The Ultimate Strategy for Buying & Selling Houses

Transcription

1 The Ultimate Strategy for Buying & Selling Houses Creating a Free & Clear Real Estate Money Machine with Richard Roop and Dan Doran Section 1 Introduction: How to Get the Most Out of this Training System Section 1: How to Get the Most Out of this System Page 1

2 Section 1 The Ultimate Strategy Creating a Free & Clear Real Estate Money Machine Introduction: In this system you will learn in great detail how to implement the 4 key steps to using The Ultimate Strategy for creating cash now, cash flow and cash later! 1) Target houses with lots of equity 2) Create multiple offers with 0% owner financing 3) Ensure you get a 15% net profit on every house 4) Sell or occupy fast with a lease option or owner financing How to Get the Most Out of this Training System This is an incredibly extensive training program! We will focus mostly on the Free and Clear business model As a system owner you have already received a tremendous amount of training and support You need to know what you got and where it is at You need to know what you can expect and when we will cover what Most training modules will end with live Q&A, including this one Customer Service: (719) Ext. 105 Fax: (719) Sales & Coaching Support: Section 1: How to Get the Most Out of this System Page 2

3 Discover the secrets to generating tons of CASH now and CASH flow buying and selling any type of real estate with no money down in any price range, during any market climate The Ultimate Strategy: How to Create a Free and Clear Real Estate Money Machine for Cash Now and Cash Flow Dear Fellow Investor, Would you like to make more money buying houses? Are you tired of dealing with sellers with little or no equity? Would you like to sell or occupy your houses faster and easier? Would you like to eliminate your challenges of generating the cash you need each and every month? Then you really got to learn The Ultimate Strategy for buying and selling houses after the recent lender market meltdown and so called "housing crisis" reported in the daily media. Get this training system, review it in full risk-free and discover proven methods for experiencing super success in any market climate and investing strategies that you won t find anywhere else. Top 7 benefits of "The Ultimate Strategy" 1. Enjoy 15% net profit on any property you buy: Buy a $150,000 house with no money down and lock in $22,500 in net profits. Buy a $600,000 house with no money down and net $90,000 after costs. Learn how to net 15% plus on every deal. 2. Collect up to $54,000 in extra cash on the day you buy: Buy a $150,000 house and collect up to $13,000 in EXTRA cash on the day you buy and then another $9,500 later. Buy a $600,000 house and collect up to $54,000 now and another $36,000 later 3. Generate real positive cash flow on houses in any price range Start building a portfolio of houses that net you $200 to $1,500 each in disposable income every month. You can create these cash flows on any house, in any price range, in market climate, anywhere in Colorado. 4. Give sellers whatever price they want: Discover how to apply simple deal structuring techniques so you can offer sellers up to full retail price (or more) and still enjoy your 15% net profit. As you can imagine, this allows you to get a lot more of your offers accepted making you a lot more money on deals other investors throw in the trash. 5. Quickly own 12 houses 100% free and clear: Live the investors dream of owning a dozen or more properties completely debt free and achieve this goal in 5 years or less. Discover how to hold houses for wealth building even in an uncertain market. Enjoy rapid forced appreciation that protects you in nervous, declining, or Section 1: Introduction Page 3

4 depressed housing markets. Then experience a windfall of bonus profits after your market moves through the normal economic cycles. 6. Resell or occupy any house within 60 days: Avoid holding costs that can eat away at your profits. Learn how to buy houses that pay for themselves and can be resold fast Create the competitive advantage you always want when selling. Attract multiple buyers even in markets with lots of unsold inventory or tough lending criteria. 7. Successfully generate real estate profits in any market climate: Recent changes in the housing and credit markets have created havoc for homeowners who need to sell and buyers who want to own. Discover how to collect immediate cash now and predictable cash flow each month with little or no risk all while offering unique solutions to both buyers and sellers. Dramatic changes in the real estate and lending markets nationwide have recently created exceptional profit opportunities when you start using The Ultimate Strategy to buy properties from sellers who NEED to sell and then quickly reselling to buyers who want to own. The Ultimate Strategy works any time, all the time, on any property and in every city in the nation. It doesn t matter if you re in a slow market, normal market, hot market or an uncertain posthot market. This investing approach protects you regardless of how much desperation or fear you may see in your local housing market. With the recent meltdown in the lending industry and foreclosure at all time highs, this is the single best real estate creative investing approach for collecting immediate cash and get this to make ANY property in any price range generate a positive cash flow. Use The Ultimate Strategy to make huge profits buying any type of real estate including single family homes, multi family units, commercial, townhomes, condos, land, mobiles and modular homes. It works on ugly properties that need work and pretty properties that need nothing. It makes every step of investing process easy and systematic. It s perfect for both new investors as well as seasoned pros. WHAT makes this the ULTIMATE strategy? A real estate investing strategy or business model is usually a combination of what you buy with how you fund it with how you sell it. There are dozens of great ways to make money doing creative real estate deals. This is Richard Roop and our students and I have made millions using most of the proven investing models out there. The best creative strategies I ve used include wholesaling, retailing, rehabbing, owner financing, lease options, straight options, buying subject to, round robin bid sales and short sales. But there are pros and cons of each strategy. Therefore, it s best to use certain business models depending upon several dynamic factors such as your local market climate, the direction of prices, your need for fast cash and your present level of training and experience. On the other hand, one strategy (what we call The Ultimate Strategy ) generates cash profits for you all the time! It provides more benefits than any other investing approach I m aware of. The Ultimate Strategy really does it all and more! If you re already making good money investing in real estate then start making more profits now using The Ultimate Strategy on single family homes. And if you re NOT now generating consistent cash every month then this is the perfect vehicle to learn this business and turbo-charge your Section 1: Introduction Page 4

