note that the Settlor Beneficiary’s fifty percent Power of Direction can be given to you by means of either an Assignment of Power of Direction, or by a Revocable, Limited, Power of Attorney. The reason for the seller’s retaining a percentage of beneficiary interest is to satisfy the requirement that if the seller places his property into a revocable trust, he must be and remain a beneficiary of that trust. The reason for keeping the 50% Power of Direction intact, is that most county jurisdictions will not re-assess the property for property taxes, or require transfer fees, when transferring the property to a living trust, so long as no more than 50% of the “voting rights” are conveyed.
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
Thursday, November 8, 2007
THE DUE-ON-SALE CLAUSE -- HOW TO AVOID IT
Bill J. Gatten
North American Realty Service, Inc., Author: No Down! No New Loan!
The Common Assumption: To get around a lender’s due-on-sale clause, one must just go ahead and violate it, and then try to make sure the lender doesn’t find out.
The Facts: The due-on-sale clause is not violated when a transfer of real estate ownership is by assignment of beneficiary interest in an inter-vivos trust, versus a conveyance by a title transfer.
The Common Assumption (“Denial”): Lenders’ don’t mind if a loan is taken over by another party without their permission. They obviously would never want to foreclose on a perfectly good, properly performing, well secured Account Receivable…especially in “this” market.
The Fact: Lender’s are conglomerations of investors (humans) who do care in a big way, but whom will usually turn away and pretend they don’t see anything wrong during times when mortgage rates are low. However, when rates start to climb and they see an opportunity to replace old, poorly performing loans with significantly higher yields for their stockholders, they suddenly begin spending considerable effort in seeking out those opportunities (like foreclosing on unauthorized transfers and fraudulently applied-for loans).
Interesting, however, one can indeed take over an entirely non-assumable loan without needing to fear, or even be concerned with, a DOS Violation. To do so, one need merely place the property into a co-beneficiary land trust in the mortgagor's (seller's) own name and take a partial Beneficiary Interest in it. The trust would then be set up to run for some specified period of time, with the understanding that, at the end of that period the seller's interest will be forfeited to the "buyer" without further claim. Such forfeiture merely needing to be in consideration of some promise of a future act by the buyer (e.g., prompt payments; strict adherence to contract terms; a share in appreciation or overall profit; etc.).
The problem confronting most of us is that the foreboding due-on-sale clause in Para. 17 of the loan agreement doesn't always say what we (or our attorneys) “think” it does, irrespective of whether a lender's rights under a DOS clause are "real," "false" or indifferent. What the clause actually says is: UNLESS PROHIBITED BY LAW, the lender has a right to foreclose if...". Well, good news! Such right is not available under the law (12 USC 1701(j)). Make no mistakes about it, a lender’s foreclosing due to a borrower’s placing its property into a living trust (assuming the trust is revocable and that the borrow remains a beneficiary), IS in fact against the law. That law is the “Federal Depository Institutions Regulations Act,” known as the FDIRA, having originated with the “Garn-St. Germain Act” of 1982.
Under Garn-St. Germain, a mortgagor’s (borrower’s) rights as established by the federal government, allows any borrower to grant its own mortgaged property to its own living trust, and subsequently name (a second party) as a Co-Beneficiary in that trust. When this is done, if your are that second party, the property has effectively been transferred to you, along with 100% of all the benefits and incidents of real property ownership. And the transfer does not need a new loan or any more cash than the seller might require. As well, the due-on-sale clause has not been tampered with. Title hasn’t been transferred beyond the authorized trust. No control over the property has been relinquished by the borrower of record. The lender’s security interest remains fully intact. There need be no public notice (recording) of the transfer to you; and the property is now shielded from either party’s judgment creditors, tax liens, lawsuits, divorce actions, bankruptcy, probate and estate tax issues.
PRACTICAL USE: When calling on a prospect that you’d want to remain on the loan, if you want to be assured of 'getting the deal,' make it sound so good for the seller that he can't refuse. Suggest to him that for his own safety and peace of mind, you'll pay to put the property into a neutral title-holding trust in his own name. Explain, as well, that he needn't ever transfer the property’s title to you at all…until you've had a chance to prove yourself by selling the property and paying off his loan, or refinancing it in your own name. Explain that you'll consent to being merely named a co-beneficiary in the trust, until such time as you retire his loan in, say, a year or two (or 3, 4 or 5 years…or more).
Note that this arrangement (called a "NARS PAC Trust") affords you the buyer 100% of the mortgage interest and property tax write-off; 100% of the Use, Occupancy, Possession; 100% of the Equity Build-Up (from principal reduction); full rights to all rents; and other profits upon the sale or other disposition of the property. In addition, you own and control every single right ordinarily available under the so-called "Bundle of Rights" in Fee-Simple Real Estate ownership.
In the NARS PAC Trust, the seller never has to take any chances with you; and you don't have to take any chances with the seller. While the property is protected from liens and lawsuits…on both sides, the Due-on-Sale Clause becomes pretty much a non-issue. That’s because the real estate interest in the property has not being sold; the title has not being transferred (beyond the borrower’s own living trust); there is no consideration or option for a purchase…yet); and that which is being transferred (beneficiary interest) is personal property only and not real estate, and therefore not the security for the mortgage loan.
As far as an attorney's suggestion that a Lease Option would be better, with reference to the Due-on-Sale Clause, that's ridiculous (and they do it all the time)! When an attorney makes such a suggestion, he/she knows nothing about Land Trusts or the Garn-St. Germain Law (12USC 1701(j)) per se. they merely are looking to make a profit on doing a deal for you that they understands better: but wholly at the expense of your maximum safety, tax write-off and income potential.
Despite what you may have heard or will hear to the contrary from time-to-time, all Lease Options, Lease Purchases, Wraps, Land Contracts or Equity Shares without the shield provided by the NARS PACTrust can, and do, more than just occasionally, constitute some or all of the following:
1) Lender’s Due-on-Sale violation (all)
2) Public notice of the transfer, or deception and legal risk by avoiding public notice (all)
3) Excessive risk of title involvement with the other party’s marital disputes, BK's, creditor judgments, tax liens, lawsuits, illegal activities and probate issues (all)
4) Loss of tax write-off for the resident party (contracts and options),
5) Possible property Tax reassessment (contracts, wraps and equity shares)
6) Difficulty in procuring title insurance
7) Difficulties with hazard insurance replacement and coverage (contracts and options)
8) Much lower income potential for the investor (contracts and options)
9) Much higher potential for difficulty in eviction and dispossession of an errant or defaulting tenant buyers who would claim “Equity” to force judicial processes versus eviction (all)
10) Need for subterfuge in dealing with lenders, insurance carriers, co-buyers, etc. (all)
11) Confusion and lack of control in timely payment and determining how payments are to be received and disbursed to creditors (all).
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
North American Realty Service, Inc., Author: No Down! No New Loan!
The Common Assumption: To get around a lender’s due-on-sale clause, one must just go ahead and violate it, and then try to make sure the lender doesn’t find out.
The Facts: The due-on-sale clause is not violated when a transfer of real estate ownership is by assignment of beneficiary interest in an inter-vivos trust, versus a conveyance by a title transfer.
The Common Assumption (“Denial”): Lenders’ don’t mind if a loan is taken over by another party without their permission. They obviously would never want to foreclose on a perfectly good, properly performing, well secured Account Receivable…especially in “this” market.
The Fact: Lender’s are conglomerations of investors (humans) who do care in a big way, but whom will usually turn away and pretend they don’t see anything wrong during times when mortgage rates are low. However, when rates start to climb and they see an opportunity to replace old, poorly performing loans with significantly higher yields for their stockholders, they suddenly begin spending considerable effort in seeking out those opportunities (like foreclosing on unauthorized transfers and fraudulently applied-for loans).
Interesting, however, one can indeed take over an entirely non-assumable loan without needing to fear, or even be concerned with, a DOS Violation. To do so, one need merely place the property into a co-beneficiary land trust in the mortgagor's (seller's) own name and take a partial Beneficiary Interest in it. The trust would then be set up to run for some specified period of time, with the understanding that, at the end of that period the seller's interest will be forfeited to the "buyer" without further claim. Such forfeiture merely needing to be in consideration of some promise of a future act by the buyer (e.g., prompt payments; strict adherence to contract terms; a share in appreciation or overall profit; etc.).
The problem confronting most of us is that the foreboding due-on-sale clause in Para. 17 of the loan agreement doesn't always say what we (or our attorneys) “think” it does, irrespective of whether a lender's rights under a DOS clause are "real," "false" or indifferent. What the clause actually says is: UNLESS PROHIBITED BY LAW, the lender has a right to foreclose if...". Well, good news! Such right is not available under the law (12 USC 1701(j)). Make no mistakes about it, a lender’s foreclosing due to a borrower’s placing its property into a living trust (assuming the trust is revocable and that the borrow remains a beneficiary), IS in fact against the law. That law is the “Federal Depository Institutions Regulations Act,” known as the FDIRA, having originated with the “Garn-St. Germain Act” of 1982.
Under Garn-St. Germain, a mortgagor’s (borrower’s) rights as established by the federal government, allows any borrower to grant its own mortgaged property to its own living trust, and subsequently name (a second party) as a Co-Beneficiary in that trust. When this is done, if your are that second party, the property has effectively been transferred to you, along with 100% of all the benefits and incidents of real property ownership. And the transfer does not need a new loan or any more cash than the seller might require. As well, the due-on-sale clause has not been tampered with. Title hasn’t been transferred beyond the authorized trust. No control over the property has been relinquished by the borrower of record. The lender’s security interest remains fully intact. There need be no public notice (recording) of the transfer to you; and the property is now shielded from either party’s judgment creditors, tax liens, lawsuits, divorce actions, bankruptcy, probate and estate tax issues.
PRACTICAL USE: When calling on a prospect that you’d want to remain on the loan, if you want to be assured of 'getting the deal,' make it sound so good for the seller that he can't refuse. Suggest to him that for his own safety and peace of mind, you'll pay to put the property into a neutral title-holding trust in his own name. Explain, as well, that he needn't ever transfer the property’s title to you at all…until you've had a chance to prove yourself by selling the property and paying off his loan, or refinancing it in your own name. Explain that you'll consent to being merely named a co-beneficiary in the trust, until such time as you retire his loan in, say, a year or two (or 3, 4 or 5 years…or more).
Note that this arrangement (called a "NARS PAC Trust") affords you the buyer 100% of the mortgage interest and property tax write-off; 100% of the Use, Occupancy, Possession; 100% of the Equity Build-Up (from principal reduction); full rights to all rents; and other profits upon the sale or other disposition of the property. In addition, you own and control every single right ordinarily available under the so-called "Bundle of Rights" in Fee-Simple Real Estate ownership.
