Real Estate: Tips on Lease Options

One of the best ideas that I have used when trying to get a lease purchase deal closed uses an alternative type of option consideration/ earnest money deposit. If the seller is okay with the idea of a lease option or lease purchase but thinks my consideration a little too low, I simply ask him how much exactly he needs. Once I get that figure my reply is something like this:

"So if I could give you $X as consideration, then you would be able to go ahead today?"

When he says yes, I offer to use all or a portion of the original consideration/deposit to purchase a zero coupon bond (not subject to state or local tax usually) that will be worth X in X period of time. Really, any type of financial investment will work here.

It is easy to show the seller the value of say $3,000 in x years when you have a Barrons financial news with you. I have paid for the brokering fees associated with this. Using this method, I have been able to turn $1,000 into $2,500 for the sellers option consideration/deposit. This works nicely with higher priced properties, since the sellers can understand the concept.

In addition, all of my lease options to a tenant buyer include a clause requiring electronic funds transfer of the monthly rent and option consideration. There are two types of services I use.

One allow a third party service to draft the tenants account, I am sent a postdated check every month so I can cash them myself. I pay $1.50 per transaction. The other uses true funds transfer from one account to another. This can be done on your own PC.

I also avoid future problems for tenant/buyers qualifying by NOT giving monthly rent credit. In instead, they pay monthly OPTION consideration. This prevents the bank from questioning the rent as being fair market or above.

Labor Day and The Housing Market...

James Gage here with Gage Consulting Group hoping that this e-mail finds you and yours in good health.

If you're head is still spinning from the recent changes in the lending marketplace, and you're wondering how the heck you can finance your investments with the lending industry running scared from anyone but the best buyers, you won't want to miss out on Profit Big: The Lease Option Secret DVD.

In addition to this week being my wife’s birthday and the beginning of the Labor Day holiday weekend, we learned also this week that the housing crisis is far from over and that the default rate on the Prime Loan market is starting to become a factor (source: Yahoo Finance). Banks are even tougher these days with who they're lending to, and they're looking more and more at your credit. What if you have less than perfect credit, don't know how to best present your deal to the bank, don’t have enough of money to get a hard money lender to sign off or you are unable to secure a private investor. So what do you do? Do you walk away from investing till this housing cycle plays out? Do you get a second or third job to help pay for the lifestyle you hope for, or have grown accustom too?

I say NO ! It’s time for real estate investors to start thinking out of the box and use time tested leveraged strategies and tactics to invest in these uncertain economic times- can you afford not too?

Before I let you go to read over my exactly what this DVD contains, many individuals have called me and ask if I would put together a step-by- step DVD presentation on "Lease Options" well your wish is my command. I have put together just that, a DVD presentation on that very subject please visit the following link for more information : http://www.jgage.com/Lease-Option-Strategies.htm
but it doesn't stop there!

Normally priced at less then a few trips to Starbucks at $37.00, it is a great value if I do say so myself. But for the next 3 days (August 27 - August 30 ) in honor of my wife’s birthday and the Labor Day holiday, I am extending to you, my newsletter subscribers the astonishing price of only $18.50 ! That's a whooping 50% off my normal website store! Enter promo Code 555 on you order/check out page to receive your discount.

After August 30 it will return to the normal price of $37.00. You maybe asking why am I doing this? Earlier in this e-mail I mentioned that this is my wife’s birthday week, and while she was deciding where she wanted to dine for her birthday dinner, she reminded me how blessed we were as a couple and as a family. I couldn’t help but to look back over the last 20 plus years of my life and that of my family, and I can say in no small part, that our financial success is do to the real estate investing strategy of Lease Options. That being said, this is the reason I come before you today, not only to make this educational resource affordable for you, but to encourage you to learn about this powerful investing technique, and to show you that I am living proof that this is a very lucrative strategy.

So please visit the link provided for more information on this jam packed DVD Presentation :

http://www.jgage.com/Lease-Option-Strategies.htm

Don't forget promo Code 555

To your success,

James A. Gage

www.JGage.com

With this jam packed informational DVD you will never have to worry about getting or controlling a property again in any type market, whether up, down or side ways!

What you will learn on this powerful DVD Presentation :

On this DVD James, a seasoned real estate investor with over 20 years of leveraged real estate investing experience will provide helpful tips and advice on how to control properties through short sales without paying the mortgages on them! During this presentation, I will share five separate strategies for successful real estate investing and much more. In particular, I will focus on the relatively unfamiliar — yet extremely lucrative — real estate investing technique known as the lease option.

