• Creator
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  • #6645

    Josh George
    Participant
    Post count: 42

    @jilldewit
    @admin
    @luketsmith

    Hey Guys,

    It’s been awhile since I’ve posted on here. Things have been a little busy with researching deals still rolling in from past mailers and also from recent mailers.

    I’ve been trying some different counties and I had a gentleman contact me a couple of days ago from one of my mailers and he wants to sell me a rather large piece of property (over 100 acres). He is asking a really great price ($125/acre!!) for the size of the property based on comps but the figures are well out of my reach. So I feel like this would be a perfect “Options Deal”.

    He is still getting me some info on the property and we haven’t even talked about doing an option yet but since I have never done one before, I’m a little hesitant to pursue/offer it on such a large transaction.

    Assuming that he is ok with doing an option agreement, my concerns are in regards to the mechanics of an option deal:
    I would for sure get title insurance on a transaction of this size but how do I go about getting that?
    Also, is getting title insurance the same as closing through escrow? I’m not well versed in how this process works.

    Any input would be greatly appreciated. I hate to let a deal like this go to waste just because of the small details.
    If he doesn’t agree to do an options deal, I may be reaching out for a partner on this.

    Thanks

Viewing 15 replies - 1 through 15 (of 15 total)
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  • Justin Holm
    Participant
    Post count: 15
    Pro

    Hi Josh,

    Don’t be afraid to do an options deal. They are fairly straight forward. Just use the option agreement you have in the Land Academy package. If you are able to sell the property, you will need to record two deeds, one to you then one from you to the buyer. Really easy and no upfront cash.

    Title insurance is easy to get. If you close through escrow, they will usually require title insurance. The title company and walk you through this. If you have questions, just call them up. They are usually very helpful.

    If you do not feel comfortable with the options part, partner up with someone. I may be willing to partner with you depending on what the deal looks like. Just let me know.

    Don’t be afraid to try something new. That is the best learning process.

    Luke Smith
    Moderator
    Post count: 1263
    ProAdvanced

    I’m working on an options deal right now for 101 acres for 12K that is just over 100 an acre, I offered 8K cash seller is stuck on 12K. Pull out the options. This land’s area is a bit depressed though.

    I just got too many calls to actually concentrate long enough to fill out the option agreement. I did not think she would actually go for it.

    Why not do a double closing through title and escrow so your buyer will pay for everything? They can even draw up the agreement for you. All you need to do is feed in the terms. Like price and time etc.

    If you don’t have a buyer lined up yet it is probably better to do a little basic written up agreement with the seller. I do electronic signature on some and others are too old school so I mail them a pen and and paid return envelope. No excuses there.

    Worst case scenery you learn about options and will be better at pitching them next time.

    Troy
    Participant
    Post count: 31

    @juholm
    @luketsmith

    Justin,

    I have been searching this site/topic for a post that gets into the specifics about “how” to partner on deals. You mentioned “partner up someone”, so I thought I would ask for your specific advice.

    I am familiar with the structure on an option deal, also familiar with the structure of an assignable contract, but you also mention “partner up with someone”. How do you work with a partner on the deal? How do you set this deal up on paper? What documents would be used to lock up the property, close the deal, and ensure both you and Josh get paid? Who is the “Buyer” on the contract? If Josh and you were to partner – how does Josh ensure he gets paid?

    Lets use the simple 100 acre property as an example. Say the price, the property, and ownership documents all look good, and you decided that you want to be the money partner on the deal — Please explain how you do this?

    Are you referring to Josh using a purchase agreement with the seller, and then @joshgeorge assigning the agreement to you for a fee? Is that it? OR are you talking about setting up a LLC with both you and Josh as members of the LLC? OR something else?

    Thanks in advance for your help. I am in the same situation as Josh, and looking for the details with “partnering on deals”

    Troy

    Luke Smith
    Moderator
    Post count: 1263
    ProAdvanced

    @troy all the answers to this are as like visiting a world class art museum. Each masterpiece is different. They all start with the same basics.

    The more tools you learn to use the more effective you can become at doing deals.

    I like to use LLC’s but it took me a while to figure out how to use them. I paid a lot for stupid things in the beginning when I was trying to figure them out. I paid a guy $1500 for an operating agreement one time. I had all these ideas I wanted in there and did not know how to structure them. That deal did not fly but I still use a lot of those clauses in new operating agreements. I read others and cherry pick my favorite parts.

    To start out why don’t both sides talk about what you feel and what you want then how you can make it work for both of you.

    Then write it down.

    Sign it in agreement.

    Change it later as you lean.