In the NARS PAC Trust, the seller never has to take any chances with you; and you don't have to take any chances with the seller. While the property is protected from liens and lawsuits…on both sides, the Due-on-Sale Clause becomes pretty much a non-issue. That’s because the real estate interest in the property has not being sold; the title has not being transferred (beyond the borrower’s own living trust); there is no consideration or option for a purchase…yet); and that which is being transferred (beneficiary interest) is personal property only and not real estate, and therefore not the security for the mortgage loan.
As far as an attorney's suggestion that a Lease Option would be better, with reference to the Due-on-Sale Clause, that's ridiculous (and they do it all the time)! When an attorney makes such a suggestion, he/she knows nothing about Land Trusts or the Garn-St. Germain Law (12USC 1701(j)) per se. they merely are looking to make a profit on doing a deal for you that they understands better: but wholly at the expense of your maximum safety, tax write-off and income potential.
Despite what you may have heard or will hear to the contrary from time-to-time, all Lease Options, Lease Purchases, Wraps, Land Contracts or Equity Shares without the shield provided by the NARS PACTrust can, and do, more than just occasionally, constitute some or all of the following:
1) Lender’s Due-on-Sale violation (all)
2) Public notice of the transfer, or deception and legal risk by avoiding public notice (all)
3) Excessive risk of title involvement with the other party’s marital disputes, BK's, creditor judgments, tax liens, lawsuits, illegal activities and probate issues (all)
4) Loss of tax write-off for the resident party (contracts and options),
5) Possible property Tax reassessment (contracts, wraps and equity shares)
6) Difficulty in procuring title insurance
7) Difficulties with hazard insurance replacement and coverage (contracts and options)
8) Much lower income potential for the investor (contracts and options)
9) Much higher potential for difficulty in eviction and dispossession of an errant or defaulting tenant buyers who would claim “Equity” to force judicial processes versus eviction (all)
10) Need for subterfuge in dealing with lenders, insurance carriers, co-buyers, etc. (all)
11) Confusion and lack of control in timely payment and determining how payments are to be received and disbursed to creditors (all).
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
Thursday, November 1, 2007
A DAY IN THE LIFE OF A JOGGER/ENTREPRENEUR
By Bill J. Gatten
A few days ago I was asked to give folks an idea of how my days came together. So we decided that a “Day in the Life of…” might be appropriate. So here it is for your perusal.
6:30 AM: Awaken prematurely to the noise of a garbage truck coming down the street, but continue lying perfectly still, eyes closed, pretending not to notice wife getting up to take out the trash
7:00 AM: Awaken again to a demanding, blaring alarm. Punch the snooze-alarm
7:15 AM: Second snooze-alarm punch
7:30 AM: Third attempt to hit snooze-alarm. Accidentally shut off the alarm instead and am forced to roll (more oozing than rolling) out of bed
7:31 AM: Half stumble and half crawl to shower and turn on water, wait for water to heat while glancing at face in mirror and wondering why eyes appear to need draining. Prop eyelids open with Q-tips and step into shower
7:41 AM: Gradually emerge from a 15-minute, early-morning standing stupor in the shower, becoming suddenly aware and concerned that hot water tank is running low, and that no scrubbing of delicate areas has taken place yet
7:50 AM: Step from freezing shower, now quite awake. Dress for the day (color coordinated Mohair sports ensemble). Put off jogging again, until afternoon
8:00 AM: Check phone messages and listen to first message: "Hi, this is Earl Splork, I'm returning your call about my house for sale. Yes, I might consider keeping the current financing in place, as you suggest, and leaving my equity in tact for a while…if you can take over payments, upkeep and all other costs"
8:01 AM: Return call: "Hi Earl, I'm returning your call. Thanks for calling...can you tell me a bit about the house?" (Yada yada yada) "Great! Let me run by it a little later and check some comps. If it looks like something we can do, I'll give you a call this afternoon or tomorrow. If it checks out, are you ready to put a deal together right away? Super! I'll call you this afternoon. Oh, by the way, how did you come up with that asking price? I see, and...and how much work or repairs would you say need to be done on it? OK, that’s not too bad. And about how many payments are in arrears at the moment? And, roughly, what's your current loan balance, not counting the arrearages? Ouch! Oh, and by the way, why do you think it hasn’t sold? Have you by any chance asked the bank for any kind of forbearance? Well, I'll give it my best shot and call you when I have all the data together. Fair enough?"
8:03 AM: Return second call: "Hi this is Bill Gatten returning your call. You had called about the property I have available over there on Fir Street. What can I tell you about it? (Yada, yada, yada). Great! Well, basically, if you like the house, there are three ways to get in: You can come in with 10% and closing costs and I'll carry the entire financing for you for, say 3 to 4 years. Or, if you’d prefer, you could come in with just half of that amount plus closing costs, and we’ll just agree to share in any future profits if there are any, over the next 5 or 10 years. Or...you might want to come in with maybe just 3 or 4 payments up front, on what we call a 'Tax Lease.' What that means is that you would lease the property from my land trust with full access to all of my income tax deductions: mortgage interest and property tax. The payments will, of course, be a bit higher than rent, but your after-tax monthly cost should be much lower, depending on your tax bracket, and you might save thousands of dollars per-year over renting.
9:30 AM: Pull comps on properties that I intend to try to get under contract today.
10:00 AM: Return as many phone calls and Emails as possible.
12:00 Noon: Drive by one of the properties that is just a few miles away, and call the owner to make an appointment to sign the deal up. (Put off jogging until evening)
2:30 PM: Call for appointment to meet with owner of first property: “Are you pretty much the decision maker for this transaction? No? Ok, then, will you need to confer with anyone else on this? Oh, I see…and will she be there for signing? Great!” (If the other decision maker/s won’t be there, I’d say, “then call me after you talked to her/them). And by the way, assuming that everything we’ve talked about turns out to be as expected and to your advantage, are there any other considerations we need to address before putting it all together?” “No? Good! So we can get everything signed up this evening if everything checks out…great!”
Laughingly: “I hate to have to be so specific on these points, but you’d be surprised at how many people give me the old “I have to think it over” stall after I’ve done all of everything I said I would. You won’t do that to me. Right (light chuckle)? How does 5:30 sound? Or would 6:00 be better? Great! See you then."
(At the meeting I’ll have my briefcase with plenty of Purchase Offer forms, Non-Exclusive Option forms; authorization forms (e.g., so I can speak to the creditors); a copy of the comps (to discuss with the seller, should there be any difference of opinion about value). All forms will be a completely filled-out as possible in order to save time and get to the point quickly during the meeting.
AS PART OF THE MEETING: "Yes, the 'fixed-up' value does appear, as you said it would, to be about $195 to $200K; and it appears that it'll take between $8-10,000 to bring it to 'Full Market' for resale.
Then considering my remarketing expenses...about 7.5% ($15,000); and even a minimum four or five percent profit (e.g., $10,000): unless you'd want to cover some of those costs, I'll come in at about $165,000.00, including, of course, taking over all of your payments, principal, interest, property tax, insurance, upkeep, management, maintenance, repairs, insurance, etc."
2:45: After making bank deposit and picking up mail, stop for a Veggie Burger, a Diet Coke, a small green salad, a Weight Watcher's 2-Point bar and a Double Bacon Cheese Burger with Chili Fries (…decide to delay jogging until after this evening’s meeting…it’ll be cooler then anyway).
2:50 to 5:00: Deal with matters of the properties I have on the market.
4:30 PM: Call a couple FSBOs and For Rent ads (“Hi I’m looking for folks who are selling on their own, who—for a full price offer—would consider leaving their exiting loan in place for a while and who can afford to leave their equity in tact for a couple years. In the meantime I’ll cover 100% of all payments, maintenance, repairs, property tax and insurance…then retire your loan and pay you off and, say 3-4 years”).
5:30 PM (At the meeting): I show Earl the unsigned Purchase-Offer and the signed Non-Exclusive Option Agreement, explaining that I’ll need about 30-45 days to get all my ducks in line: i.e., to run a title search; check on utility liens; check on the status of the hazard insurance and property tax; check on building code or ordinance violations; have the property appraised; have the property inspected; etc. I explain to him that I fully realize that the time all this could take could be a problem if he had to take the property off the market and wait for me: so, instead, we do the NEO so that he can leave the property on the market and accept a better offer than mine, if one were to be receiverd. I explain that if that happens, I’ll require only a five-day notice: i.e., five days within which to either exercise my option or relinquish it.
(After the NEO and the Memorandum of Option are executed, the next morning I record the Memorandum of Option at the County Recorder's office and call the local newspaper and Penny Saver to place my ad (No Bank Qual, No Down, No Credit Req'd, 3 pmts & cl. costs moves you in. $160K, 3-2 beauty w/pool, 1,450 sq ft, 2cg. Owner fin. Call Bill. 1-800-207-4273)
7:00 PM: Back to the office to answer Email, phone calls, website discussion groups until 10:30 PM. (Put off jogging until tomorrow morning)
11:00 PM: Ponder why I’m actually watching Jerry Springer while waiting for David Letterman to come on.
11:30: Fall asleep with TV blaring four minutes before David Letterman starts.
2:00: AM: Treat myself to a midnight snack, tale my final pee of the day, and amble bleary-eyed off to bed, and prepare to repeat as needed the following day (knowing that I can use my jogging time to make up for the late hour and lack of sleep).
Bill Gatten
www.landtrust.net
-----Original Message-----
From: JOHN WHITWORTH [mailto:johnlw@thegrid.net]
Sent: Wednesday, May 21, 2003 7:30 PM
To: Bill J. Gatten
Subject: Re: The Transaction Process, etc.
Bill,
Thanks! A diary of you, as the "investor" would help clear up exactly what paperwork I should be using, the detailed steps I should take, etc.
John :-)
----- Original Message -----
From: Bill J. Gatten
To: JOHN WHITWORTH
Sent: Monday, May 19, 2003 2:44 PM
Subject: RE: The Transaction Process, etc.
Hi John,
Give me a while to get situated here (just finished a week on the road), and I'll get back to with that diary of a day you're looking for.
Bill
-----Original Message-----
From: JOHN WHITWORTH [mailto:johnlw@thegrid.net]
Sent: Saturday, May 17, 2003 7:24 PM
To: Bill Gatten
Subject: Re: The Transaction Process, etc.
Bill and/or Staff,
I wish I could spend a few days following you around as you go about dealing with a Seller and Tenant-buyer. I wish I was privy to a "Diary" of Bill Gatten, where each day, a part of the "process" was documented. Specifically, including what forms you bring and fill out with each meeting with the Seller and then again with the buyer. I probably wouldn't have so many questions, then (sorry). Maybe I should have purchased the S.S.S.P. (Slow Start Success Pack) (ha, ha).
I have been reviewing the TRANSACTION PROCESS and I have some questions:
Since I've never done anything like this before, To build confidence, it is necessary for me to be able to visualize the details of the ENTIRE PROCESS (which includes the transaction process), as if I'm dressed in my suit, briefcase in hand, and going to see the Seller, or Tenant-buyer. What forms (all of them!) do I take with me? What is notarized and/or recorded when (prior to NARS involvement), etc? (Keep in mind, that I'll be working out of my home and don't have an office).
