Did You Download The “For Rent Method” Contracts I Gave You?
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Joe: Hey, it’s Joe. This is module #15 and it’s titled “Did You Download The For Rent Method Contracts I Gave You?”
Joe: I just want to make sure you did. Go to the training tab, go to the For Rent Method contracts, click on that and it’s going to bring up this little thing here. All you have to do is click on download and it’ll download those documents for you, and then when you double click on it, it’ll open up a .zip file. If you don’t have a .zip file or if you don’t have a .zip utility, go to jzip.com and it’s a free utility that you can download that’ll make it possible for you to compact files in one place. Each one of these has lots of value.
Joe: The for rent voice script – This is a script that we have spent literally years tweaking it, changing it, improving it, and making it easier to understand and making it easier to work with. And I still have to say that the first time you look at it, it’s going to be a little bit convoluted and it’s going to be a little bit difficult to get your head around, but once you start using it, you’re going to see why we did it the way we did it. Also, the wording is vital and if you just read this script over and over and over again, 50 times or 100 times, and just read through it all of those times, you’re going to get your head around the words and how it’s structured and how we talk. Because the way you say things makes a lot of difference when you’re talking to people and trying to be persuasive. So make sure you understand how this script works.
Joe: The lease option agreement memo – this is the document that is signed between you and the seller to give you control of that property and to make you a principle in the transaction. If this document is not signed and you don’t have a license and you try to sell that property, then you’re acting illegally and you’re breaking the law, so make sure that you get this lease option agreement memo signed so that you can do it.
Joe: It’s a one page document. I call it the ‘stab me in the back’ document because literally it allows (and I tell the seller this) ‘It allows you, as the seller, to stab me in the back because it lets you get out of this contract any time you want. It doesn’t obligate you to anything. All it does is it sets up the deal so that I’m legally allowed to go out and sell this property. What I’m going to do is – I know that it’s possible that I can be stabbed in the back with this contract but I also know that most people are honest, good people that would never do that.’ I have to trust in human nature to make that a reality.
Joe: So, the lease option memo is a wonderful tool to have, and again, it looks simple because it’s just one page, but there’s a reason why we did it this way. Don’t try to reinvent the wheel. Don’t try to change this stuff unless you have a really good reason to do it.
Joe: The next thing here is the lease option agreement. This is the full blown lease option agreement. It’s got a lot of information in here. It’s got a lease. And with the way it’s written, it’s written as a first right contingency and a resident agreement. So, look at it, read through it and I think that you’ll understand what we’re talking about. You can also listen to the audios that are in this program to explain it a little more.
Joe: The resident document’s addendum is the assignment form. You’re not going to be signing this resident document – this lease option agreement. You’re going to be signing the resident document addendum because what you’re doing is you’re assigning your right to buy (which is the lease option memo) – you’re going to sign your right to buy over to the new buyers. So it’s the new buyer and the seller that’s going to be signing the lease option agreement. All three of you are going to sign this one – the seller, the new buyer and you are going to sign this one. These are going to be the final two documents and then this one will be discarded.
Joe: And then this is the tenant application that people need to fill out. So you can give that to your seller along with a credit report that they can pull up for themselves. Let them pull it up themselves. It’ll save them from getting an inquiry on their credit which reduces their credit. The reason they’re buying lease option in the first place is because their credit’s not good enough to go out and buy a conventional loan, which is 75% of the population by the way so there’s a lot of buyers for lease option buyers.
Joe: So, you get them to fill this out. You get them to print out their credit report. You tell them, ‘Look, we know that there’s going to be things on it. That’s why you’re buying lease option. That’s not a problem for us. What we want to know is that you can make the monthly payments.’ And when you qualify these people, qualify them based on their payment, it shouldn’t be much more than a third, maybe 35 or 40% of their total revolving income or their total gross income every month. So, that tenant application will go to the seller.
Joe: So, when you first talk to the seller, you’re going to get a lease option memo agreement signed. Then when you find your buyer (because once you have house under your control and you go out and find a buyer) you go out and you get the buyer and you get these two documents signed by the new buyer along with this tenant application. Plus, you get the first month’s rent as a check made out to the seller and you get the lease option fee as a check made out to you.
Joe: And that’s when the deal closes. You take the deal to your seller, lay it in front of them or have somebody else lay it in front of them, they sign the document, you give them the check and you cash your check. You’re in and out of the deal. You’re done, and now the deal is between the new buyer and the seller. And that’s all you have to worry about.
Joe: So make sure you download these contracts. Make sure you use them. Make sure you read them. I had a student that on the first deal that she ever did, it took her 3 hours to get through the document and look through it and try to figure out what it said. You need to be able to do that. Spend some time with it and be able to explain it comfortably and quickly and say, ‘This paragraph means this. This paragraph means this. This paragraph means this,’ and just summarize it for them. They don’t expect you to read through the whole thing, and then give them the option to read through it all if they want to. But just summarize it for them and then give them a pen and then ask them to sign. They will sign and they’ll give you the check and then the deal will be done, and it’ll be a wonderful thing for you.
Joe: Alright, that’s all you need to know for now. Again, you should listen to more of the training materials. So if you need more training materials, go to this conference call stuff – this ‘How To Find Buyers And Close Deals’ also shows you how to close these deals and how to put the paperwork together, so it’s worth doing there.
Joe: And don’t neglect the question and answer sessions as well. There’s one here. There’s another one here. This is an hour and a half. This one’s for two and a half hours, and here’s another one for two and a half hours, so there’s a lot of great documentation here that can help teach you this process. Good luck.