Here are some articles written up by students of mine about their
experiences with my courses, mentoring, or other training.....
EVEN A SKEPTIC CAN MAKE IT WORK!
Hi everyone. My name is Brian and I'm a mentoring student of Matt, who has
asked me to write about my previous deal and the experiences I
encountered. Firstly, we all know the importance of marketing within the
context of the type of investing that we do. My marketing consists mainly
of the bandit signs, which I have been trying to put out on a
consistent basis.
I had been discussing the strange phenomenon that marketing is with a
friend and fellow investor in the west end of the city (I am based in
Scarborough, Ontario, Canada) in that there have been times where after
putting out 30-40 signs, I wouldn't receive a single call! Generally, the
day after a marketing session would yield between 3-4 calls. For this
particular deal, I had all of 4 signs out. I guess the moral of this
particular story would be that you never quite know when a deal will
'surface', but in order to increase your chances keep your marketing out
there, and keep putting it out consistently. As Matt has said and
continually stressed, marketing is what will make or break you!
I received a call from a lady who wanted to sell her 4 bedroom 2200sq.ft.
freehold townhouse. With a few questions she opened up with a wealth of
information and I just simply let her talk. She mentioned that her
daughter moved out, that she had an impending loan that needed attention,
that she feared she would not be able to make the payments on the
house in 4 months time. Hearing all this and letting her vent, I made my
benefits to her known. I would be able to take over the payments of her
property, thus allowing her to give full attention to her other loan and
keep her credit intact! All that needed to be discussed were the numbers.
Now she had mentioned that she had wanted $185,000 for the property. A
comparable on the property came in at $183,500 for a smaller 3 bedroom a
few doors down. My agent told me I would be good at $180,000 but if I
could get in at $175,000 I'd be laughing. So, with this information, I set
up an appointment to meet. I should preface this by mentioning that my
seller had also stated that the house needed some work (a bit of a
bargaining tool on my end). When I got there, she showed me around
the house (central a/c, hardwood floors, new roof, and 5 appliances).
There was some water damage on the living room ceiling that had occurred
from an overflow in the second floor washroom. She had mentioned that she
was going to have it repaired prior to selling the property and that she
was quoted at just over $1800. I mentioned that I had some contacts and
would look into getting a better quote for her.
We sat down at the kitchen table and I presented my paperwork (contract
for deed) for her to look at. I mentioned that this would be a purchase
offer whereby she would keep title to the property until she received
payment in full and have us take over the mortgage payments in the
meantime. I reiterated that there was a short timeframe (as she had
mentioned) and made my offer of $160,000. After further negotiation, (she
went from $185k, to a "solid" $170k, to $165k) I left my paperwork on the
table for her to have reviewed by her lawyer. She told me after the fact
that her family told her under no circumstances to sign at the first
meeting. Upon leaving, I thanked her for her time and mentioned that the
sooner I heard from her, the sooner we would be able to act on her
scenario. I also asked her to consider my offer of $160k.
The next morning, (9a.m. to be exact), I received a call from my seller
stating that she had read over everything and was ready to sign! The final
terms of my contract for deed were as follows:
$160,000 over a 2 year term @ 7%
$224/weekly mtg. payment
$90,000 remaining mtg. owed by the seller
I later had the weekly mtg. payments altered to one monthly payment of
$896(due to the accelerated payment plan by my seller, switching to a
monthly plan gave us an additional month "off" -something that would be
put to good use in my beer fund, eh Matt?).Now in terms of finding my
buyer, I had put an ad in the local community newspaper that stated:
Rent to Own
Beautiful no maintenance fee, freehold townhome. 2200sq.ft.
$1200/mth.
I reasoned that for $60 I would be able to market the property while
getting my for sale bandit signs ready. I was inundated with calls. In
fact, weeks after the property sold people going through their old
newspapers were still calling about the property! I ended up selling the
property the second time I showed the house on the following terms:
$190,000 on a 1 year l/o
$1350/mth (utilities to be paid by the tenants)
3% down ($5700)
So...