1. Is it correct to assume that when you go see the Seller (Step #1), you then proceed with Step #2 and Step #3 all in that first meeting?
2. Step #2: I am still confused what the investor does different from a Realtor. Does the INVESTOR use the "Purchase Offer" AND "Agreement For Option to Acquire and Interest in a Land Trust" (with the Seller)? Or, do I only use an Agreement For Option to Acquire and Interest in a Land Trust (with the Seller)?
3. I know I need to record the Memorandum of Offer to Purchase (Step #4). Does the Seller follow me down to a bank (or somewhere) to have us both sign in front of a notary, or do I just go by myself and have my signature notarized? Then, I take the notarized Memorandum of Offer to Purchase and record it at the Court House, right?
4. When the tenant-buyer fills out an Agreement For Option to Acquire and Beneficial Interest in a Land Trust and then the Memorandum For Offer to Purchase, he and I (investor) sign it (Memorandum...), notarize it, and then I record it at the Court House, just like I did with the Seller, right?
5. Step #3: Does not mention APPENDIX #1. What's happened to it? Does the Seller get a copy of it?
6. Step #3: Speaking of copies, once you present the Seller with everything, who keeps the originals? Do I mail copies later? (Wish I could read your "diary"!)
7. APPENDIX #4: Line 18-C: It say's "B & C above". Don't you mean "A & B above", since it is "C"?
8. APPENDIX 2: Term confusion: Is the "Transaction Fee" the same as the "NARS Facilitator Fee"? (I don't see "Transaction Fee" under the Fee Schedule or anywhere else than in APPENDIX #2).
I'm trying to personalize and integrate the information from the course. I've created some documents to help me define the process. I am making progress, but still need your help.
Thank you for your mentoring.
John Whitworth
(510) 525-7460
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
A few days ago I was asked to give folks an idea of how my days came together. So we decided that a “Day in the Life of…” might be appropriate. So here it is for your perusal.
6:30 AM: Awaken prematurely to the noise of a garbage truck coming down the street, but continue lying perfectly still, eyes closed, pretending not to notice wife getting up to take out the trash
7:00 AM: Awaken again to a demanding, blaring alarm. Punch the snooze-alarm
7:15 AM: Second snooze-alarm punch
7:30 AM: Third attempt to hit snooze-alarm. Accidentally shut off the alarm instead and am forced to roll (more oozing than rolling) out of bed
7:31 AM: Half stumble and half crawl to shower and turn on water, wait for water to heat while glancing at face in mirror and wondering why eyes appear to need draining. Prop eyelids open with Q-tips and step into shower
7:41 AM: Gradually emerge from a 15-minute, early-morning standing stupor in the shower, becoming suddenly aware and concerned that hot water tank is running low, and that no scrubbing of delicate areas has taken place yet
7:50 AM: Step from freezing shower, now quite awake. Dress for the day (color coordinated Mohair sports ensemble). Put off jogging again, until afternoon
8:00 AM: Check phone messages and listen to first message: "Hi, this is Earl Splork, I'm returning your call about my house for sale. Yes, I might consider keeping the current financing in place, as you suggest, and leaving my equity in tact for a while…if you can take over payments, upkeep and all other costs"
8:01 AM: Return call: "Hi Earl, I'm returning your call. Thanks for calling...can you tell me a bit about the house?" (Yada yada yada) "Great! Let me run by it a little later and check some comps. If it looks like something we can do, I'll give you a call this afternoon or tomorrow. If it checks out, are you ready to put a deal together right away? Super! I'll call you this afternoon. Oh, by the way, how did you come up with that asking price? I see, and...and how much work or repairs would you say need to be done on it? OK, that’s not too bad. And about how many payments are in arrears at the moment? And, roughly, what's your current loan balance, not counting the arrearages? Ouch! Oh, and by the way, why do you think it hasn’t sold? Have you by any chance asked the bank for any kind of forbearance? Well, I'll give it my best shot and call you when I have all the data together. Fair enough?"
8:03 AM: Return second call: "Hi this is Bill Gatten returning your call. You had called about the property I have available over there on Fir Street. What can I tell you about it? (Yada, yada, yada). Great! Well, basically, if you like the house, there are three ways to get in: You can come in with 10% and closing costs and I'll carry the entire financing for you for, say 3 to 4 years. Or, if you’d prefer, you could come in with just half of that amount plus closing costs, and we’ll just agree to share in any future profits if there are any, over the next 5 or 10 years. Or...you might want to come in with maybe just 3 or 4 payments up front, on what we call a 'Tax Lease.' What that means is that you would lease the property from my land trust with full access to all of my income tax deductions: mortgage interest and property tax. The payments will, of course, be a bit higher than rent, but your after-tax monthly cost should be much lower, depending on your tax bracket, and you might save thousands of dollars per-year over renting.
9:30 AM: Pull comps on properties that I intend to try to get under contract today.
10:00 AM: Return as many phone calls and Emails as possible.
12:00 Noon: Drive by one of the properties that is just a few miles away, and call the owner to make an appointment to sign the deal up. (Put off jogging until evening)
2:30 PM: Call for appointment to meet with owner of first property: “Are you pretty much the decision maker for this transaction? No? Ok, then, will you need to confer with anyone else on this? Oh, I see…and will she be there for signing? Great!” (If the other decision maker/s won’t be there, I’d say, “then call me after you talked to her/them). And by the way, assuming that everything we’ve talked about turns out to be as expected and to your advantage, are there any other considerations we need to address before putting it all together?” “No? Good! So we can get everything signed up this evening if everything checks out…great!”
Laughingly: “I hate to have to be so specific on these points, but you’d be surprised at how many people give me the old “I have to think it over” stall after I’ve done all of everything I said I would. You won’t do that to me. Right (light chuckle)? How does 5:30 sound? Or would 6:00 be better? Great! See you then."
(At the meeting I’ll have my briefcase with plenty of Purchase Offer forms, Non-Exclusive Option forms; authorization forms (e.g., so I can speak to the creditors); a copy of the comps (to discuss with the seller, should there be any difference of opinion about value). All forms will be a completely filled-out as possible in order to save time and get to the point quickly during the meeting.
AS PART OF THE MEETING: "Yes, the 'fixed-up' value does appear, as you said it would, to be about $195 to $200K; and it appears that it'll take between $8-10,000 to bring it to 'Full Market' for resale.
Then considering my remarketing expenses...about 7.5% ($15,000); and even a minimum four or five percent profit (e.g., $10,000): unless you'd want to cover some of those costs, I'll come in at about $165,000.00, including, of course, taking over all of your payments, principal, interest, property tax, insurance, upkeep, management, maintenance, repairs, insurance, etc."
2:45: After making bank deposit and picking up mail, stop for a Veggie Burger, a Diet Coke, a small green salad, a Weight Watcher's 2-Point bar and a Double Bacon Cheese Burger with Chili Fries (…decide to delay jogging until after this evening’s meeting…it’ll be cooler then anyway).
2:50 to 5:00: Deal with matters of the properties I have on the market.
4:30 PM: Call a couple FSBOs and For Rent ads (“Hi I’m looking for folks who are selling on their own, who—for a full price offer—would consider leaving their exiting loan in place for a while and who can afford to leave their equity in tact for a couple years. In the meantime I’ll cover 100% of all payments, maintenance, repairs, property tax and insurance…then retire your loan and pay you off and, say 3-4 years”).
5:30 PM (At the meeting): I show Earl the unsigned Purchase-Offer and the signed Non-Exclusive Option Agreement, explaining that I’ll need about 30-45 days to get all my ducks in line: i.e., to run a title search; check on utility liens; check on the status of the hazard insurance and property tax; check on building code or ordinance violations; have the property appraised; have the property inspected; etc. I explain to him that I fully realize that the time all this could take could be a problem if he had to take the property off the market and wait for me: so, instead, we do the NEO so that he can leave the property on the market and accept a better offer than mine, if one were to be receiverd. I explain that if that happens, I’ll require only a five-day notice: i.e., five days within which to either exercise my option or relinquish it.
(After the NEO and the Memorandum of Option are executed, the next morning I record the Memorandum of Option at the County Recorder's office and call the local newspaper and Penny Saver to place my ad (No Bank Qual, No Down, No Credit Req'd, 3 pmts & cl. costs moves you in. $160K, 3-2 beauty w/pool, 1,450 sq ft, 2cg. Owner fin. Call Bill. 1-800-207-4273)
7:00 PM: Back to the office to answer Email, phone calls, website discussion groups until 10:30 PM. (Put off jogging until tomorrow morning)
11:00 PM: Ponder why I’m actually watching Jerry Springer while waiting for David Letterman to come on.
11:30: Fall asleep with TV blaring four minutes before David Letterman starts.
2:00: AM: Treat myself to a midnight snack, tale my final pee of the day, and amble bleary-eyed off to bed, and prepare to repeat as needed the following day (knowing that I can use my jogging time to make up for the late hour and lack of sleep).
Bill Gatten
www.landtrust.net
-----Original Message-----
From: JOHN WHITWORTH [mailto:johnlw@thegrid.net]
Sent: Wednesday, May 21, 2003 7:30 PM
To: Bill J. Gatten
Subject: Re: The Transaction Process, etc.
Bill,
Thanks! A diary of you, as the "investor" would help clear up exactly what paperwork I should be using, the detailed steps I should take, etc.
John :-)
----- Original Message -----
From: Bill J. Gatten
To: JOHN WHITWORTH
Sent: Monday, May 19, 2003 2:44 PM
Subject: RE: The Transaction Process, etc.
Hi John,
Give me a while to get situated here (just finished a week on the road), and I'll get back to with that diary of a day you're looking for.
Bill
-----Original Message-----
From: JOHN WHITWORTH [mailto:johnlw@thegrid.net]
Sent: Saturday, May 17, 2003 7:24 PM
To: Bill Gatten
Subject: Re: The Transaction Process, etc.
Bill and/or Staff,
I wish I could spend a few days following you around as you go about dealing with a Seller and Tenant-buyer. I wish I was privy to a "Diary" of Bill Gatten, where each day, a part of the "process" was documented. Specifically, including what forms you bring and fill out with each meeting with the Seller and then again with the buyer. I probably wouldn't have so many questions, then (sorry). Maybe I should have purchased the S.S.S.P. (Slow Start Success Pack) (ha, ha).
I have been reviewing the TRANSACTION PROCESS and I have some questions:
Since I've never done anything like this before, To build confidence, it is necessary for me to be able to visualize the details of the ENTIRE PROCESS (which includes the transaction process), as if I'm dressed in my suit, briefcase in hand, and going to see the Seller, or Tenant-buyer. What forms (all of them!) do I take with me? What is notarized and/or recorded when (prior to NARS involvement), etc? (Keep in mind, that I'll be working out of my home and don't have an office).
