Learning the Cooperative Assignment - Lease Option Strategy

By
Education & Training with REISkills.com

Here is a story, please just read it through and let me know your thoughts in an email...Can it work in your area?

 

"Here's a story that illustrates how you make money with the cooperative assignment:

 

“Bob and Susan on a nice house in a nice neighborhood: three bedrooms, fenced in yard, good primary and intermediate schools within walking distance, not far from shops and the post office. So Bob and Susan are trying to sell their house, and have had it listed with the agent. The agent hasn't brought any buyers by over the last six months that have been able to get bank financing. In fact the agent is no longer an agent and working in a different field. Bob and Susan are very disappointed with the real estate process so far. Bob has to go out of the area because his job requires some to go to another office in another city out of state. Susan is really stressed out about their situation, trying to time everything with the kids changing schools, and kid’s friends missing their children.’

 

Kathy Richardson owns a business called a business called www.TampaHomeSolutions.com which focuses on helping sellers sell their home using the Cooperative Assignment Instruction.

 

Kathy sat down with Bob and Susan, and explained that there is a possible solution for selling their house almost immediately.

 

And the solution involves getting a tenant buyer in their house as soon as possible to pay all PITI (principle interest taxes and insurance) costs.

 

Kathy reviewed the financial information on Bob and Susan's house, and was relieved that there was a fixed rate mortgage on the house, not an ARM (adjustable rate mortgage).

 

When there are fixed mortgages, Kathy explained, the cooperative assignment service works really well.

ARMs do not.

Bob and Susan were excited that Kathy could quickly solve their problem, not getting them cashed out quickly, but making sure that their cash flow every month would not be jeopardized, as long as Kathy could get the numbers to work.

Kathy got to work quickly after the paperwork was filled out on the Seller’s side of things.

• She created a flyer for Bob and Susan's house, • placed a webpage on her Tampa finance homes website,

• and did other marketing to find tenant buyers that could afford Bob and Susan's house.

 

A few days later, Kathy got a phone call from Ted and Beth, and they were interested in this house of Bob and Susan's. Kathy explained to Ted and Beth that her job was to totally understand their own unique financial situation, so that she could get quickly approved.

She needed to run a check on them, which they would need to pay for. This home would be financed for them through a rent to own or lease option, and even if they had credit problems in the past, they would be able to build a equity fund so that a mortgage company would lend them an 80% mortgage in the near future. In order to enter this financing plan, they would need 3% of the market value of the property, or $6000. If they didn't have the full $6000, Ted and Beth could have 50% or $3000 finance at 12%. A property inspection has been done on the house and can be reviewed once credit has been checked, a fee of $40 will be necessary to check credit reports.

Kathy was patient with Ted and Beth, having them both on the phone at answering their questions, preventing any confusion. After the phone call, Kathy checks credit reports on Ted and Beth, after receiving their credit card details for the $40 background check.

Kathy called Ted and Beth in that to let them know the good news in that their credit and financial information had been approved, and the next stage they needed to prove that they had the $3000 available in order to see the house. Kathy gave them her fax number for a print screen of Internet Banking to prove that they had the liquid funds.

Once Kathy received this, she called Ted and Beth to arrange a walk-through of the house. Then Kathy called Bob and Susan, and let them know that she had a strong candidate the house. When could she walk-through the prospective tenant buyers? Kathy finished the paperwork with Ted and Beth, collected her assignment fee of $3000, and her promissory note of the other $3000 at 12%, over 12 months, and then met with Bob and Susan, to go over this agreement with them line by line.

Kathy went to her own home, and had dinner with her family. She works more now on marketing new houses, and has plenty of extra time to enjoy her professional and personal life as a real estate investor.

IMPORTANT POINTS:

• Kathy was patient with the owners, not hard selling or ‘pushy’, and was patient answering her clients’ questions.

• Kathy was cautious when qualifying the tenant buyers, knowing that many prospects are “tire kickers”, and will waste her time.

• Kathy received a $40 credit report fee up front on a credit card before allowing the Tenant Buyers to enter the house. • Kathy carefully verified the $3000 was available, knowing from experience that prospective customers many times do not tell the truth.

• Kathy did not give the keys to the tenant buyers until she met with the seller, going over the agreement line by line, and having them sign off that they approved the lease option agreement.