5 investing results, becoming a successful real estate entrepreneur in no time flat. The 4 steps to using The Ultimate Strategy for creating more cash now and more monthly cash flow It all comes down to what you buy how you fund it and how you sell it 1) Target houses with lots of equity Many real estate entrepreneurs have discovered that when there s more equity in a deal, there are more exits and more ways to create an acceptable offer to the seller. Did you know that 33% of all homes in the U.S. are free and clear? The benefits of targeting houses that are free and clear or have very little debt are awesome: First, if you need cash for buying and getting a house occupied, you can borrow against the equity without bank qualifying using hard money loans or private investors. You can raise cash for a down payment, doing repairs or remodeling, paying off liens, paying for your marketing and holding costs PLUS pull out cash profits in advance on the day you buy. Second, sellers with free and clear houses in many cases do not need any of their equity in cash now. These sellers with high equity tend to be older and many times like the idea of receiving a monthly cash flow. This allows you to buy in installments. You can pay the seller off with the income from the property. Next, a lot free and clear houses are non-owner occupied and the seller might be facing a big tax bill if they received all their money at once. You can help them defer or stretch out their tax bite by having them finance your purchase. Finally, you ll find landlords with multiple properties who may want to eliminate all their management hassles and sell all of their properties to you! 2) Create multiple offers with 0% owner financing If doesn t matter what price a seller wants for their free and clear house. You can always pay it. The only question is when. The longer they can wait, the more you can pay. The benefits of creating owner carryback financing at 0% interest include: You can offer a higher purchase price and get more of your offers accepted by having the seller wait for part or all of their equity. You can create a lump sum balloon payment due in 3, 6, 10 even 15 years and then collect all the cash flow from the property during that term. You can give all the positive cash flow to the seller if you want to rapidly pay off the principle balance and build huge equity positions without ever relying on appreciation. This is ideal for post-hot, slow or uncertain markets which describes most of the nationwide housing markets today! If the seller ever wants to be paid off early you can discount their note. If you ever want to cash out a house early then you can move their mortgage to other properties for many, many years. 3) Ensure you get a 15% net profit on every house Section 1: Introduction Page 5

6 Based on your projected resell price (either now or in the future), make offers that guarantee you at least a 15% net profit on every deal. If that happens to drive the price down so low that it s unacceptable to the seller, you can now raise the price back up by pushing part (or all) of their equity into the future using the simple deal structuring formulas and spreadsheet tools used with The Ultimate Strategy. 4) Sell or occupy fast with a lease option or owner financing Since the mortgage market meltdown, sellers are having trouble selling. But buyers are also having trouble buying. Many of the loans for less than A-paper buyers are gone. This is creating a growing demand for rentals and a greater need for creative seller financing. How quickly do you want to pay it off 0% financing? That s right never! Then how can you resell? Here s how: Sell to a tenant buyer and require they close later with wraparound owner financing, or Sell to buyer with a larger down payment and close immediately with wrap financing, or Don t sell. Rent your property out and collect a reliable positive cash flow or give the net income to the seller to own the property free and clear in just 8 to 12 years without ever relying on any appreciation! What is wraparound financing? On a wrap you make a mortgage payment to your seller while collecting a mortgage payment from a buyer. Your junior lien from your buyer wraps (or includes) what you owe on the senor lien to the seller. You get the difference in cash flow and equity. Discover how to create your own free and clear money machine! Go through The Ultimate Strategy Real Estate Training System and allow me and Dan Doran to teach you step-by-step this incredible business model and handle all of the questions that you may have now plus most all of the ones you ll have when you get into action on this. I ve looked and I can t find anything else like this anywhere from anyone! While Dan and I have successfully used and taught this strategy for over a year with our clients having great success with it, we have now put it all together so anyone can quickly and easily use it without any other previous experience or training. Take advantage of what s going on in real estate markets right now all across the country, by helping buyers and sellers solve their problems. And get paid handsomely for it. Discover how to use The Ultimate Strategy and overcome the biggest cash flow challenges you might ever face investing in real estate even in light of recent market changes. Order the home training system today! Sincerely, Richard Roop THE Marketing Consultant to Real Estate Entrepreneurs Section 1: Introduction Page 6

