Real Estate Investing: Tips on Negotiating Leases

Ask for a copy of the lease before the lease signing, so you have time to review it. If you're reading this tip right before the lease signing and have yet to see the lease, don't worry. Just read over the lease carefully at the signing. If you feel uncomfortable with the lease or want someone to review it, ask to reschedule the lease signing appointment – have all legal contracts and documents reviewed by an attorney.

1. Negotiate only with the landlord or someone who has the authority to make decisions. The broker cannot make any decisions, unless they have “Power of Attorney”, or are the “Trustee” of the Land or Realty Trust that the property may be in.
2. Choose one person to be the negotiator, if you're signing the lease with your roommate or spouse. You don't want multiple people chiming in with points that contradict each other.
3. Know basic information about the landlord and try to understand the landlord's position. Is your apartment owned by real estate management company with thousands of units or a family renting out a room or their second home? Will a $25 reduction in rent be a big deal to them? Knowing the landlord's concerns will help you tailor your arguments in the lease negotiation.
4. The best negotiation time is during the signing of the lease when the landlord has approved you for the apartment and is ready to close the deal. You only have negotiation power when you have something the landlord wants.
5. Ask questions before you begin the lease negotiation. It's good to demonstrate your reliability as a good tenant. This is the one thing you can offer the landlord that will make him or her more open to negotiation. Asking questions is one way to show the landlord that you want to follow the rules.
6. Begin the lease negotiation after you've read the lease and asked all your questions. First identify what you want to change and why. Maybe you want a lower rent because it's higher than all the other apartments you've looked at and you see no reason for the higher rent. Or the ceiling is leaking and you want a guarantee that it will be fixed within a week, because you've had bad experiences with neglectful landlords.
7. If the landlord resists putting any changes in writing or seems offended or hurt by your negotiation, be ready to reassure him or her that you trust him, but you are a person who likes to play it safe.
8. If the landlord argues with you or puts you on the defensive, acknowledge the landlord's points by explaining why these concerns don't apply to you and remind him or her of your qualifications (good credit, timely rent payments, no disturbances, no damage).
9. Always ask twice, followed by the reason. Giving more than one argument during the lease negotiation lends further support to your request.
10. Write down all agreements on a piece of paper that is signed by all the tenants and the landlord. If it's a change to the lease, correct it on the actual lease, or write a lease rider that specifies it is overriding the lease. If any of the agreements are promised actions--such as repairs--write down a deadline (the water pressure must be fixed by this date).
11. Know what your expectations are beforehand. Will you sign the lease if the landlord refuses? How flexible will you be if the landlord agrees to part of your suggestions?
12. Be polite. Don't get angry or hostile, even if the landlord does. Take the higher ground and the landlord may respect your professionalism and believe you to be a good tenant.
13. Do not make ultimatums--change this or I won't sign the lease--unless, of course, you mean it. If you don't mean it, this will only backfire and prove to the landlord that you're being manipulative, and therefore untrustworthy.
14. Only negotiate items that are most important to you. Decide which issues are too small to argue over. The landlord is unlikely to concede to every issue, so pick your battles.

Real Estate Investing: Reasons to Use a Land/Realty Trust

1. Avoids property being probated (out of court transfer upon death of beneficiary)

2. Ease of Transferability

3. Judgments do not attach to the beneficiary

4. No Partition (avoids spouse’s “forced share” sale buyout upon divorce)

5. Easier management with multiple owners (multiple owner do not have to sign docs)

6. No costs upon transferring beneficiary

7. No registered agent needed

8. Legal and Equitable property interest in trustee’s name (never be in the "chain of title")

9. Income and Expense conduit, not a business with tax consequences

10. Trustee has no personal liability

11. No annual fees like other entities, if trustee is an individual or friend

12. Estate planning benefits – automatic successor beneficiaries

13. Less expense with grantor creating the trust entity

14. Avoids the due on sale clause (lenders never know what happened)

15. Privacy of ownership (no recordation of the Trust Agreement) Helps avoid Identity Theft of your name

16. Keep sales price private

17. Able to fracture interests of multiple owners without being "partners"

18. Ease of linkage to other asset protection entities

19. Non-judicial repossessions of real estate sold on installment contract

20. 1099 not required for transfers (personal property not subject to real estate regulations)