Here are just some of the amazing benefits of this DVD presentation:

* Learn five different money-making lease option strategies that work

* Understand the anatomy of a lease option from soup to nuts

* Find lease option deals fast and easy

* Learn how to negotiate with buyers, sellers and lenders (in the case of foreclosures).

* Learn how to exit a deal without financial harm if it doesn’t work out like you envisioned!

* Use lease options with Foreclosures, Probates, Up Side Down Properties etc…

* Learn to invest/work smart and not hard with James’s investing principles.

And of course like all of James's products you will receive much more.

Visit the link provided for more information on this jam packed DVD Presentation :

http://www.jgage.com/Lease-Option-Strategies.htm

Real Estate Question of The Month: Housing Starts Are Up For July, Is That Good News?

This months question comes from Ken Hilton from Austin, TX.

" Housing starts are up for the month of July, is that good news?"

Hi Ken, thanks for the question. Unfortunately the data that was provided in the month of July is known in the investor arena as a false positive!

Sales of existing homes rose 3.1 percent in July, easily beating Wall Street's expectations, as buyers snapped up deeply discounted properties in parts of the country hit hardest by the housing bust.
However, the number of unsold properties hit an all-time high, the latest indication that the worst housing market slump in decades is far from over.

Even though President Bush last month signed sweeping housing legislation that aims to prevent foreclosures by allowing an estimated 400,000 homeowners to swap their mortgages for more affordable loans, but only if their lender agrees to take a loss on the initial loan it seems this will not be enough!
Even with government help, nearly 2.8 million U.S. households will either face foreclosure, turn over their homes to their lender or sell the properties for less than their mortgage's value by the end of next year, predicts Moody's Economy.com.

So now, more than ever it is the time to think about using lease options (http://www.jgage.com/rent-to-own.htm) to control property for maxium profit - please visit my web site for latest tips and strategies for the leveraged investor. http://www.JGage.com

Be well,

James Gage

Title Insurance & Real Estate Deals

Contrary to popular belief you must always elect title insurance on all your transactions whether you’re buying or selling!

First, let us explore why you should buy title insurance as a buyer. When you borrow money from a lender to buy a new home you will be required to pay for title insurance. This title insurance is for the lender and covers them only. You will be given the option to purchase your own title insurance at the closing. Typically the cost is two or three hundred dollars. This insurance, should you decide to buy it, will protect you from any defects in the title. Before the closing the attorney will order a title search which looks for liens against the home and to make sure the property has a clear title.

The purpose of title insurance is to protect you against any unforeseen problems or claims against the property. You will be charged a one time fee for this protection. If you don't buy title insurance and your attorney did not do a good job with the title search you could be held liable for existing liens against the home. You could owe someone thousands of dollars for work done on the house before you bought the home or because there is another property owner that you did not know about.

The bottom line is for only a couple hundred dollars you can protect you from the unexpected title problems and gain a little piece of mind.

Now let’s explore why buying title insurance as a seller is equally important.
Any prospective buyer will need evidence that his investment in your property is free of title defects. In fact, your contract of sale probably requires it. The title insurance policy that you provide the buyer is a guarantee that you are selling a clear title to your real estate, unencumbered by any legal attachments that might limit or jeopardize ownership. It reassures your buyer that the title has passed the most careful scrutiny. In addition, it can help your deal close more quickly and easily.

You may be asking yourself isn’t that what a title search is for, so why should I pay the expense of title insurance- it doesn’t make sense! I learned long ago a title search is only as good as the searcher…

I’ll give you an example: when I bought my first home it was a foreclosure through the RTC ( as you can tell this was many moons ago), and as is customary my attorney did a title search which came up crystal clear, When I put it on the market for sale 3 years later, the buyer did their own title search, but this time it came back with an IRS lien from a previous owner to the tune of $35K ! If I didn’t have title insurance I would have been on the hook for the 35K, even though it wasn’t mine! NOTE: Remember, liens are on properties, not on individuals.

Until next time, be well…

James Gage

Real Estate Tips For Savy Investors

Editor's Note: You can find everything you need to know about making money with lease options PLUS great practical, "how to" tips like these in James Gage's sixteen -hour audio/video workshop, James Gage's Lease Option , AKA Rent to Own Investing System : http://www.jgage.com/Lease-Option-System.htm Enter promo code 500 and receive a 50% off back to school discount!

Here are some practical tips I have learned from doing lease options over the past 20 years. Lease options are great, except when the seller decides not to live up to their end of the bargain.