7 Owner Support Site: For system owners only Password: hes Refer to your Welcome letter or for any updates in Member site link and password Password or site will change from time to time Please protect your investment and keep this site access confidential. Member Benefits Each Month The Ultimate Strategy monthly membership is $197 a month including 4 audio CDs shipped each month plus teleseminars, online benefits and more. New course owners get a free trial for several months, then charged the dues each month. Each paid month has a 30-day money back guarantee and you may cancel anytime. #1 Membership Site The Ultimate Strategy NEW membership site includes networking opportunities, course updates, online downloads, member forums, blog, FAQ, software updates, referral program, contests, affiliate program, deal structuring call archives and more. #2 Bonus Coaching Calls We conduct a bonus coaching call each month for active members where you can eavesdrop, ask questions and go over your deals. These calls will usually be on the 4th Wednesday of each month and will be recorded with the replays available online. #3 & Fax Alerts You'll receive announcements on teleseminar call-in information, new benefits and new site updates by and sometimes supplemented by fax or postcards. #4 Marketing Mastery Training Calls You get a subscription to the 2 hour "virtual boot camp" teleseminars on hot real estate investing topics each month at no additional charge. They are normally held on the 3rd Thursday of the month. This benefit with the live call, audio CDs and support site with online replay, transcripts, training outline, related downloads and other resources begins immediately. Normally $97 a month but included with The Ultimate Strategy membership. #5 What's Working Best Now Investor Club The Ultimate Strategy membership includes benefits of the "What's Working Best Now Investor Club" including Killer Conversations Audios of the Month. You get two CDs each month with insider secrets on "what's working best" for investors nationwide. These CDs are carefully selected recordings of recent live boot camp events, teleseminars, group telecoaching calls, one-on-one consultations, and occasionally recordings of calls with buyers, sellers and private investors. Normally $37 a month but is included with The Ultimate Strategy membership. Section 1: Introduction Page 7

8 Training System Components System Training Manual This is a comprehensive, step-by-step training and operations manual outlining each lesson and includes training outlines, checklists, contracts, forms, examples, etc. Each new Chapter or Section is available for download instantly. The final manual will be reorganized, edited, printed and shipped when ready. 13 Audio Training Modules Each training session is minutes plus Q&A. All sessions are available for online access or download instantly except for the final Module 13 on Advanced Strategies to be held in May. The full set of 26+ audio CDs will be shipped when ready. Instant Action Startup Guide Step-by-step implementation plan delivered after the teleseminar series ends in May 2008 and will be posted on your membership site. Quick Start Telecoaching Call A startup call for brand new system owners will occur in June 2008 and added to the course, shipped to existing course owners and posted online. DVD Collection of Full Day Seminar The Ultimate Strategy live training was first held January It was video recorded and edited and will delivered to you on DVDs when the full and final home training package is shipped. Deal Structuring Software You'll receive a number of valuable Excel spreadsheets throughout this system including the Free & Clear Offer Generator available for download instantly. All these tools are included on the Data CD shipped with the course. Course Documents & Forms Forms, checklists, contracts, and marketing materials are available for download instantly and are included on the Data CD shipped with the course. Written Training Transcripts Each teleseminar session has been transcribed and once edited will be posted on the Download page. Certificate of Completion After you complete the entire training you can take an open book "High Equity Specialist" exam online, accessible through your membership site. Once passed, we'll ship you a handsome Certificate of Completion as a free graduation gift! Section 1: Introduction Page 8

9 Bonuses for New Members FREE One-On-One coaching call After you have completed The Ultimate Strategy home training system you can schedule a FREE 15-minute coaching call with Richard Roop. The link to request an appointment will be posted on the new membership site after the course is completed. This is a LIMTED TIME bonus for new course owners who ordered prior to the course being completed on or about May 7th, The Ultimate Strategy FREE live seminar Register to attend your FREE full day The Ultimate Strategy training event. You may also bring a family member, employee or business partner as a guest. The next one will be May 20, 2008 in Long Beach. Upon registration you'll receive hotel and group room rate information. An additional training event is scheduled for September 30, 2008 in Dallas. This is a LIMTED TIME bonus good for the May or September dates only. What's Working Best Now Investor Club NEW Member Benefits What's Working Best Now" FREE online audio 7 FREE "how to" reports by Richard Roop o How to Make $982,800 Quick Turning Real Estate o How to Raise Millions in Private Money in the Next 45 Days o 30 Days to Greater Real Estate Success o Multiple Streams of Motivated Sellers o 17 Ways to Generate Monthly Cash o 5 Ways to Sell Houses Fast o 7 Ways to Raise Cash for Real Estate Deals without Banks 3 FREE ebooks by Richard Roop o Winning Big in Changing Markets o The Fearless Investor o How to Make a Fortune as a Real Estate Entrepreneur And more! 3 FREE Marketing Mastery Training Systems You receive the following training systems normally $291 for FREE. Each system includes 2 audio CDs, online replay links, written training transcript, training outline, downloadable tools and other online resources: Free and Clear Deal Structuring Maximizing Profits with Private Lenders How to Profit after the 2007 Lender Market Meltdown Section 1: Introduction Page 9