$300/mth. cashflow on top of my $30,000 spread ($5700 upfront, and
$24,300backend profit)
-don't forget my beer money fund = one month's rent $1200 due to changing
to a monthly payment (all I did was ask!)
In the end, my t/b's are looking to close within 6mths as opposed to the
one year. All in all, not too shabby. I told Matt when I met him that I
would be his most skeptical student until I experienced firsthand!!
There was nothing special that I did, but followed what was outlined in
the course, and most importantly, took action. Anyways, to all fellow
investors, happy investing, and may your cup overflow with deals!
Brian
Scarborough, Ontario
<Matt's comments>
When Brian called me about this deal, we took a close look at the numbers
and everything else involved with this property. He was thinking of doing
a lease option, but I thought a better idea would be to get an OWNERSHIP
interest in this property instead of just control. This is why we went
with a contract for deed.
SOME LESSONS LEARNED BY A MENTORING STUDENT
Hi everyone. My name is Gary. Matt has asked me to write a small article
about the transaction we concluded in the Spring of 2003 here in Ottawa.
First, I must give Matt credit for the deal. What he teaches does work, IF
you work at it. Fact: most people who buy courses don't even read them.
Why is that? I believe it's because they need the expert person right
there with them. They read a little bit, get scared that they couldn't do
it and give up. People NEED a coach. That's where I got lucky. Matt agreed
to come up for a 2-week visit.
Matt arrived at our house in December 2002, just a few days before
Christmas. One of my assignments he gave me was to get some signs made
before he arrived. That did not happen. So we got some coroplast from the
local sign shop. Matt cut it into 18x24 pieces and he painted signs on the
kitchen floor. That's called being resourceful in the face of a
challenge. In this case Matt's challenge was a procrastinating student -
me.
We ventured out on our first sign run and before we got back people had
already called. That impressed me. Like I said what he teaches works. Now
please people don't get the wrong idea here. There were no immediate deals
from that first run. You have to be willing to do the work of putting up
the signs and not seeing money for awhile. Again that's where it is
invaluable to have someone right there with you, looking at you over prime
rib and beer saying, "don't worry, it's gonna happen" I don't mean words
on a course, or a computer screen. I'm talking a personal trainer in REI.
Warning : I ramble.
The point I'm making here is that signs do work. Calls do get generated
from putting up signs. YES, putting up signs is not my first choice when
it comes to a fun time out on the town. It may not bother a lot of you and
that's great - go for it. Personally, after the second set of signs came
down, I came to prefer paying someone to do it.
Again, the calls do come in. You get some crank calls, some concerned
citizens saying, "your signs look crappy", etc. Now, you must be patient
with these calls. Most of them want all their money right away and at the
highest price possible. Understandable. However, that's not what we're
looking for. We're looking for two things; either a severe discount so we
can sell it to another investor for cash, or we're looking for time -
someone who can wait for their money while we work with a tenant buyer.
Anyway, eventually someone called who wanted to get rid of a house. For
whatever reason these people just wanted to move and get the selling of
their house out of the way. That was their mindset. They had already put a
deposit on an apartment they were downsizing to. It was the middle of
winter, they believed nobody would buy their house at that time of year.
So when they saw our sign, they found what they were looking for - a
buyer.
Now in this case it was not the kind of buyer they were accustomed to.
This new kind of buyer that was willing to put an offer on their house was
a buyer that was going to find another buyer. I guess they didn't care.
Standing in front of them was a guy who could solve their problem - get
this house sold. To who? Who cares as long as they got their money. I
think that was their attitude.
So, I came home from work one day in early February and Matt had a
contract signed. Incidentally, the signed contract had the design of a red
ribbon printed around it. Matt's gift to us.
Now I don't know what he said when he went to see those people.
Unfortunately I was at work. I should have taken time off. All I know is
we put up signs, people called, he came home with a contract.
The contract was a simple agreement of purchase and sale. It had a clause
that we would find one of the following within 30 days: our own financing,
a retail buyer, or a wholesale buyer; meaning another investor. The
contract also had a clause that the 30 days could be extended, at our
discretion, to another 30 days.