21. Ease of operating across state lines

22. Lots of case law to support land trust administration

23. Many attorneys do not study this section of the law – not profitable for them (yields a competitive advantage)

24. No recordation of the Trust Agreement

25. No tax return to file (pass through entity)

26. To avoid “seasoning” problems (secondary market rules of ownership)

27. To save title insurance premiums (Trustee-insured-remains the same)

28. Good negotiating technique in the sale or purchase of property (Disney World used land trusts to acquire its property prior to construction...to avoid price escalation)

29. To provide non-recourse financing

30. Lowering of real estate taxes (prevents re-assessment)

31. Avoids state regulations that apply to corporations and LLC’s

As you can see, Land/Realty Trusts are a wonderful tool for you to use to hide your assets, avoid real estate tax increases, privatize your sales transactions, avoid probate and use for many other benefits. Now that you have a basic understanding of why people use Land/Realty Trusts, please consider acquiring our Land/Realty Trusts Made Easy Home Study Course. You will be amazed at the logic behind how to structure your Trust Agreement so no one but YOU understands what is going on.

At the end of the course we give you all of the forms needed to create and maintain your own Land/Realty Trusts on 1 CD, and we have even included 2 DVDs on how to file out the trusts page by page and line by line - this will save you thousands of dollars in legal fees. As a bonus you will receive on CD Oxford's Law Dictionary.

By the way, I want to let you in on a secret! When attorneys put together land /realty trusts for their clients they hand over your information to a paralegal who uses a computer program (that only attorneys have) and 20 minutes later you have your document. And sense I have a legal background as many of you know, I have this software which I use for creating my own trusts, and now I am making not only my knowledge and expertise to you, but also these very valuable trust documents. So please take time out of your busy day to visit my web site.

This is available by going to: www.JGAGE.com clicking on “Investing Tools” then clicking on one of the “Package Deals” tabs.

Are you working hard to acquire your assets? You will spend a life time building your financial estate…spend a little time and

money learning how to protect your net worth from the deadbeats and their contingency fee lawyers!

Please visit our website at www.JGAGE.com. You can read even more about Land Trusts and how they benefit you.

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

6 Red Hot Tips When Negotiating a Real Estate Purchase

Negotiating may be the most critical part of the real estate purchase process. Being able to strike an advantageous deal with the seller virtually guarantees your profit. Negotiating is both an art and a skill that you will master with time and practice; I call it the “Million Dollar Skill”. Here are six tips to get you on your way to profitable transactions.

Know the Property

You should know as much as possible about the real estate purchase you’re about to make. This knowledge comes from researching the neighborhood and knowing how the property compares to others around it along with the cost of potential repair items you may find.

Know the Seller

The best way to learn more about the seller is to listen; use the 75/20 rule, listen 75% of the time and speak 25% of the time! People will be more likely to volunteer information if you give them a chance to talk. But if you aren’t finding out what you need to know, ask questions. Understanding the seller’s situation and their possible flexibility will help you negotiate financing options as well as price.

You also need to find out what the seller’s motivations are. Why are they selling? Or in the case of foreclosure what circumstances brought them to this unfortunate situation. Understanding the reasons behind the sale can help you structure a deal that meets their needs and yours.

Think Win-Win

The best real estate purchase deals result from negotiations that seek to provide something to both parties. There are certain things you want out of the deal and certain things the seller wants in order to sell. Every real estate purchase has several facets. If you can give the seller something they want, that will increase your chance of getting something you want.

Negotiate Terms, Not Just Price

Price is not your only negotiating point. Sometimes the terms of the deal are more important to the seller than the price. Once again, if you can address the seller’s needs in a real estate purchase, your offer will be more persuasive.

Maintain Control

If the seller counters your offer with an offer of his own, don’t let things spiral out of control. Prepare for counter offers by starting your negotiations low and have plenty of concession points. Don’t focus on price, but use other aspects of the deal in your negotiations. Don’t re-negotiate things that have already been decided.

Be Prepared to Move On

Don’t walk away from an attractive real estate purchase without offering your best deal, but know when it’s time to walk away. There will always be another property.

As you can see from these tips, negotiating a real estate purchase is more than two people in a room. Negotiations are won or lost in the preparation. Achieving the outcome you desire depends on your research and mental preparation.

Until next time – be well.

James Gage

TOP 10 REASONS TO BECOME A BETTER NEGOTIATOR IN REAL ESTATE & EVERY OTHER ASPECT OF YOUR LIFE! Part 3

Number 3 of our 10 points deals with: Maximize financial returns, while creating the edge in negotiations.