10 What you ll discover with this new investing training system: Marketing: The Key to Cash Profits Made Easy How to generate quality leads cost effectively using proven, done-for-you direct mail marketing campaigns and get motivated sellers (with equity) calling you daily to buy their house. Includes my best postcards and letters which are already written, tested and proven! Prescreening: Identifying Golden Opportunities in Minutes How to capture leads, gather property info fast, qualify prospects on the phone, identify deals with real potential and then determine a solid, reliable resell price or exit plan that get any house occupied within 60 days. Deal Structuring: Creating Cash Now, Cash Flow and Cash Later How to create compelling offers that get sellers what they want, adjust your offer when a seller insists on interest and guarantee you a 15% net profit on every house you buy. You get my exclusive Free & Clear Deal Structuring software and cash flow planning tools. Negotiating: Mastering the Secrets of the Pros How to do a value building presentation, build trust and rapport, uncover hot buttons, overcome any objection and get more of your offers accepted. Funding and Raising Cash: Buying Better than No Money Down How to avoid using your own cash or credit, create 0% owner financing, raise millions in private money and collect extra cash whenever you buy a house. You ll get tools and scripts for raising private money. Selling or Occupying Quickly: Creating Multiple Paydays How to occupy any house in 60 days or less even in uncertain markets, offer your buyers the best deal on the market, sell on without fixing up, sell on wraparound financing and generate real, predictable cash flow each month on any house. You get the marketing tools, proven ads, checklists and other documents needed for selling or occupying fast. Holding for Wealth Building: Creating Financial Independence Fast How to avoid paying off 0% owner financing early, create rapid equity growth, pay off debt at a discount, buy houses back when a buyer wants to sell and get a bunch of houses 100% debt-free in no time flat. Leveraging Your Time & Money: Making More with Less Effort How to systemize, delegate and outsource everything you can t do or don t want to do and begin accelerating your cash flow and automatic wealth accumulation by working smarter. Section 1: Introduction Page 10

11 Why this is truly the ultimate strategy for buying and selling houses Section 1: Introduction Page 11

12 Action Notes: Customer Service: (719) Ext. 105 Fax: (719) Sales & Coaching Support: Section 1: Introduction Page 12

13 The Ultimate Strategy for Buying & Selling Houses Creating a Free & Clear Real Estate Money Machine with Richard Roop and Dan Doran Section 2 Marketing: The Key to Cash Profits Made Easy Section 2: Marketing Page 1

14 Section 2 The Ultimate Strategy Creating a Free & Clear Real Estate Money Machine Marketing: The Key to Cash Profits Made Easy Overview: The 6 Elements of a Marketing Campaign Market What or who is your target market? Message Media Money o Homeowners with lots of equity o 33% of all houses in U.S. are free and clear What message or messages will you send? o I m interested in buying your house. We buy houses in your neighborhood and we are looking for more. You can sell you as at a fair price on the date of your choice What media and mix of media will you use to communicate your message to this market? o Postcards & Letters o Free recorded message line o Free special report o Buying website o Advertising specialties How much money will you spend to achieve your goal? Multiple Hits o Spend $300 make at least $6,000 or more in profits o Spend $1,500 to make at least $30,000 in profits o Make $20,000 or more on every deal How many times will you hit your market with your messages? Months o 5 or more times Over how many months will you spread out your campaigns? o Hit once every 2 or 3 months Section 2: Marketing Page 2

15 1) Select your farm areas Geographic or Area Selections Your city or county Surroundings cites and counties Where you can manage properties Zip codes MLS areas Neighborhoods o Age o Price range o Days on the market Section 2: Marketing Page 3

16 2) Choose your mailing lists Demographic or List Selections Tell your mailing list provider you need homeowners in your geographic areas that meet these types of conditions: Property type o Single family homes o Condos, townhouses o Mobile, modular and manufactured homes Mortgage balance o No public data may mean no mortgage o Over 40% equity o No mortgages Date of mortgage o 15 years or more or pre-1993 o No public data might mean no mortgage Price range o Median price easiest to occupy Years owned o Sale date 15 year or more o No public data might mean no mortgage Age o Over 50 - available through mailing list companies Non owner occupied o Landlords o Absentee owners AKA: Out of the area owners Mailing address out of the area Harder to get lists o Vacant o Probate Out of town Out of state Out of the country AKA: Out of state owners Section 2: Marketing Page 4

17 In house follow up o Sellers who rejected your first offer o Follow up monthly Section 2: Marketing Page 5

18 3) Get your mailing lists Sources of mailing lists Public Records o Tax assessor o County courthouse o County clerk and recorder o Title companies Data Subscription Services o Multiple Listing Service (MLS) o First American Core Logic Realist.com RealQuest.com Mailing List Companies o Infousa.com o Melissadata.com o Sales Team Live o Does not sell lists o Lists are including with print and mail service o o Done For You buying campaigns available Free & Clear (High Equity) Out-of-Area (Absentee) In-house Follow Up Day Lates Bankruptcy Property Taxes Delinquent Expired Listings Adjustable Rate Mortgages w/equity Wholesale Properties Pre-foreclosure Multi-family w/equity Section 2: Marketing Page 6

19 4) Prepare your Media Considerations Whose name to use o Your name o Acquisitions manager o Pseudo name Who will take the calls o You o Your voice mail o Answering service o Staff Which direct number to use o When they want to speak to someone What recorded message line to use o If you are offering 24 recorded info Which web site to use o For more information about how you help sellers o Credibility and testimonials o Online response form Mom and pop or professional approach Will you include address and or fax number o Use web site contact form instead of o Most people will go online or call Which address to use o Street address is better than PO Box o Local address is better then out of state o Do not use your home address Do you use a company name o Only important to you o Is it congruent with your message? When do you need to disclose if you re an agent o Real estate agent versions are done for you Section 2: Marketing Page 7