The next step in this process was to put up some more "crappy" home made
signs. Matt says he does this home made look on purpose. The signs said
"House for Sale, Owner Financing, Bad Credit Okay". I must admit I did not
understand what his strategy was here. Why not just go for a retail buyer,
with a pre-approved mortgage? Matt fill me in here, I forget what you said
about this. <Matt's note: See my comments below>
We got calls, but everybody found the price too high. Oh, I guess I should
give you the numbers. They agreed to sell to us at $170,000. We were
trying to sell at, I believe it was $225,000.
Okay the next phase. The NEGOTIATING. Eventually, a couple who own a motel
in the same neighbourhood started negotiating. This was fun for Matt and
absolutely nerve racking for me. This couple is from India (a beautiful
country, great people and great cuisine) - BORN NEGOTIATORS MAN!! The
first thing out of this lovely lady's mouth when Matt told her the price
was "NO WAY C"MON!!!!! I don't know if Matt laughed out loud at her
outburst, but later he told me that he thoroughly enjoys it when he has a
real negotiator on the line. They threw everything at us.
Matt had to leave for the States or T.O and these people drove me nuts. I
thought I was gonna lose the deal. Matt kept telling me, "they want the
house, just hang in there and relax". I did. It was not easy. He was
correct. They bought at $190,000. Thus the $20k.
Next was the closing. Aaaah yes the glorious closing. How nice and simple
it would be if the buyer could just hand me $190,000, I take my $20k and
give the seller the rest. NOOOoooo! The buyer's lawyer started a fight
over this and that. The buyer's lawyer scared the bijesus (that's
Newfuneese) out of them over this trust thing that Matt was trying to do.
We gave up on that and ended up paying the land transfer tax of over $1400
frickin' dollars. Somehow, I don't remember how, we ended up paying some
of the buyer's legal fees cause the closing got delayed. He, again, ever
the negotiator, tried to get us to pay 100% of his fees or no deal. I mean
these people were squeezing all the way through this thing. Meanwhile
Matt's laughing and quoting some book about Secrets of a Master Negotiator
and just lovin 'it.
Guess what I'm doin'- YEP freaking out, worrying and getting all stressed
out. Man I'm telling you I was so scared this buyer meant all those
threats about backing out. I really did not like the guy through this. Now
we're cool. His wife recently asked me if I had another house to sell
them. Matt kept quoting the book, "It's not lying when it's negotiating".
This higher business skill was new to me. I was naive.
Anyway, after the lawyer fees and the land transfer taxes, we had $16,500.
In conclusion of all the opportunities I've looked at and spent money on
this is one of the few that I ever made this kind of money with. There is
no way I could have done it on my own. I believe I am not alone in this
regard. People need a coach, Good luck folks hope this helps.
Gary
Ottawa, Ontario
<Matt's comments: The reason that this I decided to offer this for sale
with owner financing was to attract more buyers faster. I wanted to get
this place sold fast, and I know that in order to do this, you need to
offer the place for sale on some sort of "creative" terms. You can offer
it for cash at a cheap price, but I wanted to add an extra incentive of
owner financing.
I was planning to set up the owner financing and sell the note at the
closing to fund the deal (this is all detailed in my "Fa$t Ca$h" course)
and pay the sellers their asking price.
One other comment- Gary mentioned that I was quoting something from a
book. "It's not lying when it's negotiating". I wanted to clarify that I
was not telling him to lie in a negotiation. I was telling him that even
the "most honest" person will lie when they have something at stake, such
as in a negotiation.>
SOME LESSONS LEARNED
One of my mentoring students recently dealt with some problems with a
tenant/buyer in a lease option deal. He handled this very well and learned
a number of lessons, so I asked if he would mind sharing his experience
with the readers of my newsletter. He agreed, so here's what happened in
his own words-
A Lesson on How to Deal with the "Maintenance and Repairs" Issue with
Tenant/Buyers
Ok, so why did we get into or consider getting into the lease option
business? For the most of us, it's because we want to make more money AND
not have the hassle of dealing with tenants right? Well, that was me
anyways. I got started a few months ago under the wing of my real estate
mentor Matt Bowman here in Newfoundland Canada.