1. Is it correct to assume that when you go see the Seller (Step #1), you then proceed with Step #2 and Step #3 all in that first meeting?
2. Step #2: I am still confused what the investor does different from a Realtor. Does the INVESTOR use the "Purchase Offer" AND "Agreement For Option to Acquire and Interest in a Land Trust" (with the Seller)? Or, do I only use an Agreement For Option to Acquire and Interest in a Land Trust (with the Seller)?
3. I know I need to record the Memorandum of Offer to Purchase (Step #4). Does the Seller follow me down to a bank (or somewhere) to have us both sign in front of a notary, or do I just go by myself and have my signature notarized? Then, I take the notarized Memorandum of Offer to Purchase and record it at the Court House, right?
4. When the tenant-buyer fills out an Agreement For Option to Acquire and Beneficial Interest in a Land Trust and then the Memorandum For Offer to Purchase, he and I (investor) sign it (Memorandum...), notarize it, and then I record it at the Court House, just like I did with the Seller, right?
5. Step #3: Does not mention APPENDIX #1. What's happened to it? Does the Seller get a copy of it?
6. Step #3: Speaking of copies, once you present the Seller with everything, who keeps the originals? Do I mail copies later? (Wish I could read your "diary"!)
7. APPENDIX #4: Line 18-C: It say's "B & C above". Don't you mean "A & B above", since it is "C"?
8. APPENDIX 2: Term confusion: Is the "Transaction Fee" the same as the "NARS Facilitator Fee"? (I don't see "Transaction Fee" under the Fee Schedule or anywhere else than in APPENDIX #2).
I'm trying to personalize and integrate the information from the course. I've created some documents to help me define the process. I am making progress, but still need your help.
Thank you for your mentoring.
John Whitworth
(510) 525-7460
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
Thursday, October 25, 2007
TWENTY-TWO STEPS TO FREE REAL ESTATE
By Bill J. Gatten, Author of ‘No Down!
No New Loan!’ And ‘Making it BIG in
Creative Real Estate and Keeping It…This
Time,’ and semi-nude Chip and Dale Dancer
(…yep the chipmunks)
The following is an open letter that I wrote to my cousin John, in Orlando Florida after his having informed me in an E-mail that there were over 6,000 foreclosures within a few miles of him, and suggesting that maybe I should move to Orlando (which I’d love to do, but there are 13,000 foreclosures where I live, and as of late, I’ve developed a real affinity for gang wars, graffiti and drive-by shootings).
Dear John,
Regarding those foreclosure opportunities, with your good looks and my brains, we could buy them up. We could partner on dozens and dozens of them.
Here’s the deal: I contact the sellers, run the ads screen the calls and then advertise for and screen the buyer calls with our toll-free Adtrakker lines and do all the documentation and collections. You need merely get the Foreclosure lists (once a week), pick out the acceptable areas, and head-up any refurbishment or repairs that might be needed There is no, or very little, cash out of pocket. Our resident beneficiaries pay for all of that.
Some of them we resell for cash, and some (most) we hold for old age (which is creeping up on me, John: I don’t even buy green bananas anymore, and I’m going through mucilage and Tucks like they were Diet Pepsi and Crepes).
OK, Here's how the ‘holding’ part works:
1. We create a Limited Liability Company to be funded on our first deal at the close of Escrow (the "Turko-Amazon Mining Co, a Nevada LLC" with you and me (or you’ns and us’ns) as co-members...you are the ‘managing’ member)
2. You obtain foreclosure data from the courthouse, or better yet, from a local FC publication (a few hundred buck a year)
4. I commence a five-piece mailing program to all distressed (foreclosed upon) homeowners, telling them that we buy houses for Full Price, All Cash or Terms, any condition (60%-65% of FMV is our full price offer which we get via a ‘hard money’ no qual loan: anything else would necessitate ‘terms,’ wherein the seller-carries and gets paid at the end of the trust).
5. I identify those distressed homeowners who are willing to deal with us (i.e., they are the only ones who answer my mailings. And when they call they get a recorded messages explaining exactly what we can do for them…if they’re interested, they then call my private toll-free 800 line)
6. I offer to take over their loan, bring the arrearages current (i.e., say, $5-6,000 or ?), get them out from under the property, and reestablish their credit with their lender
7. If they like what I have to say, we take a 30-45 Day Non-Exclusive Purchase Option from the homeowner (no option fee, no obligation…they can sell to anyone during the option period: but they have to give us a 10 days notice to exercise our option if they do get another offer)
8. We order and obtain a reinstatement quote from the lender
9. During the option term, I advertise for our resident beneficiary (buyer) via the newspaper and a hangman sign that you place on the property...the ad and the sign say: "No bank qual. No down payment. 3 pmts and clos. costs moves you in (e.g., which sum comes to, say, $10-11,000)."
10. Upon locating our buyer, we create a land trust to hold the property’s title (the homeowner being the ‘only’ beneficiary, at that point)
11. We open Escrow
12. We set our “Mutually Agreed Value” at 20% 30% or (?) ‘above’ what we owe on the mortgages(s) and/or any money owed to, and carried by, the former homeowner, if any.
13. The distressed owner leaves the property
14. We place the buyer's money into Escrow
15. We remit all sums necessary to bring the mortgage loan current (i.e., the $5-6,000)
15. We take an assignment of 90% of the beneficiary interest in the trust, with the other 10% remaining with the homeowner: which percentage will be forfeited to the LLC at the trust's termination (leaving the percentage with the borrower of record avoids open due-on-sale violation re. the existing financing, and avoids and transfer or conveyance tax or reassessment by the county…as the homeowner has only placed his property into an inter-vivos trust and has not relinquished more than 50% of the Power of Direction)
16. We now take a ‘Limited Power of Attorney’ from the former homeowner so that we can “vote” in his stead, directing the trustee on his/her behalf throughout the agreement (as far as he’s concerned, he sold the house and needn’t be involved in any day-to-day functions relative to it).
17. We next assign to our ‘resident beneficiary (our buyer)’ a 50% beneficiary interest in the trust (i.e., they then receive 100% of the benefits of homeownership, including income tax write-off, and 50% of the principal reduction and 50% of any future appreciation over the term): they get 100 of the bundle of rights in fee-simple real estate ownership, except for our half of the profit on sale.
18. We set the resident beneficiary’s monthly payments at, say, $100-$200.00 above what our actual payments are, and we set the Mutually Agreed Value (the amount above which profits will be shared) at some amount greater than what we got the property for.
19. At this point the trust leases the property to the resident beneficiary on a ‘triple-net’ lease basis for the term of the land trust (i.e., a full contractual obligation to pay the mortgage interest, property tax and insurance).
20. We then put the overage from Escrow into our LLC's bank account
21. The positive cash continues to flow to our LLC throughout the agreement, while the resident beneficiary pays all the bills and handles all maintenance, management and upkeep.
22. At the end of the (5, 7 10 or ? year) term, the property is sold for ‘Fair Market Value’: either to the resident beneficiary or to someone else (if the resident buys, he buys at FMV, MINUS the money owed to him from his 50% share in profits); and our LLC receives 100% of the [“bumped”] equity that we’ve been carrying from inception, and 50% of all net profits (which, when added to the up-front money we got in the beginning and our positive cash flow along the way, creates a nice incentive to do a whole bunch of these babies).
John! Free houses! They’re everywhere! They’re everywhere!
Your Next O’ Kin,
Cuz Bill
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
No New Loan!’ And ‘Making it BIG in
Creative Real Estate and Keeping It…This
Time,’ and semi-nude Chip and Dale Dancer
(…yep the chipmunks)
The following is an open letter that I wrote to my cousin John, in Orlando Florida after his having informed me in an E-mail that there were over 6,000 foreclosures within a few miles of him, and suggesting that maybe I should move to Orlando (which I’d love to do, but there are 13,000 foreclosures where I live, and as of late, I’ve developed a real affinity for gang wars, graffiti and drive-by shootings).
Dear John,
Regarding those foreclosure opportunities, with your good looks and my brains, we could buy them up. We could partner on dozens and dozens of them.
Here’s the deal: I contact the sellers, run the ads screen the calls and then advertise for and screen the buyer calls with our toll-free Adtrakker lines and do all the documentation and collections. You need merely get the Foreclosure lists (once a week), pick out the acceptable areas, and head-up any refurbishment or repairs that might be needed There is no, or very little, cash out of pocket. Our resident beneficiaries pay for all of that.
Some of them we resell for cash, and some (most) we hold for old age (which is creeping up on me, John: I don’t even buy green bananas anymore, and I’m going through mucilage and Tucks like they were Diet Pepsi and Crepes).
OK, Here's how the ‘holding’ part works:
1. We create a Limited Liability Company to be funded on our first deal at the close of Escrow (the "Turko-Amazon Mining Co, a Nevada LLC" with you and me (or you’ns and us’ns) as co-members...you are the ‘managing’ member)
2. You obtain foreclosure data from the courthouse, or better yet, from a local FC publication (a few hundred buck a year)
4. I commence a five-piece mailing program to all distressed (foreclosed upon) homeowners, telling them that we buy houses for Full Price, All Cash or Terms, any condition (60%-65% of FMV is our full price offer which we get via a ‘hard money’ no qual loan: anything else would necessitate ‘terms,’ wherein the seller-carries and gets paid at the end of the trust).
5. I identify those distressed homeowners who are willing to deal with us (i.e., they are the only ones who answer my mailings. And when they call they get a recorded messages explaining exactly what we can do for them…if they’re interested, they then call my private toll-free 800 line)
6. I offer to take over their loan, bring the arrearages current (i.e., say, $5-6,000 or ?), get them out from under the property, and reestablish their credit with their lender
7. If they like what I have to say, we take a 30-45 Day Non-Exclusive Purchase Option from the homeowner (no option fee, no obligation…they can sell to anyone during the option period: but they have to give us a 10 days notice to exercise our option if they do get another offer)
8. We order and obtain a reinstatement quote from the lender
9. During the option term, I advertise for our resident beneficiary (buyer) via the newspaper and a hangman sign that you place on the property...the ad and the sign say: "No bank qual. No down payment. 3 pmts and clos. costs moves you in (e.g., which sum comes to, say, $10-11,000)."
10. Upon locating our buyer, we create a land trust to hold the property’s title (the homeowner being the ‘only’ beneficiary, at that point)
11. We open Escrow
12. We set our “Mutually Agreed Value” at 20% 30% or (?) ‘above’ what we owe on the mortgages(s) and/or any money owed to, and carried by, the former homeowner, if any.
