What you missed February 2008 Meeting by Robert Davis
Wendy Patton gave a lively and informative talk on acquiring real estate through the use of an option to buy and a lease. She bought her first investment property in 1985. She used a credit card to pay the down payment. Her income was $500/Mo and the mortgage PITI was $438/Mo. Her first deal had a positive cash flow of $62/Mo. Soon after that she found she could make a lot more money in real estate than working at a regular job.
She said people are dropping out of real estate because of a very soft market. She says the smart investors are staying in and will capitalize on some great buys. This is the time to buy when sellers must be willing to accept terms favorable to the buyer in order to sell their home. Things we could ask for are delayed payments until we rent, lower (or no) down payment, lower interest rate if they are holding paper, pay off back taxes and get two times the credit off price, etc. Today it is a buyer’s market and we need to take advantage of that. Some of the reasons sellers are more willing to give better terms are for debt relief, saving their credit, they lost their job, they are having a divorce, they are in pre-foreclosure, they are downsizing their living quarters (Empty-nesters).
Some of the keys to success Wendy said are don’t make excuses, have a desire to succeed, get the knowledge needed, and use proven methods. By using the option it gives the optionee a right to exercise a privilege if they want to. If the market continues down, we don’t exercise. If the market goes up, we can buy for a profit when we sell. Wendy also listed five simple steps to profit. We just need to find a seller, agree to terms, set new terms of allowing as much as they will allow of our payment to be a credit towards the purchase price, find a buyer, and close the deal. She always tries to find a renter before closing on the option and lease.
Realtors are also a great source of good deals. Wendy said realtors control about 80% to 90% of the pretty houses on the market. Also, people tend to tell their realtor a lot about their personal life. This could make it easier to find out what a seller really wants out of a deal. She always tries to do a win/win/win deal. A realtor’s income is mainly from the commission received from a sale. If we do an option with a lease – when does the realtor get paid? Wendy structures the deal so her buyer pays enough option money to pay the realtor’s commission up front. This way realtors are much more willing to pass deals on to her.
Wendy has written two books so far that are available at the normal bookstores. She can also be contacted via the web at WendyPatton.com for more information.
See past meetings here