Anyways, I closed my first deal with my first caller/vendor before the
winter started (our winters are bad). I found some tenant/buyers who
seemed like really nice people and really want to straighten out their
credit and own a home someday. However, they didn't have a down
payment/option deposit at the time because he didn't start his
construction work until the spring. So mistake number one, being the nice
guy that I am, I accepted their application and signed an agreement for
the option deposits to start during the spring. I explained to them the
lease contract and that they were responsible for maintenance and repairs.
They accepted and paid their first months rent.
Everything was going fine, they were making their payments on time etc.
Then BOOM, we get heavy rain along with melting snow and their basement
ends up flooding! Note that there was no flooding in this home since 1986,
just some freak occurrence. Anyways, who's the first person they call? ME!
I feel for them, and contact the previous owner who informs me of where
the drain is etc. I call them and tell them how to get rid of the excess
water.
Anyways, they call me afterward saying that they will not pay for any
damages etc. At that point, I was pretty frustrated because it was obvious
that they did not understand the contract that we signed. So, I informed
them of the clause in the lease agreement that they are responsible for
all repairs and maintenance. At that point, he was pretty pissed off. They
then tell me that this is a "lease" agreement and that the LANDLORD is
responsible for all maintenance and repairs. At this point, I knew that
they had a point but I persisted in telling him that this is a rent to own
agreement and that his obligation is to do all the repairs. They disagreed
and refused to pay for damages, and called the landlord/tenancies act
department. The people at the landlord/tenancies act department called me
informing me of my obligations as a landlord no matter what it says on the
lease agreement, and I knew they were right. Then I remembered a line in
the purchase agreement that stated that if the lease contract was broken
in any way (like not doing maintenance), that the purchase agreement would
be void. This would be major leverage on my part, IF they had a non
refundable option deposit down already. However, I knew that they REALLY
wanted to own the home for their family, so I mentioned the clause to them
and that they would not have the option to buy if they did not do the
repairs.
In conclusion, they reluctantly agreed to do the repairs. I may end up
having more troubles with these tenants, but at least I realize the
control I have in these deals. You really need to make mistakes during
these deals to really learn from them.
To summarize, when dealing with tenant/buyers:
1. Know your rights! Go through your contracts, and make sure you
understand them thoroughly.
2. Make sure that you explain to the tenants their rights and obligations
clearly before they move into the property. Explain to them the
consequences if they do not comply.
3. Be understanding towards your tenant/buyers, BUT, be stern. Do NOT bend
away from your contracts! They will eat you alive if they know that you're
flexible.
4. Always collect an option deposit upfront, no matter what. If I had
my time back, I would not have accepted their offer. The option deposit is
leverage for YOU and it will help convince the tenant buyers to follow the
rules of the contract.
5. The maintenance clause in the lease portion of the lease/option
contract IS NOT ENFORCEABLE in Canada! <Matt's comments: This is true in
SOME areas, but not all.> The landlord/tenancies act people WILL force you
to fix if the tenants call them. However, in the way that Matt's contracts
are worded, if the tenants do not fix or follow the lease contract
accordingly, the purchase option is void along with losing their earnest
deposit money (non refundable).
Hope this helps somebody out in the future.
Cheers,
Joe (NF Investor)
YES! IT REALLY DOES WORK IF YOU TAKE ACTION!!!
Hi Everyone,
I am writing this article as Matt asked me to detail my first lease-option
experience, so here it goes :
Well I bought the package deal from Matt's website back in late fall 2003.
I have been doing a lot of research on creative investing for a good year,
mainly owner-financing when I stumbled upon Matt's site. After reading
what he had to offer and going through all his free information I believed
that I had found something here so without to much resentment I ordered
his course materials.