The person who mentions price first always ends up on the losing end of the stick. Let’s think about that for a moment. Is it a true statement? Over my 20 plus years of negotiating for a living and real estate investing I can say without reservation absolutely Yes!

Let me explain. When you make the initial offer you give up the ability to see how flexible your opponent is regards to the issue being negotiated, in addition your first offer may be too high and your opponent may accept it on the opening round.

If you are forced to put an initial offer on the table, make sure it is a low ball offer which will demand a counter offer from your opponent.

Be well,

James Gage

TOP 10 REASONS TO BECOME A BETTER NEGOTIATOR IN REAL ESTATE & EVERY OTHER ASPECT OF YOUR LIFE! Part 1

Number 1 of our 10 points deals with : "More Personal & Professional Profitability". Plain and simple, it means the better negotiator your are the more your bank account will increase.

The first mistake people make is thinking that sales and negotiating are 2 different animals - nothing could be further from the truth. We need to treat negotiating as if we are a commission based sales person, that every step of the negotiating process is a matter of putting food on the table.
With that in mind we must change the way we approach the negotiating table and forget about getting to "yes" and get to "no" as soon as possible in order to make maximum profit and leverage time to our greatest benefit.
Instead of dealing with prolonged negotiations, determine upfront whether your time invested will bear fruit or establish whether you are on a hopeless quest leading no where. If you probe your opponent, you sound be able to know based on pointed questions, within 5-7 minutes, if you will be able to accomplish a winning negotiating session; this holds true in real estate, business transactions and personal venues.

" Negotiating is a "Million Dollar Skill".

Until next time be well.

James Gage

TOP 10 REASONS TO BECOME A BETTER NEGOTIATOR IN REAL ESTATE & EVERY OTHER ASPECT OF YOUR LIFE!

Why become a better Negotiator? The answer is SIMPLE !!

When you improve your negotiation skills and techniques, you will gain the ability to increase your value in every aspect of your life simply by increasing the effectiveness of your communication skills. Contrary to popular belief negotiators are not born, they’re made through real world training! Here are just 10 reasons for you to improve your negotiating skills, especially in these uncertain financial times…

1. Improve personal and professional profitability.

2. Achieve desired outcomes.

3. Maximize financial returns, while creating the edge in negotiations.

4. Avoid being cheated or ending up on the short end of the stick.

5. Out smart and maneuver around difficult negotiators and their tactics.

6. Enter into every negotiation whether in person or on the phone with confidence.

7. Know when and how to walk away from a negotiation, while leaving the door open to future negotiations.

8. Learn to get to the No’s, before you get to the Yes’s.

9. Turn every cultural, economic differences into assets rather than liabilities.

10. Earn a six figure income on a part time basis by using your negotiating skills.

For the next 10 blog posts I will expand on each one of the above reasons, which will take your negotiating skills to the next level!

Be well,

James Gage

Observations for the Coming Year

All booms eventually go bust.

We all remember the stock market crash of 2000, and most of us remember the real estate crash after the implementation of the 1986 Tax Reform Act.

Unfortunately, despite our understanding of booms and inevitable busts, it's always near the top of a boom that "dumb money" buys in. Currently, this has set the scene for a potential market bust of which few people are aware.

Supermarket Inspiration

About a year ago, I wrote a Yahoo! Finance column warning readers that the real estate boom was over. How did I forecast the end of the boom? I got my hot tip from the cashier at my local supermarket, along with other economic factors.

While she was tallying the cost of my apples, broccoli, and steaks, she handed me her new real estate agent's card and invited me to call her for my next real estate investment. Moments later, I was home writing that column. As I have always said, "When dumb money chases smart money, the party's over." Needless to say, many real estate agents and investors wrote me nasty notes.

Most economists are forecasting a strong economy, but economists worry me more than newly minted real estate agents. Most seem to be happy that inflation is in check; when I hear that inflation is in check, I begin to think about deflation, and as most of us know, deflation is much, much, worse than inflation.

The Truth

In the simplest terms, inflation occurs when there' too much money in the system. On the flip side, deflation occurs when there are too few dollars in circulation. When that happens, prices start to fall. For example, in inflationary times, prices of houses go up. In deflationary times, prices of houses come down. If prices of houses begin to drop too fast right now, it could be 1986 all over again.

I wrote a column in 2005 about how I love debt and my credit cards. The trouble is that most people do. In the past you could qualify for a loan to buy a house simply if you're alive and breathing.