13. The distressed owner leaves the property
14. We place the buyer's money into Escrow
15. We remit all sums necessary to bring the mortgage loan current (i.e., the $5-6,000)
15. We take an assignment of 90% of the beneficiary interest in the trust, with the other 10% remaining with the homeowner: which percentage will be forfeited to the LLC at the trust's termination (leaving the percentage with the borrower of record avoids open due-on-sale violation re. the existing financing, and avoids and transfer or conveyance tax or reassessment by the county…as the homeowner has only placed his property into an inter-vivos trust and has not relinquished more than 50% of the Power of Direction)
16. We now take a ‘Limited Power of Attorney’ from the former homeowner so that we can “vote” in his stead, directing the trustee on his/her behalf throughout the agreement (as far as he’s concerned, he sold the house and needn’t be involved in any day-to-day functions relative to it).
17. We next assign to our ‘resident beneficiary (our buyer)’ a 50% beneficiary interest in the trust (i.e., they then receive 100% of the benefits of homeownership, including income tax write-off, and 50% of the principal reduction and 50% of any future appreciation over the term): they get 100 of the bundle of rights in fee-simple real estate ownership, except for our half of the profit on sale.
18. We set the resident beneficiary’s monthly payments at, say, $100-$200.00 above what our actual payments are, and we set the Mutually Agreed Value (the amount above which profits will be shared) at some amount greater than what we got the property for.
19. At this point the trust leases the property to the resident beneficiary on a ‘triple-net’ lease basis for the term of the land trust (i.e., a full contractual obligation to pay the mortgage interest, property tax and insurance).
20. We then put the overage from Escrow into our LLC's bank account
21. The positive cash continues to flow to our LLC throughout the agreement, while the resident beneficiary pays all the bills and handles all maintenance, management and upkeep.
22. At the end of the (5, 7 10 or ? year) term, the property is sold for ‘Fair Market Value’: either to the resident beneficiary or to someone else (if the resident buys, he buys at FMV, MINUS the money owed to him from his 50% share in profits); and our LLC receives 100% of the [“bumped”] equity that we’ve been carrying from inception, and 50% of all net profits (which, when added to the up-front money we got in the beginning and our positive cash flow along the way, creates a nice incentive to do a whole bunch of these babies).
John! Free houses! They’re everywhere! They’re everywhere!
Your Next O’ Kin,
Cuz Bill
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
Thursday, October 18, 2007
PRAYERS, WISHES, WANTS, NEEDS, DEATH AND DYING…AND DO YOU HONESTLY DESERVE WHAT YOU WISH FOR?
Bill J. Gatten
Some of us are born with the gifts that seem to automatically make superstars of us without a lot of effort (natural athletes, natural actors, natural musicians, artists, writers, the unnaturally lucky, etc); but alas, most of us are not superstars by virtue of our birthright. In fact, most of us have to establish whatever stardom we are ever to attain by the sweat of our brows, and most often in the face of sometimes seemingly insurmountable obstacles and handicaps that life has endowed us with (in order to test our steele) .
We did not choose the geographical location of our birth, our parents, their birth place or their mindsets; or the conditions under which they were raised, or how they raised us. We are, none-the-less, victims of all of those aspects of our own heredity, parentage, peer-pressure and early environment. Fortunately though, we have been given the gift of Free-Will, and the right to override or neutralize any part of our personal heritage and neural programming that we are willing to look at closely enough…and take the time necessary to understand it all and work through it, around it and in spite of it.
This aspect of our personal control over who we are, and can become, has many names: Self-Directed Destiny; Programmed Life Management; Objective Oriented Self-Discipline; Structured Determination, Focused Achievement, and so on. But to me it all boils down to just plain old ‘Personal Goal Setting.’
The most common error (and the most disastrous one) in Goal Setting is that of mistaking one’s Wishes (wants) with what Napoleon Hill referred to as “Burning Desire (unquenchable dire need).” It is only this burning desire that can lead us through the life-changes and mental re-programming so necessary for achievement of the abundance that is our absolute right and which most of us desire—even pray for.
To make a wish, we need do nothing but think it, retain it in our thoughts for a while, and wait and see what happens. With dire necessity, however, we must move several steps further, and acknowledge without question that we will actually die in some way should these elemental components of who we are go unfulfilled. We humans are simply incapable of allowing any real need to go unrealized. We will strive to fulfill our needs at any cost: wishes, hopes, dreams and passive prayer take a backseat..
Have any of us ever gone without water or food indefinitely? No. That’s because we would die if we did. Do drug addicts, alcoholics and tobacco users go without their regular daily fixes? No, because a terrible sickness and feeling of immense loss would overtake them, and a major part of who they have become would have to die a painful death. The fact is that no true need goes unrealized…ever. One might idly wish for food and drink and not get it right away: but when it becomes a matter of life and death it will never fail to appear (even to the extent of one’s own body’s resorting to digestion of itself in order to prolong existence as long as possible). Ergo, it would then seem that if a particular goal were to become a necessity incorporated into this “fear of death” equation, its attainment would be certain.
In support of this concept, consider the reason we panic when deprived of air for a brief while. It’s because we fear death. When struck with illness, our fear of dying calls our sympathetic and parasympathetic neural systems to the healing process to the detriment of life-saving sugar, protein and fat stores. When we have too little income, why do we worry and fret about bills, creditor retribution, legal action and loss of our personal possessions? It’s because we are overtly afraid of being unable to sustain our lives if we fail at those activities that are necessary for our survival.
It is the universal fear of dying that forces all of us to strive, to forage, earn, achieve and build (and re-build). Though we are hardly ever consciously aware of this ever-present fear it’s always there, prodding us ever onward, requiring toil, attainment, procreation and the building of stores in reserve. In view of all of this, doesn’t it then stand to reason that if we would seek to accomplish something heretofore seemingly unattainable or impossible, that it would naturally manifest if it were to be directly associated with our natural fear of death (i.e., becoming a dire necessity).
Let’s say you'd like to build a 40-story high-rise, or, say, a 1,200 foot-long aircraft carrier, you certainly are free to do begin doing so if you choose. Many have in fact built thousands of these things and were greatly rewarded for having done so. But, until completion of such work becomes an absolute necessity, you likely will never start; and if you do start, you will likely never finish. It's only when a major aspect of your life depends on it and will surely die otherwise, that you will do what all builders of 40-story high-rise buildings and aircraft carriers have always done…pull it from potential by imagining it, converting it to substance by drawing it and making it real by building it.
So…before writing out your objectives, choosing a mantra, and heading off to visit Mahesh Yogi in India on your trek toward bliss, take the time to figure out what your goals actually are; which of your “wishes” are worthy of being converted to “dire needs”; and what your resources for accomplishing these aspirations might be. Should you come up short in the “resources” area, then you have to write-out a plan for either attaining what you are lacking, or for replacing what your are lacking with something else of equal value that you have more than enough of (e.g., physical work can replace the need for cash; eliminating someone else's burden can replace the need for credit; patience can replace experience; caution, diligence and research can replace formal education; hard-learned valuable skills. And tenacity trumps a college degree every time.
A good test of what wants can be converted to needs, then to dire necessity is to ask yourself which of the following you could in-fact live without in reasonable comfort…if you had to. Strike through those items that are not completely necessary, and without which some part of you would not surely die. The items that are left over are beyond wishes: they are your wants. But its crucially important to know that until each want is elevated to the status of Need (a life-sustaining necessity) it will likely continue to remain allusive if not wholly unattainable.
• Full-time self-employment
• More social acceptance
• More public popularity
• Fame
• Prestige
• A better/safer living environment
• A rich person’s high-class lifestyle
• A bigger and more prestigious home
• A new, more rewarding career
• A less strenuous, demanding or tedious job
• More vacations and the ability to afford them
• A much higher income
• A new or more suitable spouse
• A new identity
• A more attractive physique
• A private airplane
• A chauffer driven limousine
• A new face
• New teeth
• A trimmer or m ore attractive body
• New friends
• Better friends
• A larger bank account
• A large stock portfolio
• A retirement fund
• True Happiness (Bliss)
• Personal contentment
• Freedom from drudgery
• More self-esteem
• A greater inner feeling of personal value
• Freedom from disease worries
• A newer car
• A more showy car
• An executive job title
• A bigger office
• A well-defined life-purpose
• Great spiritual fulfillment
• Greater spiritual understanding
• Absolute certainty re. the existence or non-existence of God, ghosts, space aliens, angels and mental telepathy
• A TIVO
• The ability to comfortably take risk
Prayers, Wishes, Wants (Desires)…and true Needs:
1) Praying - acknowledging your inability to attain on your own,
2) Wishing - being dissatisfied with the status quo (the way things are);
3) Wanting –preferring one thing over another thing with which you are not wholly dissatisfied
4) Needing – requiring a necessity of life (that avoids death to some degree)
Never forget that, according to Epictetus, a 5th Century BC orator: “[A person's] Wealth is measured only by the expense of one’s [that person's] pleasures.”
In other words, when life itself is your gift, and when the least expensive pleasures are your greatest rewards, you are already wealthy beyond calculation: no matter how much or how little money you have. My own true net-worth quadrupled when my children were born, and quadrupled again with the arrival of my grandchildren. Think about it…who is wealthier: the man with a big house and matching mortgage, five tapped-out credit cards and a 72-month payment plan on a new Mercedes Benz convertible--or a well-loved and highly respected Eskimo hunter with eight good dogs, a jolly fat wife, seven healthy children and five years worth of walrus blubber…and plenty more where that came from?
The answer is, of course, the Eskimo…but only until and unless he would develop an eye for more than he has and not be able to afford it: an insatiable taste for filet mignon, Chateau Lafitte Rothschild and Mercedes convertibles. Should that happen, he instantly tumbles from real true Wealth to abject poverty…UNLESS those things are what he needed and knew he deserved all along, and he planned well relative to their affordability and his adaptability.
Converting a Want to a Need, and a Need to a Burning Desire (dire need) are the first real steps in goal setting, and the process requires much thought and definitive action. For example, if you're having difficulty in making the life-saving decision to jump off the 200 foot high cliff into the cold raging river below, in order to protect yourself from the menacing band of marauders who are hot on your trail, out to kill you, and drawing nearer every minute…just do this: Tie the end of a long rope around your waist, then tie the other end around a massive round rock. Then roll the rock to the edge of the cliff. If you‘re still afraid to jump but know you have to, just push the rock the rest of the way over…your fate is now sealed. You needn't worry about making the decisions any longer. Definitive action tied to need is what brings all “potential” into the physical universe and into our lives.
The Peloponnesian War of 404 BC between the Spartans and the Athenians serves a good example of how wants are quickly converted to needs.
When the Spartan ships landed and the soldiers were outfitted and lined up for the siege, all their ships were set on fire, eliminating any possibility of retreat. It was at that point that the Spartans realized that they must either be the victors or die trying (as it were)…there was no means for retreat. With this added incentive the Spartans annihilated 25% of the Athenian Population and took charge of Greece…having fulfilled a need that might not have worked out so well for them had they retained the ability to withdraw when the going got rough.
To become honestly wealthy and attain abundance in this life you must first know what it is that you honestly want, and then you must convert that want to dire need and give yourself no choice but success.