Once I got the e-courses I must of read them numerous times over and over
again just to grasp this new concept of buying and selling real estate. I
was truly amazed that this actually worked but kept reading and learning
more and more each page I read. At this point I felt probably like most
new investors, I felt that I needed to know all of whatever I was learning
in order to be successful at what I had planned ahead but more importantly
to be able to answer any questions that would come up from sellers or
buyers. Now to the extent of it, knowing what you are doing is crucial and
very rewarding in the end but, the biggest hurdle I had in the beginning
was that not only did I feel that I knew the material good enough to do
something about it, I did not do the one thing all new investors should do
after they buy all those courses and read them, take ACTION!!!
Finally after about two more months of reading more and by this time
wearing out the videotapes Matt had sent me I decided to go to sign store
and order some We Buy Houses signs. That was even I little nerve racking
but got through it somehow and received my signs in a week. Once I got my
signs I bought some wooden stakes to attached with screws to my signs. Now
I know this is a little different that what Matt says to do in his
marketing section in the course or on his website but the reason is that I
was able to get 24 by 24 signs for the same price as 18 by 24. The signs I
got being bigger, I thought that the h-stakes as described would be a bit
too flimsy for my signs and might not hold up and for me these wooden
stakes work fantastic.
Now that I got my signs all made and ready to go, another obstacle that
had to be dealt with was the actual putting up of the signs. Now this
scared the (beep beep) out of me. My way of thinking thought that for sure
if I get caught putting up any of these signs that could mean some serious
time with Bubba upstate. To re-assure me though, I used what Matt said,
but check with your local authority, also what Matt said, I would put up
signs at night time on Friday and take them down night time on Sunday.
Till this day that is still my routine.
Ok so I put up some signs around some targeted areas in my town and
figured that if I do this for a good month or so to get my word out then I
might get a call or two a week from all this marketing. Well the next
morning the phone was ringing off the hook with sooo many sellers of all
kinds, motivated, stubborn, rude, all types but eager to sell in general.
Every single call I received, for the most part, sellers were very open to
the service I was offering and were more than willing to listen to what I
had to say. One call in particular was one that was very similar to
examples Matt had mentioned or talked about. This couple had already
bought another house in another area so were now making double payments. I
hardly had to do any explaining to this couple as from my marketing it
said that we take over payments. They simply phoned me up and told me that
they could not afford the double payments anymore and needed someone just
to take over the house and they only wanted a few hundred dollars at
closing. The more and more they kept speaking because I kept shut, as
explained in the course, the more I knew this deal would be an ideal
candidate for a lease-option. They also told me that there was a tenant in
their property but was moving out at the end of the month so they would
like to contact me again when this tenant had moved out and they had a
chance to do a little clean up work inside.
Well I month came and went and nothing from these sellers. In between all
this I was only trying to make everything work on a lease-option as I was
very unfamiliar with the subject to agreements, big mistake on my part,
many passed up deals now to find and did not know enough for a fast cash
transaction with owner-financing in Canada so it was lease option or
nothing.
Close to the end of the second month since my sellers first contacted me,
they finally phoned back and said they wanted to meet and sign the deal
up. So I went out to their house, which turned out to be a nice house in a
good area of my town. I signed it up that at closing I will owe them $300
dollars for their house. Not a bad deal buy a four bedroom house for 300
bucks. I then set out to market the property as described in the course.
In the end after fumbling around with a few buyers I finally got a buyer
who qualified enough to be able to be put in the property. This all
happened in a two week time frame, amazing. I was able to collect $3000
down with a small monthly cash flow of $75 dollars and when my buyers get
financed, 8 months from now, the closing should be around the $18 000
mark. Not bad for one deal and a guy who still does not have clue really
what happened. All due in part because I got off my butt and did something
about it.
For me now putting up signs is still a little sketchy but I have come to
realize that whole minute of work to put up one sign can bring you
thousands of dollars. The key is took take ACTION and put up your signs as
calls will come in no matter what.
Thanks everyone for hearing my story and get out there and do the same and
make some money !!!!
Sincerely,
Norm