Sure, you can always sue the seller to force them to sell you the property, but this can cost you thousands of dollars in legal fees and take years to accomplish in our over saturated legal system. You always need to position yourself in a better position if you want your option to be protected. Here are three good ways to protect your option:

1. Record the option. If your option was signed before a notary, you can record your option in the public real estate records. This will give the world public notice of your interest. If the option was not notarized, you can sign an affidavit called a "memorandum of option" and file it at the Registry of Deeds in your county. Keep in mind that this does not create a lien, it only creates a "cloud" on the title do the owner can not sell it from under you.

2. Escrow the deed. If your seller has died or disappeared, you will have a big problem getting him to sign a deed. An escrow should be created up front in which a title company or attorney holds an executed deed. When you are ready to exercise, you simply tender the money to the escrow agent (which can be your or the owner’s attorney) and collect the deed.

3. Record a mortgage. Typically a mortgage is recorded to secure payments on a promissory note. A mortgage can be recorded to secure performance of any agreement, even a purchase option. You as optionee (buyer) will now be a lien holder, in the same position as a secured lender. If the seller refuses to sell the property, you foreclose. Now the SELLER has to go to court to protect himself, rather than the other way around.

Here are some tips to prevent a tenant from asserting equitable mortgage. On paper you should make everything look like a landlord tenant relationship, but you operate the transaction like a Buyer – Seller relationship.

1. Use separate agreements. Give your tenant a lease and a separate option agreement. Make certain the lease does not refer to the option. More than 75% of the time, the tenant loses his paperwork. You don't show any option agreement to the court until the judge asks for it.

2. Keep your term short. Do not give tenants more than a one-year lease option at a time. If the tenant insists on three years, give him a one year with two rights to renew. Draw up brand new leases and option agreements each time he renews. If you give a cumulative rent credit, raise the purchase price each time.

3. Take a security deposit. Sellers don't take security deposits, landlords do. Make it look like a landlord/tenant relationship, even if the security deposit is small.

4. Make sure you pay the taxes and insurance. Do not let the tenant pay the taxes and insurance. This makes it look like a sale.

5. Don't give large rent credits. The more "equity" the tenant has, the more likely a judge will favor an equitable interest assertion. My rule of thumb is that if you choose to give a “rent credit”, it should never exceed 35%. I know many gurus tell you to give 50% or more in rent credit, but I believe that the more rent credit you give the more equitable interest exposure you create for yourself.

I hope these tips help you on your next lease option transaction.

To claim your 50% off Back to School sale visit : http://www.jgage.com/Lease-Option-System.htmand enter promo Code 500

To your success,

James Gage

Lease Options: A Great Investment Strategy in Today's Market

By James Gage

A twenty years ago while I was working as a real estate agent, a client who was going through a divorce asked me to look for properties she could "rent to own."

At that time, the market was just beginning to shift in our area. Sellers were selling, and Landlords were Landlording. Very rarely did the two types overlap. Some agents would even categorize "rent to own" transactions in the same category as Santa Claus - something some people think exists, but is really just imaginary.

In that market, rent-to-own might have well been imaginary. I could not find the right situation for her, and she ended up moving in with her daughter.

Now, nearly 20 years later, the market has shifted into a buyers market again. Many properties are staying on the market much longer than in the past, and many people that would have been buyers, are finding themselves forced to rent for a while longer, till their credit scores meet today's tougher standards.

This is exactly the market conditions where a Lease Option makes sense - for both the tenant/buyer and the landlord/seller, creating a potential for a real WIN-WIN situation.

Strategies I use to help my coaching students (and others) get some of the best bargains on the market Today !

Study The Market Cycle: Homes in general may take longer to sell these days because of pricing, perceived seller value and a more cautious pool of buyers. But that doesn’t mean sellers are any less motivated to move on with their lives. At one time, we thought little of homes sitting on the market for 90 days or more. These days, we seek buying opportunities if a home has been on the market over 60 days-- and are seeing some heavy price discounting from our buyers if days on market goes over 90 days.

Check Tax Records and other Sources: Is there more debt on the home than what it is worth? Has a Notice of Default been filed that would indicate a looming foreclosure? If so, and if this is a home of interest for our buyer, we submit an offer contingent upon the successful negotiation of a short sale (where the lender sells the property for less than what is owed). In this case, either we or professional negotiators deal with the lender(s) to reach the best possible price for our buyer.

Did Owners Pay Cash or Have They Owned Their Home for Longer than 10 Years? These sellers may be in a position to sell at a discount or may be motivated to do so due to life transitions or other investment opportunities. They may also be open to owner-financing for all or part of the home mortgage. Become knowledgeable about installment sales and other creative financing strategies.