SO WHAT WILL BE YOUR PLAN OF ACTION (I.E., YOUR “POA”)?
One’s “POA” is that long rope and that big ol' rock at the edge of the cliff referred to earlier.
The POA is your design for success. It is the very map of your destiny. It becomes your guide to all of what you must do to become who and what you ‘need’ to be (not what you ‘want’ to be), and to attain all of what you need to own and control during this roller coaster ride called “Life.”
Goals that are held only in the mind of the hopeful are never goals at all. They're just residual random electronic impulses left over from unfulfilled wishes, nothing more. It's only when our hopes and dreams begin the physical transformation from potential (yet to exist) to substance (materiality) through the process of writing them down on paper (or chiseling them in stone) that they can begin to metamorphose into need fulfillment.
As has been said many times, handwriting your goals is always preferable to typing them out in your word processor. The more arduous and physical the mind-to-hand transference exercise is, the more likely the transformation will take place (i.e., the moving of a conceptualization from the ethereal realm of pure ‘potential’ into our world or physical reality). Although I don’t believe viewing your goals daily and repeating them aloud to the bathroom mirror and moaning a mantra is ever necessary, it is none-the-less a good idea to keep them in a safe place, and review and modify them every few months.
Forty years ago, I was dissatisfied living on only $326 per-month (before deductions); but with that income I could fairly comfortably cover a $60.00 per-month rent payment; a $35.00 per month payments on my brand new Ford Falcon; I could buy gasoline (39 cents a gallon), J.C. Penny's clothing; and all the groceries I needed, for about $15.00 per week. And after the bills were paid I still occasionally had enough left over to take my wife to a drive-in movie once a month or so. Oh, and water was almost free then (‘didn’t know it had to come in a bottle in those days).
Interestingly most of my close friends at the time who made even less than I did could somehow always afford to buy a case of beer along with their groceries every week. I often wondered how they managed to do that, when we seldom had anything left over at all, especially for fun stuff. I once asked my buddy Bob about it and he jokingly replied…”Hey man, it’s because beer’s a number one staple in my diet and I can’t live without it.” I didn’t get it at the time, but forty years later I now appreciate the philosophy. This fact is that I only “wanted” a case of beer every week, but didn’t need it, so didn’t budget for it. Bob needed it…and it appeared every week. If it’s not a need, then it’s only a passing fancy.
In those days we associated with some who couldn't afford even as much as we could (much less ol’ Bob): but I felt somehow looked-down-upon by those with whom I most wanted to impress and associate: high school friends who were coming out of college as doctors, lawyers, engineers, dentists; local civic activists; politicians, etc.). But now, 40 years later, because of converting my wishes to necessities, I find myself earning more than most all of those old friends, but prone to becoming frantic if my monthly income drops below $30-40,000.00 (after deductions).
What do you suppose it is that I'm doing any differently today than I was forty years ago?
I'm doing absolutely nothing different, except following a plan that converts wants to needs. And directly because of that plan, I now live in a much larger house in a much nicer area; I drive nicer cars and because of a far larger bank account, take more elaborate vacations and eat snootier foods.
And, too, I've thrust various ancillary necessities into my current lifestyle that weren't there before (vacation cruises, country clubs, first-class and frequent airline travel, nice hotels, fine dining, fine clothing, housekeepers, gardeners, maintenance people, big screen TV's, hobnobbing with the rich and phony, etc.): all this is luxury that was absent and thought to be unattainable a few years back. But now-a-days I never think of these elements of my life as being luxuries…today they are (in my present mindset) integral pieces of who I am, whom I have worked and planned to become, and whom I choose to be (…and I ain't finished yet).
Were I now to be deprived of any one of these previously ancillary and unnecessary (un-needed) items, a part of who I envision myself to be would cease to exist (i.e., that is to say that part of my persona would die). My so-called luxuries are no longer just wants and wishes…but are now a part of my bundle of perceived necessities to be retained and defended as an important part of the self I have built.
Could I live without these things if I had to? Absolutely! A part of me could, but another part would die and that scares the other part enough to endeavor to avoid the loss. Could I be happy without these things? Absolutely (OK, ‘maybe’…after a while). Am I wealthier because of these things? No! 'Richer perhaps, but by no means wealthier. But, would I fight to defend and hang on to what I have? You bet! Would I gladly and freely give away any extra that I have been given? You bet! It’s weird…but the more I give of what I have, the less I need and the more I receive, for some inexplicable reason.
This “reason,” by the way, is fully ‘explicated (explicable)’ in the Bible and virtually all other religious writings: what it boils down to is that the Universe abhors a vacuum; therefore, our deigning to create a void by giving something away can only result in the instantaneous refilling of it…which process invariably returns far more than was given away:
“Give it away and you shall receive more of it.” “Ask “how” and never “why” and you will be answered and rewarded.” “Seek and you will find abundance…when it is truly needed.” That is the uncompromising Universal Law of abundance, and…if you ever read Napoleon Hill’s, ‘Think and Grow Rich,’ that is…“The Secret.”
Oh yeah, and long-live the marvelous third-party trustee, co-beneficiary, inter vivos title-holding land trust transfer (the NARS Equity Holding Trust™ Transfer System).
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
Some of us are born with the gifts that seem to automatically make superstars of us without a lot of effort (natural athletes, natural actors, natural musicians, artists, writers, the unnaturally lucky, etc); but alas, most of us are not superstars by virtue of our birthright. In fact, most of us have to establish whatever stardom we are ever to attain by the sweat of our brows, and most often in the face of sometimes seemingly insurmountable obstacles and handicaps that life has endowed us with (in order to test our steele) .
We did not choose the geographical location of our birth, our parents, their birth place or their mindsets; or the conditions under which they were raised, or how they raised us. We are, none-the-less, victims of all of those aspects of our own heredity, parentage, peer-pressure and early environment. Fortunately though, we have been given the gift of Free-Will, and the right to override or neutralize any part of our personal heritage and neural programming that we are willing to look at closely enough…and take the time necessary to understand it all and work through it, around it and in spite of it.
This aspect of our personal control over who we are, and can become, has many names: Self-Directed Destiny; Programmed Life Management; Objective Oriented Self-Discipline; Structured Determination, Focused Achievement, and so on. But to me it all boils down to just plain old ‘Personal Goal Setting.’
The most common error (and the most disastrous one) in Goal Setting is that of mistaking one’s Wishes (wants) with what Napoleon Hill referred to as “Burning Desire (unquenchable dire need).” It is only this burning desire that can lead us through the life-changes and mental re-programming so necessary for achievement of the abundance that is our absolute right and which most of us desire—even pray for.
To make a wish, we need do nothing but think it, retain it in our thoughts for a while, and wait and see what happens. With dire necessity, however, we must move several steps further, and acknowledge without question that we will actually die in some way should these elemental components of who we are go unfulfilled. We humans are simply incapable of allowing any real need to go unrealized. We will strive to fulfill our needs at any cost: wishes, hopes, dreams and passive prayer take a backseat..
Have any of us ever gone without water or food indefinitely? No. That’s because we would die if we did. Do drug addicts, alcoholics and tobacco users go without their regular daily fixes? No, because a terrible sickness and feeling of immense loss would overtake them, and a major part of who they have become would have to die a painful death. The fact is that no true need goes unrealized…ever. One might idly wish for food and drink and not get it right away: but when it becomes a matter of life and death it will never fail to appear (even to the extent of one’s own body’s resorting to digestion of itself in order to prolong existence as long as possible). Ergo, it would then seem that if a particular goal were to become a necessity incorporated into this “fear of death” equation, its attainment would be certain.
In support of this concept, consider the reason we panic when deprived of air for a brief while. It’s because we fear death. When struck with illness, our fear of dying calls our sympathetic and parasympathetic neural systems to the healing process to the detriment of life-saving sugar, protein and fat stores. When we have too little income, why do we worry and fret about bills, creditor retribution, legal action and loss of our personal possessions? It’s because we are overtly afraid of being unable to sustain our lives if we fail at those activities that are necessary for our survival.
It is the universal fear of dying that forces all of us to strive, to forage, earn, achieve and build (and re-build). Though we are hardly ever consciously aware of this ever-present fear it’s always there, prodding us ever onward, requiring toil, attainment, procreation and the building of stores in reserve. In view of all of this, doesn’t it then stand to reason that if we would seek to accomplish something heretofore seemingly unattainable or impossible, that it would naturally manifest if it were to be directly associated with our natural fear of death (i.e., becoming a dire necessity).
Let’s say you'd like to build a 40-story high-rise, or, say, a 1,200 foot-long aircraft carrier, you certainly are free to do begin doing so if you choose. Many have in fact built thousands of these things and were greatly rewarded for having done so. But, until completion of such work becomes an absolute necessity, you likely will never start; and if you do start, you will likely never finish. It's only when a major aspect of your life depends on it and will surely die otherwise, that you will do what all builders of 40-story high-rise buildings and aircraft carriers have always done…pull it from potential by imagining it, converting it to substance by drawing it and making it real by building it.
So…before writing out your objectives, choosing a mantra, and heading off to visit Mahesh Yogi in India on your trek toward bliss, take the time to figure out what your goals actually are; which of your “wishes” are worthy of being converted to “dire needs”; and what your resources for accomplishing these aspirations might be. Should you come up short in the “resources” area, then you have to write-out a plan for either attaining what you are lacking, or for replacing what your are lacking with something else of equal value that you have more than enough of (e.g., physical work can replace the need for cash; eliminating someone else's burden can replace the need for credit; patience can replace experience; caution, diligence and research can replace formal education; hard-learned valuable skills. And tenacity trumps a college degree every time.
A good test of what wants can be converted to needs, then to dire necessity is to ask yourself which of the following you could in-fact live without in reasonable comfort…if you had to. Strike through those items that are not completely necessary, and without which some part of you would not surely die. The items that are left over are beyond wishes: they are your wants. But its crucially important to know that until each want is elevated to the status of Need (a life-sustaining necessity) it will likely continue to remain allusive if not wholly unattainable.
• Full-time self-employment
• More social acceptance
• More public popularity
• Fame
• Prestige
• A better/safer living environment
• A rich person’s high-class lifestyle
• A bigger and more prestigious home
• A new, more rewarding career
• A less strenuous, demanding or tedious job
• More vacations and the ability to afford them
• A much higher income
• A new or more suitable spouse
• A new identity
• A more attractive physique
• A private airplane
• A chauffer driven limousine
• A new face
• New teeth
• A trimmer or m ore attractive body
• New friends
• Better friends
• A larger bank account
• A large stock portfolio
• A retirement fund
• True Happiness (Bliss)
• Personal contentment
• Freedom from drudgery
• More self-esteem
• A greater inner feeling of personal value
• Freedom from disease worries
• A newer car
• A more showy car
• An executive job title
• A bigger office
• A well-defined life-purpose
• Great spiritual fulfillment
• Greater spiritual understanding
• Absolute certainty re. the existence or non-existence of God, ghosts, space aliens, angels and mental telepathy
• A TIVO
• The ability to comfortably take risk
Prayers, Wishes, Wants (Desires)…and true Needs:
1) Praying - acknowledging your inability to attain on your own,
2) Wishing - being dissatisfied with the status quo (the way things are);
3) Wanting –preferring one thing over another thing with which you are not wholly dissatisfied
4) Needing – requiring a necessity of life (that avoids death to some degree)
Never forget that, according to Epictetus, a 5th Century BC orator: “[A person's] Wealth is measured only by the expense of one’s [that person's] pleasures.”