The strong economy we've been experiencing for years has thus been built on dumb money -- in addition to smart money -- borrowing more and more. Even the U.S. government has had field day borrowing money to do such things as fight a war and attempt to rebuild Iraq and Afghanistan rather than rebuild our country. And the inconvenient truth about debt is that it has to be paid back.

Warning

For the next two years, I'm cautioning people to watch their ratios between good debt and bad debt, and keep liquid reserves such as cash, gold, or silver and become a leveraged real estate investor through short term strategies.

Good debt is debt that makes you rich. An example of good debt is the debt on the apartment houses I own. That debt is good only as long as there are tenants to pay my mortgages. If tenants stop paying their rent, my good debt turns into bad debt.

Most people don't have good debt -- all they have is bad debt. Bad debt is debt that makes you poorer. Forms of bad debt are car payments, credit card balances, or other consumer loans.

On our home, my wife, Sharyn, and I keep a 25 percent debt-to-equity ratio. In other words, our debt is 25 percent of the home's value. Unfortunately, many people have an 80 percent or higher debt-to-equity ratio. That means the debt on their home is 80 percent and their equity is only 20 percent.

To protect ourselves, we have cash reserves to cover the expenses of our investments. Unfortunately, the dumb-money crowd has no reserve funds for their properties and or investments.

Where Deflation Does Its Damage

In a deflationary market, the value of your home can drop. If the value drops, the bank may call in your loan. Even if you've never missed a payment, and even if you're ahead on the payment schedule, the bank can call in your loan if they feel the value of the property is lower than the loan amount.

For example, say you buy a house for $100,000 and put 20 percent down and borrow $80,000. If the market deflates and the value of your home drops to $70,000 (because everyone else is selling their homes to get out of debt), the lender may ask you to pay the $80,000 you owe immediately.

If such deflation happens, cash will become king. There will be half-price sales on BMWs, expensive restaurants will close, and people will be out of work. And anybody who caters to people with dumb money will be in trouble. As I said before, deflation is much worse than inflation.

Smart Money, Bad Times

The good news is that during deflationary times, smart money reenters the market, so crashes are great for smart people with smart money. Instead of listening to the optimistic economists, then, you should eliminate bad debt and improve your debt-to-equity ratios on good debt.

Most important, study; if you want to be smart, you need to learn. I'll discuss what you should study in the second part of this column. For now, be aware that if deflation comes and there's a recession, it won't have much effect on the poor. Instead, it'll punish middle-class people who think they're rich because their houses and stocks have gone up in value.

Finally, don’t forget the impact of our weakening dollar; some forecast that a gallon of milk will be at $5.00 by summer due to the weak buying power of our dollar.

The moral of the story is that those who prepare and know how to invest will make it through the tsunamis ahead and make a whole lot of money, which can be used in part to educate others.

Have a happy, healthy and prosperous New Year.

James Gage

Real Estate: Negotiating

You may be saying to yourself that the part on mentoring on my previous blog posting is very self serving, because I happen to specialize in One-on-One Mentoring - let me address that for a moment.

I have always said that creative real estate isn't rocket science, you could figure it out on your own, but how many failures are you willing to accept before success?

There is an old saying that "time is money", and nothing could be a greater truth. There is a learning curve to everything in life, especially in real estate, but after that is accomplished it comes down to knowing how to negotiate, Negotiating is a "million dollar skill" few have grasped it fully. I have seen numerous investors leave far too much money on the table, or negotiate a deal that leaves them 1 vacancy from financial disaster. The moral of the story is this- find a mentor to take all your deals to the next level for maximum leverage and profit.

I would like to end this entry by giving you 3 negotiating tips!

1. Never need a deal that bad that you are willing to compromise your invest plan! So many investors will do a deal just for the sake of doing one; they pull the trigger with the shot gun blast mentality, hoping to hit the perfect deal.
2. Be Prepared: Know what you’re talking about. Do your comps, fix up estimates, estimate down side potential, know the players, know what you going to do with the property ( know your exit, before you go in the entrance ) – this is essential before you start negotiating.
3. Never loose control of the negotiations. If you find yourself loosing control, excuse yourself for a bathroom break, if you’re on a phone negotiation put them on hold with the excuse that you need to find vital documents that will impact the subject matter. Of course, this is just a stall tactic for you to gather your thoughts and get back in control.

Hope this helps and till next time – be well.