Are You Open to Remodeling? Homes sold in as-is condition are more likely than others to sell at a substantial discount. Owners, especially when the home has been on the market for some time, are often overwhelmed with the thought of remodeling and updating–and fearful that their decor choices will not suit potential buyers. In many markets, older or outdated homes are sometimes sold at land value.

Foreclosure Sales: The f-word (foreclosure) is occurring even in the luxury home market. Highly leveraged homes purchased in the last few years are more frequently ending up on the courthouse steps. Foreclosure purchases, which require cash and carry no disclosures or guarantees, offer both great potential for profit–and big dangers for the uninformed. Bidding should be non-emotional and it is best to have a professional bidding for you–but only after thorough-as-possible research has been done regarding the home’s condition, its history and resale potential. Cracked slabs, structural defects and boundary line encroachments are unwelcome surprises.

Check Out The Realtor: If the property you want is listed, have your agent check the other real estate agent’s listing history, or better yet, you if you if you have access to MLS. If that agent tends to have listings on the market for a long time, you may wish to lower your offer. On the other hand, if the agent prices properties aggressively and has short “days on market,” you may consider coming in near to, at, or over list price. You will likely find those listings already priced at or below market to attract multiple offers.

A combination of patience, perseverance and the ability to move quickly will serve all astute buyers of real estate these days, but the greatest potential of all may lie with properties whose replacement value could far exceed the purchase price--or those with great locations

August Real Estate Tip of The Month

Hello All :

Here is my monthly tip, for you my faithful blog readers.
Many individuals ask me how I locate foreclosure deals before they are listed in the newspaper or before they appear on foreclosure lists?

Through the use of : Bankruptcy Leads ! Many homeowners who are loosing their home to foreclosure, will file bankruptcy as an attempt to delay the process. These properties are real bargains. I am always on the lookout for these properties and when I find them, they are sold--fast! To find out how to access these leads, sign up for my Free newsletter on the left hand side panel.

Until next time - be well.

James Gage

Looking For A Career Choice or Change? Why Not Consider Creative Real Estate Investing?

Are you wondering how to choose the right occupation whether you're doing it for the first time or changing careers? Well you came to the right place! Choosing a career can be confusing at best.

There are hundreds of career options out there. How do you make a career choice when you don't really know what you want to do? Does it seem like an insurmountable task? It's not. Yes, you will have to put some time and energy into making your decision, but your effort will be well worth it in the end.

How Do You Choose the Right Career?

Choosing a career is an involved process that is based on a number of things, including your interests, skills, work-related values, and personality.

Whether your goal is a full-time business or a steady, part-time income stream, Gage Consulting Group (GCG) will show you innovative and proven ways to profit and work from your home with a career in the lucrative creative real estate investing industry. Explore the pages of my web site http://www.JGage.com and discover which avenues are right for you!

That being said, browsing the internet there are literally thousands of business opportunity resources and a person often gets overwhelmed by the sheer choice of programs, and services.

When looking for a business opportunity you should look for 7 primary qualities:

1. Integrity : Does the company have a reliable track record/history?

2. Value : Is the company providing a valuable service/product?

3. Training : Do they provide you with quality one-on-one training and materials?

4. Support : Is it easy to contact them and do they reply in a timely fashion?

5. Compensation : Is your effort rewarded in a timely manner (Return On Investment)?

6. Investment : Does the opportunity require tens of thousands of dollars to get started, and years for you to recoup your initial investment?

7. Recession Proof : Can it be profitable in an up, down or side ways economic market?

All these qualities are important when choosing a business opportunity.

Too many people jump in to an opportunity such as MLM ( Multi Level Marketing) that promises them mountains of gold, only to find that they have been ripped off after the opportunity seems to have disappeared into thin air or has gone bust.

Another opportunity being marketed is that of the franchise. A franchise business is a method a company uses to distribute its products or services through retail outlets owned by independent, third party operators. The independent operator does business using the marketing methods, trademarked goods and services and the "goodwill" and name recognition developed by the company. In exchange, the independent operator pays an initial fee and royalties to the owner of the franchise.

The company that grants the independent operator the right to distribute its trademarks, products, or techniques is known as the franchiser. The independent, third party business person distributing the franchiser's products or services through retail or service outlets is called the franchisee. The franchiser charges hundreds of thousands of dollars for a license, and in addition may require annual payments to continue using their name and trade marks.

What ever business you choose to get involved with make sure it meets your budget and expectations! There is nothing worse then starting a business that becomes un-enjoyable, unprofitable, and finally becomes a 80 hour torture chamber.