In other words, when life itself is your gift, and when the least expensive pleasures are your greatest rewards, you are already wealthy beyond calculation: no matter how much or how little money you have. My own true net-worth quadrupled when my children were born, and quadrupled again with the arrival of my grandchildren. Think about it…who is wealthier: the man with a big house and matching mortgage, five tapped-out credit cards and a 72-month payment plan on a new Mercedes Benz convertible--or a well-loved and highly respected Eskimo hunter with eight good dogs, a jolly fat wife, seven healthy children and five years worth of walrus blubber…and plenty more where that came from?
The answer is, of course, the Eskimo…but only until and unless he would develop an eye for more than he has and not be able to afford it: an insatiable taste for filet mignon, Chateau Lafitte Rothschild and Mercedes convertibles. Should that happen, he instantly tumbles from real true Wealth to abject poverty…UNLESS those things are what he needed and knew he deserved all along, and he planned well relative to their affordability and his adaptability.
Converting a Want to a Need, and a Need to a Burning Desire (dire need) are the first real steps in goal setting, and the process requires much thought and definitive action. For example, if you're having difficulty in making the life-saving decision to jump off the 200 foot high cliff into the cold raging river below, in order to protect yourself from the menacing band of marauders who are hot on your trail, out to kill you, and drawing nearer every minute…just do this: Tie the end of a long rope around your waist, then tie the other end around a massive round rock. Then roll the rock to the edge of the cliff. If you‘re still afraid to jump but know you have to, just push the rock the rest of the way over…your fate is now sealed. You needn't worry about making the decisions any longer. Definitive action tied to need is what brings all “potential” into the physical universe and into our lives.
The Peloponnesian War of 404 BC between the Spartans and the Athenians serves a good example of how wants are quickly converted to needs.
When the Spartan ships landed and the soldiers were outfitted and lined up for the siege, all their ships were set on fire, eliminating any possibility of retreat. It was at that point that the Spartans realized that they must either be the victors or die trying (as it were)…there was no means for retreat. With this added incentive the Spartans annihilated 25% of the Athenian Population and took charge of Greece…having fulfilled a need that might not have worked out so well for them had they retained the ability to withdraw when the going got rough.
To become honestly wealthy and attain abundance in this life you must first know what it is that you honestly want, and then you must convert that want to dire need and give yourself no choice but success.
SO WHAT WILL BE YOUR PLAN OF ACTION (I.E., YOUR “POA”)?
One’s “POA” is that long rope and that big ol' rock at the edge of the cliff referred to earlier.
The POA is your design for success. It is the very map of your destiny. It becomes your guide to all of what you must do to become who and what you ‘need’ to be (not what you ‘want’ to be), and to attain all of what you need to own and control during this roller coaster ride called “Life.”
Goals that are held only in the mind of the hopeful are never goals at all. They're just residual random electronic impulses left over from unfulfilled wishes, nothing more. It's only when our hopes and dreams begin the physical transformation from potential (yet to exist) to substance (materiality) through the process of writing them down on paper (or chiseling them in stone) that they can begin to metamorphose into need fulfillment.
As has been said many times, handwriting your goals is always preferable to typing them out in your word processor. The more arduous and physical the mind-to-hand transference exercise is, the more likely the transformation will take place (i.e., the moving of a conceptualization from the ethereal realm of pure ‘potential’ into our world or physical reality). Although I don’t believe viewing your goals daily and repeating them aloud to the bathroom mirror and moaning a mantra is ever necessary, it is none-the-less a good idea to keep them in a safe place, and review and modify them every few months.
Forty years ago, I was dissatisfied living on only $326 per-month (before deductions); but with that income I could fairly comfortably cover a $60.00 per-month rent payment; a $35.00 per month payments on my brand new Ford Falcon; I could buy gasoline (39 cents a gallon), J.C. Penny's clothing; and all the groceries I needed, for about $15.00 per week. And after the bills were paid I still occasionally had enough left over to take my wife to a drive-in movie once a month or so. Oh, and water was almost free then (‘didn’t know it had to come in a bottle in those days).
Interestingly most of my close friends at the time who made even less than I did could somehow always afford to buy a case of beer along with their groceries every week. I often wondered how they managed to do that, when we seldom had anything left over at all, especially for fun stuff. I once asked my buddy Bob about it and he jokingly replied…”Hey man, it’s because beer’s a number one staple in my diet and I can’t live without it.” I didn’t get it at the time, but forty years later I now appreciate the philosophy. This fact is that I only “wanted” a case of beer every week, but didn’t need it, so didn’t budget for it. Bob needed it…and it appeared every week. If it’s not a need, then it’s only a passing fancy.
In those days we associated with some who couldn't afford even as much as we could (much less ol’ Bob): but I felt somehow looked-down-upon by those with whom I most wanted to impress and associate: high school friends who were coming out of college as doctors, lawyers, engineers, dentists; local civic activists; politicians, etc.). But now, 40 years later, because of converting my wishes to necessities, I find myself earning more than most all of those old friends, but prone to becoming frantic if my monthly income drops below $30-40,000.00 (after deductions).
What do you suppose it is that I'm doing any differently today than I was forty years ago?
I'm doing absolutely nothing different, except following a plan that converts wants to needs. And directly because of that plan, I now live in a much larger house in a much nicer area; I drive nicer cars and because of a far larger bank account, take more elaborate vacations and eat snootier foods.
And, too, I've thrust various ancillary necessities into my current lifestyle that weren't there before (vacation cruises, country clubs, first-class and frequent airline travel, nice hotels, fine dining, fine clothing, housekeepers, gardeners, maintenance people, big screen TV's, hobnobbing with the rich and phony, etc.): all this is luxury that was absent and thought to be unattainable a few years back. But now-a-days I never think of these elements of my life as being luxuries…today they are (in my present mindset) integral pieces of who I am, whom I have worked and planned to become, and whom I choose to be (…and I ain't finished yet).
Were I now to be deprived of any one of these previously ancillary and unnecessary (un-needed) items, a part of who I envision myself to be would cease to exist (i.e., that is to say that part of my persona would die). My so-called luxuries are no longer just wants and wishes…but are now a part of my bundle of perceived necessities to be retained and defended as an important part of the self I have built.
Could I live without these things if I had to? Absolutely! A part of me could, but another part would die and that scares the other part enough to endeavor to avoid the loss. Could I be happy without these things? Absolutely (OK, ‘maybe’…after a while). Am I wealthier because of these things? No! 'Richer perhaps, but by no means wealthier. But, would I fight to defend and hang on to what I have? You bet! Would I gladly and freely give away any extra that I have been given? You bet! It’s weird…but the more I give of what I have, the less I need and the more I receive, for some inexplicable reason.
This “reason,” by the way, is fully ‘explicated (explicable)’ in the Bible and virtually all other religious writings: what it boils down to is that the Universe abhors a vacuum; therefore, our deigning to create a void by giving something away can only result in the instantaneous refilling of it…which process invariably returns far more than was given away:
“Give it away and you shall receive more of it.” “Ask “how” and never “why” and you will be answered and rewarded.” “Seek and you will find abundance…when it is truly needed.” That is the uncompromising Universal Law of abundance, and…if you ever read Napoleon Hill’s, ‘Think and Grow Rich,’ that is…“The Secret.”
Oh yeah, and long-live the marvelous third-party trustee, co-beneficiary, inter vivos title-holding land trust transfer (the NARS Equity Holding Trust™ Transfer System).
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
Thursday, October 11, 2007
ANOTHER WEIRD DECISION
Re. Lease Options
By Bill Gatten
In a nutshell, what happened in this case was that the Option term was overshot by nearly 3 months before any attempt to exercise it took place: but the Optionor was none-the-less forced to sell at the original option price. The court mandated this sale, even though (and partially because) the property had increased in value by $54,000. The Optionor (owner) in this case was even directed by the court to refund all moneys having been taken for insurance and property tax over the term of the purchase option, and also to pay reasonable attorneys fees to the optionee on top of it all.
I have researched the data through the defendant in the case, one of the brokers involved and an attorney friend of mine who happens to know someone involved in the case (knows the uncle of the cousin of the plaintiff's next-door neighbor's former boyfriend’s Gardner’s uncle).
Here's the deal as told to me and verified by direct interviews with two of the parties involved and the others mentioned above:
On December 1st, 1997, Party A (a seller) accepted a PACTrust™ Purchase Offer from Party B (the buyer) which was to have commenced on, or about the 18th of the same month, and which was to have include payments for PITI+HOA and a monthly Trustee Fee. The property was deemed to have been worth $195,000 at the time, but the property owner accepted a PACTRust™ Mutually Agreed Value of $181,000. Their real estate broker informed the seller that Party B had filed a bankruptcy in the recent past, and that their former home had been deeded to a relative to protect it from the bankruptcy proceedings.
On December 18, a new agreement…a Lease Option…was drawn up in lieu of the PACTrust™ because the buyer’s attorney didn’t under it and said that a Lease Option would do the same thing and be simpler. This change was initially rejected by Seller; but being faced with the expense of re-marketing the property, relented and accept the Leaser Option alternative. Party A indicated that the Lease Option would become effective only if there was a full Escrow, and then only upon the official closing of such Escrow. However, the Escrow was never opened due to the hesitation of the Optionee to bring in all the required monies…again the sellers relented and allowed the Lease Option to begin without an escrow process.. It was clearly understood by all parties at that time that a balloon payment relative to the financing on the property was coming due in full on 08/01/99 (about one year and eight months later).
1/98 - The first payment and partial option fee was several weeks late ion coming. The hazard insurance and the HOA were not paid by the occupant for 2 months.
2/98 - Option Agreement (retroactive from 12/18/97 to 12/18/98) finally executed by Optionor, but never acknowledged by Optionees.
A year goes by…
12-18-98 - Option Agreement terminates. There is no offer or effort to exercise the option to buy.
2/1/99 - Property had gone up in value from $181,000 to approximately $235,000 (good upswing in Ca. Market). Over the term of the Option Agreement, the monthly payments had invariably been 1 to 2 months late (to the detriment of Optionor's credit record) and paid only after “nagging and begging” by the Optionor. Likewise, the Homeowner’s Association dues were always 2-3 months late. The hazard insurance carrier threatened cancellation for non-payment on at least one occasion. On various occasions, Party A had to pay HOA dues our of their own pocket in order to avoid a lien being placed on the property by the association…an act that would end up biting them butt-wise (as it were) later on.