20 Media Postcards o Personalized small postcard o NOTICE postcard Letters o Yellow letter o Follow up yellow letter Free recorded message line o Buying script o Free special report o Instant Marketing Tools Buying website o Advertising specialties o Calendars o $100 Bill Business Cards o Pens o Magnets Section 2: Marketing Page 8

21 5) Mail your postcards Benefits of Direct Mail Controllable o Turn on or off o Choose drop dates Scalable o Stay small if needed o Increase as desired o Limited only by Your capacity to handle the leads The geographic farm areas you select Focused & Targeted o Reduced waste Stealth o Competitors will not know what you are doing Easy to personalize o Always increases response Less competition o Unlike classified ads or yellow pages Section 2: Marketing Page 9

22 6) Mail your postcards again How many times will you hit your market? 5 or more times Once every 2 or 3 months Over how many months will you spread out your campaigns? Hit once every 2 or 3 months Example: o Mail 1/3 of list each month and then repeat Why mail more than once? 1 shotgun hit to 50,000 or 10 focused hits to 5000? Moving parade Builds credibility Build future response potential o Trickle in responses o Referrals Section 2: Marketing Page 10

23 7) Manage a marketing budget Your time verses money Your labor verses writing check Marketing (or hiring anyone for that matter) is not an expense Spend $300 make at least $6,000 or more in profits Spend $1,500 to make at least $30,000 in profits Looking for 20 to 1 return or more Make $20,000 or more on every deal Collect up to 60% of your profit in cash when you buy Section 2: Marketing Page 11

24 Recap: Marketing Campaign Example Market Free & Clear Message Sell your house as is we want to buy your house Media Personalized post card NOTICE post card Yellow letter Money $1,500 total budget for campaign 41 cents per card mailed 3,600 postcards Mail about 1,200 per month Hit one third each month Multiple & Months 8 times over 24 months Every 90 days for 2 years Section 2: Marketing Page 12

25 Typically Direct Mail Marketing Steps 1. Identify the best lists (markets) that work in your area 2. Locate the best list providers 3. Negotiate price 4. Buy the list 5. Clean up the list 6. Remove the duplicates 7. Import the list (spreadsheet) 8. Update the addresses a. USPS.com b. Sales Team Live c. NCOA 9. Write the best copy and test DONE! 10. Choose the right media mix ( handwritten letters, postcards) 11. Get the best postage rate a. Presorted first class b. Use live stamps on letters 12. Print and Address 13. Fold, Seal and Stamp 14. Drop the mail each day/week/month 15. Update the lists 16. Track the response rate 17. Measure results Use postcards, USPS.com and Sales Team Live to make it easy! Section 2: Marketing Page 13

26 Why marketing? Marketing is salesmanship multiplied To generate leads To find motivated sellers To find great deals To get deals coming to you For a consistent flow of leads For better quality leads So you can target sellers with equity So you can find sellers with motivation and flexibility To target sellers in you farm area To target sellers with the type of properties you want To get sellers presold on you Action Steps! 1) Set a stretchingly realistic goal Full time - Basic o 21 leads a month o Spend $400-$1,000 o Buy ½ to 1 house Full time - Intermediate o leads o Spend $1,000-$2,000 o Buy 1-3 houses 2) Create a plan Plan your work Work your plan Get feedback Adjust as needed 3) Automate, outsource and delegate Spend you time talking to qualified sellers Make more working less Section 2: Marketing Page 14

27 Marketing Examples & Tools Section Non-Agent NOTICE card Download Word template from your Support site. Section 2: Marketing Page 15

28 Agent Version of NOTICE card Download Word template from your Support site. Agent verses Non-Agent wording on marketing tools: Agent: We re professional home buyers. Even though we are a licensed real estate agent, we want to buy your house, not list it. Non-Agent: We re professional home buyers, not a listing agent. Section 2: Marketing Page 16

29 Personalized postcard Feb. 1, 2005 Dear, My company is interested in buying your property located at in. We buy several houses each month and we re looking to buy more in this area. Should you have any interest in selling quickly and easily at a fair price, please call us at (direct_phone). You can also visit us at (buying_website) to submit property information form and get the ball rolling. To hear more on how we can by your houses as is on the date of your choice, call our 24 hour free recorded message line at (free_rcd_msg_line_ext. XXX). If you re not interested in selling this property now, please keep this card for future reference. We have purchases hundreds of houses throughout the Pike Peak region since 1996 so we may be a perfect solution for selling your property. Sincerely, Richard Roop, President Bottom Line Results, Inc. Fax. (fax_number) * ( -address) Section 2: Marketing Page 17

30 Personalized postcard From Sales Team Live Section 2: Marketing Page 18

31 Handwritten letter Use 8.5 x 11 yellow legal pad Rip paper out of pad Place white sheet over one page Handwrite message on white sheet Place legal pad paper in copier Photocopy message onto yellow paper Be careful of paper jamming Section 2: Marketing Page 19