    Maybe later on some day move it into an LLC or some such entity.

    Josh George
    Participant
    Post count: 42
    Pro

    @juholm
    @luketsmith
    @troy

    Thanks for the input/advice guys. The concept of an options deal seems really simple but it’s just the paperwork/legalities that always intimidate me a little. I just don’t want to miss something especially when dealing with larger transactions.

    I talked with the gentleman for a half an hour the other night and he is still thinking on it. I’ll keep you guys posted on what he decides he wants to do and how it turns out.

    Luke Smith
    Moderator
    Post count: 1263
    ProAdvanced

    Sold one property I had on option yesterday and sold a different one on option a couple hours ago. They work.

    Didn’t even talk to the buyers on either deal. Online checkout works too.

    Josh George
    Participant
    Post count: 42
    Pro

    @luketsmith

    Nice work Luke! That’s awesome. At first I was kind of putting these types of deals on the back burner because I wanted to get a few more cash deals under my belt but I’m really starting to see the value in them.

    Luke Smith
    Moderator
    Post count: 1263
    ProAdvanced

    I can use the profits from the two 5 acre option ones to actually buy this 26 acre one that just came in via fax! It does not feel like paying for the land when you compound deals like this over and over.

    Josh George
    Participant
    Post count: 42
    Pro

    @luketsmith
    @admin

    Are you offering the option agreement for every deal that the seller doesn’t accept your initial offer price? I seem to be getting a lot of feedback from potential sellers that are trying to negotiate for a higher price. Wonder if I simply offered too low or if I just need to be patient and wait for the signed purchase agreements to come back. It’s tempting sometimes to negotiate with them especially when I am low on inventory of properties so I may start pushing the option agreement to combat this.

    Luke Smith
    Moderator
    Post count: 1263
    ProAdvanced

    The option pitch comes out when I like the seller #1. Got to like working with the seller. If they want more $ I am ready to move into the next caller. Sometimes they are cool and I tell them about higher option prices or options at the offer or less based on some “problem” like cliff property.

    Josh George
    Participant
    Post count: 42
    Pro

    @luketsmith
    @juholm
    @luketsmith
    @troy
    @admin
    @jilldewit

    I spoke with the gentleman on the phone yesterday and he agreed to the Option to Purchase Agreement! Now I’m just waiting to get it back from him signed and then I’ll get to marketing the property. This is by far the largest deal I’ve ever dealt with so I’m a little anxious about working through the paperwork, title insurance, etc. but I’m ready to give it a go.

    Not to get too ahead of myself, but what would be the best method of payment (both on the buy and sell sides) when dealing with larger transactions? Obviously a cashier’s check would work, but would it be better to use a wire transfer for this?

    Jill DeWit
    Participant
    Post count: 439
    ProAdvancedStaffPrincipal

    @joshgeorge

    Exciting!!! Yes, on the larger amounts my first choice is wire transfer to avoid larger credit card processing fees. Typically the cost is around $25 to the person setting up the transfer.

    Can’t wait to hear the details when it is done!

    Josh George
    Participant
    Post count: 42
    Pro

    @jilldewit

    Thanks Jill! I’m pretty excited about this one and it has a lot of potential to be a great deal! I will for sure keep you guys updated on how it turns out.

    Luke Smith
    Moderator
    Post count: 1263
    ProAdvanced

    Buying it though and asking how to pay to buy it? Why not keep to the cashiers check if you are still using a notary and not title and escrow. Some banks let you do stop payments on cashiers checks others won’t give you your money back until 90 days has passed. That is the downside of a cashiers check going missing. A wire goes missing and you can be pretty much screwed. I have had some wires go missing. I put the wrong numbers in there or it went into the wrong persons account with the same name or one account number off. It just seems like wires are a lot easier to screw up. I saw a lot of them get screwed up in the brokerage business. Seemed like a lot of time was spent fixing them and searching for them.

    When it comes to gettign paid wires work great. They are free to do through the federal reserve system. Some banks add on jerk fees but their cost is $0 so as long as you know that you got ground to negotiate with them.

    When you receive a wire it is not going back like a credit card payment can up to 6 months later!

    Joe Snustad
    Participant
    Post count: 38
    Pro

    @joshgeorge

    I was reading this thread hoping to see the end if this transaction you were working on. Needless to say I was left hangin…
    How did this work out for you? Did the option work out? The reason I found this is I was searching through posts about using options and dual closings as this interests me.

    My first thought since you didn’t follow up on the deal again, is it went well and “no news is good news” as they say.

Viewing 15 replies - 1 through 15 (of 15 total)

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