I hope you'll agree that this Cooperative Assignment mechanism of making money is simple, and effective, Sellers are in trouble—and are by necessity MOTIVATED-- and they can't sell because there's so many bargains out there, creating a world-wind of competition.

There is an old saying in real estate: lease purchase and lease options are created by trained professionals, they are not sold.

I am looking for AR opinions to how this Cooperative Assignmnet might work in your particular home seller market.

Thank-You,

 

Brian Gibbons, http://LeaseOptionCoach.com Advice@LeaseOptionCoach.com

 

 

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Rainmaker
689,036
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

So is Kathy a real estate broker?  Or is she some sort of middle-person on the transaction?  If she isn't a broker, I have some concern about her marketing a property that she doesn't have a principal interest in. In Florida you need a license to do that unless you have some sort of legal interest as a principal. I looked at her website, but it appears the link is incorrect?

Feb 07, 2009 09:33 PM #1
Rainer
14,503
Brian Gibbons
REISkills.com - Los Angeles, CA
Creative Financing Coach All 50 States

No she is not a broker, she acts as a principal in her real estate investing business, in this case her being a LESSEE and OPTIONEE.  She is a middle person and not acting AGENT FOR.  She is risk in the transaction and has complete transparancy in writing with the Lessor - Optionor as to permission to Assign for an Assignment Fee.

The link to Kath's RE Site is not active for privacy (not real site name).

Does it make commerce sense to you in this credit starved market? 

Would you do this yourself as a broker to increase income? 

Especially long term lease options allowing the market to correct and rebound? 

Would you consider having the exercise price tied to an either/or, as "price to be EITHER a current appraisal OR $200,000, whichever is higher."?

Do you sense how this is lower risk than Sandwich Lease Options (not on the hook for Tenant defalting).

Your opinion on this matter would be greatly valuable to me, as I respect your experience and ethics.

Thanks, Rob,

Brian Gibbons,  LeaseOptionCoach.com

 

 

 

 

Feb 07, 2009 09:49 PM #2
Rainmaker
689,036
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

A sandwich lease option would make sense in this market. You definitely want to be minimizing your risk right now.

I don't know if it is something I would necessarily want to do in my own ventures, but it might for other people.  Ron Legrand and other investing gurus having been teaching these for years.

Feb 08, 2009 11:00 AM #3
Rainer
14,503
Brian Gibbons
REISkills.com - Los Angeles, CA
Creative Financing Coach All 50 States

That's fine.

The difference between sandwich and the cooperative is:

You are at risk in the sandwich lease option (you "master lease option" and sublease.) If the sub-tenant does not pay, you are stuck.

And you need to double escrow close, whic is getting tougher to do.

With the Cooperative, you can make 3% cleanly, in and out.  You may have to take a partial promissory note over 12 - 24 months.

It really gets cash flow up, especially with new "non-short sale" sales people.

If you know of anyone, please send them my way.  I train on the negotiation and marketing.

All the best,

Brian

See http://LeaseoptionCoach.com for info.

PS Im always looking for great values in FL!  4 B 2 B 2000 ft, fenced yard, good schools, good employers, modest homes, good rent.  No McMansions!

 

 

Feb 08, 2009 11:17 AM #4
Anonymous
Anonymous
marcus

i need brokers who want to do mlo's with senior assisted living, mibile homes and rv park properties. please email me, i am also a middleman,principal not a broker just a middleman for pegasus investor group llc.

Mar 26, 2009 07:34 PM #5
Anonymous
Anonymous
James W. Peterson

Rent To Own -- Equity Sharing Program

Whether buyer or seller be – transfer of the title is our specialty

No Bank Qualifying or Credit Check or Down Payment.

I work with the buyer to locate his ideal property. Then I offer the property owner our Equity Sharing Program with the goal of putting the buyer into it as our property manager. We will assume the owners position and the buyer makes the monthly payments and gets all the "bundle of Rights" associated with homeownership.

All we ask is that the buyer sell or finance the place in his name, in say 2, 5, 7, 10 years. If there happens to be any equitable growth or appreciation, I share it with the buyer.

All that is required of the buyer is a 3-7% security deposit plus the first and last payments (held for his eventual use as a down payment).

Mar 12, 2012 09:01 AM #6
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Rainer
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Brian Gibbons

Creative Financing Coach All 50 States
Call me for a creative financing solution!
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