32 Handwritten Letter From Sales Team Live Computerized! Section 2: Marketing Page 20

33 Personal looking handwritten envelope From Sales Team Live - computerized Section 2: Marketing Page 21

34 Handwritten letter for FOLLOW UP From Sales Team Live - computerized Section 2: Marketing Page 22

35 Handwritten letter message «TODAY» Dear «Column_Y» or «Column_L», My name is «Column_D». My company is associated with a group of investors and we re interested in buying your property located at «Column_Z» in «Column_AA». We buy several houses throughout «Column_Q» region each month and we re looking to buy more in your neighborhood. By using private money or existing loans we can act quickly with no long, drawn out bank approvals... a typical hassle when you re selling for sale by owner or through an agent. You can sell us your property as is so there s no need for you to fix up. We have our own crews that can clean, repair or remodel the houses we buy. In fact, many of the houses we buy are in great shape. Please call me at «Column_J» or visit «Column_K» to get detailed info on how we can buy your house as-is at a fair price on the date of your choice. If you don t respond then I ll assume your house is not for sale. If you ve already listed with an agent please disregard this offer or just call us when your listing expires. If you ve already listed with an agent please disregard this offer or just call us when your listing expires. Even though we re a licensed agent who can list your house, the reason for writing you is to buy your house. I look forward to speaking with you. Thanks! «Column_D» P.S. Please reply no later than «TODAY+14» Section 2: Marketing Page 23

36 Using Personalized Postcards on USPS.com Follow the instructions the best you can on USPS.com. They recently changed their system. Watch for additional help on your Member Site with simpler, easier to follow instructions in the future. In the meantime, the follow how to steps were submitted to us by one of our clients and thought it would be helpful to share now. Instructions on How to Use New Text Editor for USPS The first step you have to do is make a blank template. The reason we have to do this is that the text editor works with text boxes. So the first part of these instructions is to create the blank document so you can just use that each time you want to mail merge in the sellers name and address. Instructions on How to Use the New USPS Site 1. Click on send cards, letters, flyers 2. Click on current Netpost customers 3. Click on send post cards option 1 4. Click on sign in or if new account then click on sign up 5. Click on Click this link etc 6. Click on post card under create a new mailing 7. Click on upload your own document next to select a post card 8. Select a product---select post card-one sided in drop down menu 9. Upload a file click browse locate document on computer---click on it then click open 10. Give document a name then click upload 11. Your document should appear---click on next step: preview 12. Click on next step recipients 13. Click on up arrow next to select mailing lists 14. Locate list on computer---click on list then click open 15. Address block mapping window will appear 16. Make sure mapping is correct or edit with drop down menus(you must know how you have your title line set up on your excel document) and click done 17. List summary page will appear telling you how many standard and non-standard addresses there are 18. Click next step select recipients 19. Check your list which should be on top under select mailing lists 20. Scroll down and check add me to list 21. Click next step proof 22. Document proofs will appear. You should see both the front and back of post card 23. If everything looks good check I have viewed this set of proofs and approve them for mailing 24. Click on next step payment 25. Fill in payment info(this is also where you can schedule up to 28 days out look for scheduled mail date and it also has a small calendar next to it) 26. Click on next step confirm order 27. If all is ok click on I accept terms 28. Click on place order Section 2: Marketing Page 24

37 Creating a Blank Document 1. The easiest way is to open your personalized post card template on your computer. Go to edit and click on select all. 2. Hit backspace to delete all text 3. Go to file and click on save as and rename the document like blank and save it 4. Close document 5. Open USPS.com and get logged in 6. Under create new mailing click on post card 7. Next to Select a Postcard click on upload your own document 8. Click on drop down menu next to Select a Product and click on postcard one sided 9. Next to Upload a File click on browse locate your document on your computer and click on it then click open 10. Next to Document Name type in name of document 11. Click upload 12. Text editor will now open 13. Click on insert 14. Click on text box which is the paper with the A on it second from left 15. Text box will open with text highlighted in it hit backspace to delete text and click save 16. Now drag text box to upper left corner of white postcard 17. Click on box on lower right of text box and drag to lower right corner of document 18. Double click inside of text box then click save---click on Next Step: Preview it will save the document 19. Now every time you use the personalized post card you want to use this blank document which will be saved in USPS.com. The reason you have to do this is you cannot edit or type in anything that isn t in a text box. How to Personalize Postcards on USPS 1. Log in to USPS.com 2. Click on mailing lists because you have to upload a list first 3. Click up arrow next to Mailing Lists 4. Locate list on computer click on it then click open 5. Define Address Block Mapping window will appear 6. Make sure mapping is correct if not click on drop down menus and choose appropriate mapping 7. Click on done when finished 8. List summary page will appear this will tell you how many standard and non-standard addresses there are 9. If you accept all non-standards then click on Next step: mailing lists 10. On main tool bar on top click on documents 11. Under work with existing documents click on the blank document you just created do not click in the box next to your document as that will just check it to be deleted but click somewhere next to the name and the while line will be highlighted blue document will preview and should be blank then click open. 12. The editor should open up 13. Locate the personalized post card text on your computer and open it Section 2: Marketing Page 25