James Gage

Real Estate Investing: More Evidence...

New Home Sales Fall in May for 4th Month

AP -

Sales of new homes fell in May for the fourth time in the past five months, providing further evidence of a continued slump in housing.

Just FYI.....

Get started investing today!

Lease Option: Another Reason to Start Using Lease Options

Home Sales Hit Slowest Pace in Four Years

Reflecting further housing troubles, sales of existing homes in the United States fell in May to the lowest level in four years while the median home price dropped for a record 10th consecutive month.

Do you see a trend forming here?

Lease Options: Rates on 30-Year Mortgages Jump to the Highest Level in 11 Months

Hello All:

I hate to tell you I told you so, but I told you so! Interest rates are are the move and those of us that invest with lease options are positioned to profit heavily! Why?

1. People will be priced out of the home buying market, thus seller's will be extremley opened minded- more than usual.

2. People who can't buy will have 2 choices: 1. traditional rent situation or 2. Lease Options.

Now is the time to get involved in lease options! Enjoy the article.

James Gage

AP
Rates on 30-Year Mortgages Jump
Thursday June 14, 11:42 am ET
By Martin Crutsinger, AP Economics Writer

Rates on 30-Year Mortgages Jump to the Highest Level in 11 Months

WASHINGTON (AP) -- Rates on 30-year mortgages rose for a fifth straight week, hitting the highest level in 11 months as prospects dimmed further for possible rate cuts from the Federal Reserve.

Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.74 percent this week. That was up from 6.53 percent last week and marked the biggest one-week rise in 30-year rates in more than three years.

The five consecutive increases have pushed 30-year mortgages to their highest level since they were at 6.80 percent for the week ending July 20, 2006.

"Mortgage rates moved sharply upward this week," said Frank Nothaft, Freddie Mac's chief economist. "These moves parallel rising yields on Treasury securities as concerns about inflation pressures and continuing strength of consumer and business spending have dimmed hopes for an interest rate cut."

The benchmark 10-year Treasury bond hit a five-year high of 5.295 percent on Tuesday, sending tremors through Wall Street as investors worried that rising interest rates could further depress the housing sector and also harm corporate profits.

All mortgage rates tracked by Freddie Mac showed increases this week.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, rose to 6.43 percent, up from 6.22 percent last week.

Five-year, adjustable-rate mortgages averaged 6.37 percent, up from 6.24 percent.

One-year, adjustable mortgages rose to 5.75 percent, up from 5.65 percent last week.

The mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages each carried a nationwide average fee of 0.4 point. Five-year, adjustable mortgages carried a fee of 0.5 point while one-year ARMs had a fee of 0.7 point.

A year ago, rates on 30-year mortgages stood at 6.63 percent, 15-year mortgages were at 6.25 percent, five-year adjustable-rate mortgages averaged 6.23 percent and one-year ARMs were at 5.66 percent.

Why People Are Not Successful In Real Estate

By James A. Gage, www.jgage.com

Have you ever wondered why most people are not successful in Real Estate or achieve very limited results? All Real Estate techniques and strategies have a learning curve, even Lease Purchasing, AKA Rent to Own which I believe is the only way to control Real Estate. That being said, after you have grasped the strategy or the technique you want to implement - what now! The easy part was learning about the strategy, now comes the hard part which is Negotiating the deal. You can go to all the seminars, buy all the books and tapes on Real Estate investing and still fall flat on your face or come out on the short end of the stick - costing you time and money.

OK, OK if rah rah seminars, boot camps and positive thinking don’t work, what does? What's the SOLUTION?

Why doesn't conventional Negotiating training work ? Why is it that most people who attend Negotiating training courses and seminars show very little sustained improvement? Why doesn't modern Negotiating training consistently produce successful individuals? Why do most people do their best to avoid investors?

Is this all endemic to negotiating or is there something fundamentally wrong with the way we negotiate that causes these problems? Could it be that Negotiating as the Art of Persuasion is a concept whose time has come and gone?

The answer is YES!

There are methods that literally allows the user to leap ahead and learn quickly and become profitable, thereby eliminating all the usual wrong turns and costly mistakes that others make. You must learn to Negotiate from someone who has used it not only as an investor (with success), but someone who has implemented it professionally as a source of primary income. Negotiating can never be taught from seminars or books, but rather it needs to be accomplished not with generic scripts and theories, but with real world experiences and role playing.

Negotiating is truly the “Million Dollar Skill".