2/15/99 - Party B (now a rental tenant on holdover) was notified of the planned sale of the property by Party A, who, feeling sorry for them and their financial condition, offered to return Party B's original option fee (about $3,500). Party B then became aware of the value of the house, and sought out an attorney (a partner in the law firm of Tyler and Dorsa, Temecula, Ca). This firm, I'm told, sued for their client’s (Party B's) right to exercise the Lease Purchase Option, even though the option date had bypassed by over three months.
Party B’s claim was that they had been iunder the impression that they had obtained a financing commitment at 85% LTV just prior to, or just after approaching the law firm; but were subsequently turned-down by the lender when it was discovered that a house they had formerly owned had been foreclosed upon. It was also discovered by at that time that Party B was in the midst of an "eviction" and UDT Action: it is rumored that to hide the property from their BK they had moved a relative into it, whom their lender thought was the borrower… (this info is not confirmed, however).
Next, Party B made a Purchase Offer to Party A for a sum, which would have given Party A about $10,000 cash. That offer was rejected and followed with a counter offer for an amount that was $10,000 under market. Party B rejected the counter.
The suit that then ensued was based upon: "The detrimental reliance of Party B upon an oral modification of the original Lease Option (purportedly an oral Agreement to Extend…which Party A insists was never proffered, but which the Realtor for Party B insisted at the hearing had been made)." Interestingly, the Lease Option contract contained an estopple strictly forbidding any reliance upon ANY oral modifications to the Agreement (but that didn't matter to our "pioneer law maker, semi-retired" judge/arbitrator).
Now, Party A, in order to avoid the minimum of a one year delay that a court hearing would no doubt entail, agreed after the failure of their UDT, to Arbitration. The arbitration hearing was overseen by one Judge Kenneth Ziebarth Ret. (retired, but still sitting on the bench in San Juan Capistrano) and concluded by "J.A.M.A. Endispute" at the rate of $240 per hour (including the Judge's research).
5/4/99 Judgement rendered in favor of Party B. The judge's statement was that "Even in view of the caveat prohibiting reliance upon oral modifications, there must have been acceptance. Why on Earth else would Party B not have exercised an Option that would clearly give them $54,000 in equity in a property in which they had been diligently making payments on for over a year?" The order was for Party A to sell to Party B at the price of $181,000 (the original Option Price); and to give Party B 60 days in which to arrange for financing. And since the Option itself did not contain a provision for HOA dues and insurance, Party A is now also to refund all such sums paid by Party B. The fact that Party B was not responsible for the HOA dues was, of course, evidenced by Party A's having paid them on several occasions. They are also directed to pay court costs and all of plaintiff's reasonable attorney's fees (so I am told).
It appears that a Hard Money lender has now agreed to loan 75% on the property, without any consideration for credit, credit history or the former BK and eviction record. It is apparent to all concerned, however, that once the sale does take place, Party B will be forced to default and lose the property to the hard-money lender: at this point they are believed to be virtually "stone broke." They haven’t even enough even for Closing Costs, and have never, it is said, had enough money to even cover their lease obligations on a timely basis, much less the new mortgage payments which will be considerably higher.
Closing Costs? No problemo. Party B has indicated that they plan to cover their Closing Costs with the settlement money from Party A. And Party A has a taped recorded message from Party B indicating that if Party B's payment record is revealed to the new prospective lender, that they (Party B) will tie up the property beyond the call date of the existing loan, and notify the lender that the house is not owner-occupied (a provision of reinstatement of the 5 year call date).
How do you spell, "This deal sucks?"
Bill
In answer to those who are asking the question, Mrs. A tells us that she and Mr. A would now “give anything” to have had the foresight to have insisted on the original PACTrust™ offer as originally proposed. It would have made Party B no more than a tenant in the property and easy to evict without the claim equity, options or ownership rights per-se (even though all the "primary benefits of ownership” would have been held fully in tact for the resident beneficiary).
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
By Bill Gatten
In a nutshell, what happened in this case was that the Option term was overshot by nearly 3 months before any attempt to exercise it took place: but the Optionor was none-the-less forced to sell at the original option price. The court mandated this sale, even though (and partially because) the property had increased in value by $54,000. The Optionor (owner) in this case was even directed by the court to refund all moneys having been taken for insurance and property tax over the term of the purchase option, and also to pay reasonable attorneys fees to the optionee on top of it all.
I have researched the data through the defendant in the case, one of the brokers involved and an attorney friend of mine who happens to know someone involved in the case (knows the uncle of the cousin of the plaintiff's next-door neighbor's former boyfriend’s Gardner’s uncle).
Here's the deal as told to me and verified by direct interviews with two of the parties involved and the others mentioned above:
On December 1st, 1997, Party A (a seller) accepted a PACTrust™ Purchase Offer from Party B (the buyer) which was to have commenced on, or about the 18th of the same month, and which was to have include payments for PITI+HOA and a monthly Trustee Fee. The property was deemed to have been worth $195,000 at the time, but the property owner accepted a PACTRust™ Mutually Agreed Value of $181,000. Their real estate broker informed the seller that Party B had filed a bankruptcy in the recent past, and that their former home had been deeded to a relative to protect it from the bankruptcy proceedings.
On December 18, a new agreement…a Lease Option…was drawn up in lieu of the PACTrust™ because the buyer’s attorney didn’t under it and said that a Lease Option would do the same thing and be simpler. This change was initially rejected by Seller; but being faced with the expense of re-marketing the property, relented and accept the Leaser Option alternative. Party A indicated that the Lease Option would become effective only if there was a full Escrow, and then only upon the official closing of such Escrow. However, the Escrow was never opened due to the hesitation of the Optionee to bring in all the required monies…again the sellers relented and allowed the Lease Option to begin without an escrow process.. It was clearly understood by all parties at that time that a balloon payment relative to the financing on the property was coming due in full on 08/01/99 (about one year and eight months later).
1/98 - The first payment and partial option fee was several weeks late ion coming. The hazard insurance and the HOA were not paid by the occupant for 2 months.
2/98 - Option Agreement (retroactive from 12/18/97 to 12/18/98) finally executed by Optionor, but never acknowledged by Optionees.
A year goes by…
12-18-98 - Option Agreement terminates. There is no offer or effort to exercise the option to buy.
2/1/99 - Property had gone up in value from $181,000 to approximately $235,000 (good upswing in Ca. Market). Over the term of the Option Agreement, the monthly payments had invariably been 1 to 2 months late (to the detriment of Optionor's credit record) and paid only after “nagging and begging” by the Optionor. Likewise, the Homeowner’s Association dues were always 2-3 months late. The hazard insurance carrier threatened cancellation for non-payment on at least one occasion. On various occasions, Party A had to pay HOA dues our of their own pocket in order to avoid a lien being placed on the property by the association…an act that would end up biting them butt-wise (as it were) later on.
2/15/99 - Party B (now a rental tenant on holdover) was notified of the planned sale of the property by Party A, who, feeling sorry for them and their financial condition, offered to return Party B's original option fee (about $3,500). Party B then became aware of the value of the house, and sought out an attorney (a partner in the law firm of Tyler and Dorsa, Temecula, Ca). This firm, I'm told, sued for their client’s (Party B's) right to exercise the Lease Purchase Option, even though the option date had bypassed by over three months.
Party B’s claim was that they had been iunder the impression that they had obtained a financing commitment at 85% LTV just prior to, or just after approaching the law firm; but were subsequently turned-down by the lender when it was discovered that a house they had formerly owned had been foreclosed upon. It was also discovered by at that time that Party B was in the midst of an "eviction" and UDT Action: it is rumored that to hide the property from their BK they had moved a relative into it, whom their lender thought was the borrower… (this info is not confirmed, however).
Next, Party B made a Purchase Offer to Party A for a sum, which would have given Party A about $10,000 cash. That offer was rejected and followed with a counter offer for an amount that was $10,000 under market. Party B rejected the counter.
The suit that then ensued was based upon: "The detrimental reliance of Party B upon an oral modification of the original Lease Option (purportedly an oral Agreement to Extend…which Party A insists was never proffered, but which the Realtor for Party B insisted at the hearing had been made)." Interestingly, the Lease Option contract contained an estopple strictly forbidding any reliance upon ANY oral modifications to the Agreement (but that didn't matter to our "pioneer law maker, semi-retired" judge/arbitrator).
Now, Party A, in order to avoid the minimum of a one year delay that a court hearing would no doubt entail, agreed after the failure of their UDT, to Arbitration. The arbitration hearing was overseen by one Judge Kenneth Ziebarth Ret. (retired, but still sitting on the bench in San Juan Capistrano) and concluded by "J.A.M.A. Endispute" at the rate of $240 per hour (including the Judge's research).
5/4/99 Judgement rendered in favor of Party B. The judge's statement was that "Even in view of the caveat prohibiting reliance upon oral modifications, there must have been acceptance. Why on Earth else would Party B not have exercised an Option that would clearly give them $54,000 in equity in a property in which they had been diligently making payments on for over a year?" The order was for Party A to sell to Party B at the price of $181,000 (the original Option Price); and to give Party B 60 days in which to arrange for financing. And since the Option itself did not contain a provision for HOA dues and insurance, Party A is now also to refund all such sums paid by Party B. The fact that Party B was not responsible for the HOA dues was, of course, evidenced by Party A's having paid them on several occasions. They are also directed to pay court costs and all of plaintiff's reasonable attorney's fees (so I am told).
It appears that a Hard Money lender has now agreed to loan 75% on the property, without any consideration for credit, credit history or the former BK and eviction record. It is apparent to all concerned, however, that once the sale does take place, Party B will be forced to default and lose the property to the hard-money lender: at this point they are believed to be virtually "stone broke." They haven’t even enough even for Closing Costs, and have never, it is said, had enough money to even cover their lease obligations on a timely basis, much less the new mortgage payments which will be considerably higher.
Closing Costs? No problemo. Party B has indicated that they plan to cover their Closing Costs with the settlement money from Party A. And Party A has a taped recorded message from Party B indicating that if Party B's payment record is revealed to the new prospective lender, that they (Party B) will tie up the property beyond the call date of the existing loan, and notify the lender that the house is not owner-occupied (a provision of reinstatement of the 5 year call date).
How do you spell, "This deal sucks?"
Bill
In answer to those who are asking the question, Mrs. A tells us that she and Mr. A would now “give anything” to have had the foresight to have insisted on the original PACTrust™ offer as originally proposed. It would have made Party B no more than a tenant in the property and easy to evict without the claim equity, options or ownership rights per-se (even though all the "primary benefits of ownership” would have been held fully in tact for the resident beneficiary).
To find out more about Landtrust and Equity Transfers Using Landtrust, Click Here.
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