38 14. When open click on edit then on select all- either right click on highlighted area and click copy or click on edit then on copy 15. Go back to editor and double click inside of text box then right click and click on paste 16. Your text should be inside of document 17. You can now bold phone numbers and website addresses or change date or do anything you want 18. If you want to change the font or text size highlight all text then click on text and from drop down menus select font size and type 19. To mail merge in the name, address and city click on triangle next to mail merge off to right 20. Check use mail merge a drop down menu will appear with lists 21. Click on list you want to use 22. Now click on insert and Mail Merge Fields with drop down menu will appear 23. Highlight area next to Dear 24. Click on owner first or whatever your heading is in your list for their first name 25. Do the same for site address and site city 26. Click on save 27. Scroll down and click on preview document 28. If all looks ok then click on Next Step: Recipients 29. Make sure correct list is checked and click on Next Step: Proof 30. Both front and back of card should appear 31. If everything looks good then click on Next Step: Payment and follow all payment instructions Section 2: Marketing Page 26

39 Buying Script: Free Recorded Message Updated 8/13/ , 2007 RichardRoop.com, Inc. Thanks for calling the real estate hotline. When you decide to sell your house, you re normally faced with just 2 options. Either listing it with a real estate agent or selling it on your own. But you have a third choice. My name is Richard Roop and my company, Bottom Line Results, Inc., is looking to buy several houses throughout the Pikes Peak Region each month. We re professional home buyers and need new properties all the time. If you like the idea of selling your house for a fair price without fixing it up, without putting it on the market and without dealing with the uncertainty of when it will sell, then I invite you to call our office at XXXX. Or you can visit us online at I ll repeat that again soon So grab a pen. When we buy your house you can get a quick and easy sale, instant debt relief, fast cash and completely avoid all the hassles commonly associated with selling a house through an agent or on your own. Section 2: Marketing Page 27

40 And by calling us first, you can still explore your other options if your property does not meet our investment needs. When we buy your house you ll avoid the need to rely on a real estate agent. We can close right away, or on the date of your choice. And we don t charge a fee or commission. When we buy your house you won t have to endure strangers parading through your home, perhaps at times which may or may not be convenient for you and your family. You won t have to fix it up and keep it looking presentable while it s on the market. You also won t have to make repairs or improvements to please a picky buyer who may or may not close. You might already be aware that it s easy for a buyer under contract with you to back out at the last minute if they change their mind or find another house they d rather buy. This can become a nightmare if you ve already moved out or if you re relying on the sale to get you into a new home you ve put under contract. When we buy your house you avoid the possibility of it not selling fast enough, perhaps forcing you to become a landlord to cover your mortgage payment either while it s on the market or after your selling efforts have failed. Section 2: Marketing Page 28

41 There s no need to make double house payments or take that risk when we might be able to make you an acceptable offer right now. When we buy your house you can get immediate relief from your mortgage payments. We help many homeowners avoid or stop a foreclosure, save their credit and enjoy peace of mind. If you re behind on your payments, or have little or no equity, or have bills you need to get paid quickly, we may be your best option. We can offer quick cash, and if needed, we can pay all the closing costs. When we buy your house there won t be any surprises. We can handle all the paperwork and explain we ll everything in clear, easy to understand terms. We offer a great alternative no matter why you want to sell. Are you looking to step-up or even downsize into a home that better meets your needs? Are you being transferred or plan on relocating to a new area? Are you tired of being a landlord and want to sell off a rental property? Are you selling because of a divorce or death in the family? Are you looking to save your credit, avoid a foreclosure Section 2: Marketing Page 29

42 or get relief from creditors? Are you looking to raise cash to buy another house, start a business or pay off some bills? Are you tired of living in a home that s now too hard to maintain or that you can no longer afford? We buy houses from homeowners in just about every situation you could imagine. We buy houses in all price ranges and in any condition. Some investors buy stocks, bonds and commodities. We prefer to invest in real estate, We specialize in single family homes, But we also buy multi-family homes, apartment buildings and even vacant land. We re associated with a group of private investors nationwide and we collectively buy dozens of properties each month. If you re serious about selling, you won t find a more serious buyer than us. All this may sound too good to be true, but it s not. If we can t offer you a fair price, or come to an some agreement that works for both of us, then we won t to business. It is that simple. The truth is we won t know exactly what we ll do with your property until we get all the facts and make our plan. Section 2: Marketing Page 30

43 Then we ll know what we can pay and how we can help you out. So your next step would be to call our office. We ll gather some information, do some research and make an appointment to inspect the property. You ll have a firm written offer within 72 hours, and quickly know if your house is sold, because our offer is acceptable, or if you need to look at your other options. You risk nothing by calling us first, and perhaps you can enjoy all the benefits we have to offer. So call our office now. We ll begin gathering the information we need to create our offer to you. Call XXXX You can also submit your property information online at All the information you provide will be keep confidential. Call us anytime, 24 hours a day. If you get our voice mail or answering service, simple leave a message and we ll call you back. Call XXXX. This is Richard Roop with Bottom Line Results, Inc. and I look forward to helping you get you house sold quickly and easily Section 2: Marketing Page 31

44 Action Notes: Customer Service: (719) Ext. 105 Fax: (719) Sales & Coaching Support: Section 2: Marketing Page 32

45 The Ultimate Strategy for Buying & Selling Houses Creating a Free & Clear Real Estate Money Machine with Richard Roop and Dan Doran Section 3 Prescreening: Identifying Golden Opportunities in Minutes Section 3: Prescreening & Planning Your Exits Page 1

