Wise Watson – Day 2

Friday, January 29th, 2010 | Uncategorized

When Watson speaks, everyone should listen…at least if your in the real estate investing biz.

For those of you not in Scottsdale, I wanted to jot down a few key points that you need to know. It’s tough to boil down three hours to a few hundred words, but here goes…

Watson just completed a 4th version of the option contract that he and Bob Mittleman developed some years ago.

For us, using the option is the most ideal way to complete back-to-back AND the option holder can treat the transaction as short-term capital gain.

So a quick review:

There are three transactions in a back-to-back. Most of us think that there are only two. What are they?

Transaction 1: A to B (Obtain option) Contractual interest and equitable interest, and in many states you have a right to do something with the interest.
Transaction 2: A to B (Deed Transfer)
Transaction 3: B to C (Deed Transfer)

Tip 1 - Something that many investors fail to do is to write a check of $10 to $100 for consideration.  You need to do this, and when you do, have the sellers endorsed, sign it back to you, and give seller the cash. That way you have a record of this transaction.

Tip 2 – You need to be consistent and congruent. The entity that signs the contract, need to be the entity that writes the check, and the same entity that comes to closing.

Tip 3 - In some states you may have to give written notice of your intent to exercise the option. It’s good policy to do this anyway. If you are using an option in any way, shape or form, do this.

Tip 4 - Make sure that the pre-approval letter doesn’t conflict with what the contract states about the transactions, that it’s cash.

Tip 5 - Be wary of rental properties that are occupied.  If the tenant is in default on payments, the landlord needs to be pursuing eviction. If tenants are paying rent, they may be able stay in property for several months.

Tip 6 – Remember dower rights and makes sure that spouses sign all docs.

Tip 7 - You need to set you business up so that you can close deals even if you can’t close them on the same day.  This is why you need private lending.

Watson will talk more about that on Saturday.

Okay… Time to get on stage with Dan Doran for some Sales Mastery Training.

More later…!

~josh

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