46 Section 3 The Ultimate Strategy Creating a Free & Clear Real Estate Money Machine Prescreening: Identifying Golden Opportunities in Minutes OK. You ve mailed postcards and letters out and now the calls and web forms are coming in. The prescreening process can be streamlined or simplified if they have equity. That s because you only need to gather enough information to plan your exits and prepare for an appointment. If there s a good amount of equity then you want to meet with the sellers. And the purpose of meeting with the sellers (a preview to an upcoming training section) is to: Verify your assumptions Build trust and rapport Do a value building presentation Discover their hot buttons Use their hot buttons and Get a contract In this section we will cover: How leads are typically handled by various investor experience levels How to use a Property Information Sheet How to process Web form submissions The Call Handling Process Handling calls using a script Preparing a seller property information file Doing a pre-call in your office Determining your exits Action Steps! Section 3: Prescreening & Planning Your Exits Page 2

47 How leads are typically handled by investor experience level Group 1 - Basic o Newer investor o May have fear or lack of confidence o May have limited time due to another job, career or business o May have calls go to voice mail and batch call backs o May outsource to a live answering service Example: Group 2 - Intermediate o Experienced investor Mention you re a RoopDoran client to waive setup fee Can be setup through Sales Team Live o Patlive has a basic seller script to gather some information You must call seller back ASAP to complete prescreening Additional vendor updates at o Getting good results but inconsistent o Working on refining systems and processes o May prefer to take the calls themselves or use assistant Virtual assistants: The 4 Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich By Timothy Ferriss ( Group 3 - Advanced o Super successful investor o Have more money than time o Looking to generate higher profits with less work o Has Buying Support person hired and trained to take calls Gathers information Sets appointment for you for or Acquisitions Manager Prepares seller property file for you to review Pulls comps, tax record, MLS history Runs MAO worksheets Helps determine you exit plan Section 3: Prescreening & Planning Your Exits Page 3

48 Resources: o Volume 3 of Marking Mastery Training Collections: Power Negotiation & Sales Strategies for Investors which includes Magic Words for Converting Leads in Cash o Volume 5 of Marking Mastery Training Collections: Profits without You: Automation, Delegation & Outsourcing o Business Mastery for Real Estate Entrepreneurs o Sales Mastery for Real Estate Entrepreneurs How to use a Property Information Sheet Download example from your Support site if needed o Property Information Sheet o Property Information Sheet Always record: o Date of call o Source of lead o Name of caller and owner o Phone number o Property address How to process Web form submissions Transfer information to Property Sheet Call seller to gather more details ASAP o Run Calling Handling Process below o Do not procrastinate by researching property info before calling the seller Unless you know it has equity and you will be setting an appointment ASAP Otherwise it may be fear and you re really looking for a reason not to call back! Section 3: Prescreening & Planning Your Exits Page 4

49 The Call Handling Process Prescreening is simplified for The Ultimate Strategy o Other investing strategies may require gather more details on the phone Be friendly, flexible and enthusiastic o Show you re excited and happy that they called Make them feel good about it o Appreciate their courage to call and show respect their time Quickly gather the W.W.O.W. formula: o When do they want to sell? This helps you discover: Do they want to sell? Are they in a hurry? What is their situation? Is it owner occupied? Do they already have another house? What is there need for cash? o What is the property Worth? What do they think it is worth? How did they determine the value? Are they asking less or more than it is worth? An indication of motivation Is it in the low end, median range, or high end price range? Help determine how easy will it be to get occupied or sold How much will it take to bring the property into excellent condition? o What do they Owe? Determines your cash needs on the deal o How quickly can you get it occupied? o How much cash do you need to raise for fix up? Reasons for discovering this: Do they have equity? o Equity is the difference of what is owed and what you buy the houses for. Section 3: Prescreening & Planning Your Exits Page 5

50 o It is not the difference between what is owed and what it is worth o If they owe less then you would consider buying the houses for, they have equity It there is equity, GO meet with them o Do not try to over prescreen on the phone o It is better to meet, build rapport and do a presentation o If they have equity, they are a qualified lead o Look for motivation on the phone but do not require it o Fear cause investors to look for reasons not to go o How much do they Want? Optional for The Ultimate Strategy because it does not matter! More important for other creative investing or business models Reasons for exploring this: Have they done anything to sell the house yet? What have they been asking for and for how long? Have they lowered their initial starting price? Is it listed or was it listed with an agent? Have they had much interest? Why do THEY think it has not sold? What is their level of motivation? Section 3: Prescreening & Planning Your Exits Page 6

51 1) Handling calls using a script o Hello, this is Richard. How can I help you? I understand you want to buy my house, etc. o Great. How did you get my number? You sent me a postcard. So how does this work? o As I mentioned, mine name is Richard. What s your name? This is John. o Hi John. So you got my post card. Good. We sent several postcards to your neighborhood. What s the address on the property you re thinking of selling? 123 Main Street o Thanks John. And the city and zip code? Seattle, o OK John, if you can give me a few details I ll be able to do some research and let you know what I can do for you when I buy your property. Can I ask you a couple quick questions? OK, but I only got a few minutes. How much do you want to buy my house for? o I won t be able to tell you exactly until I come out and see it. And I ll go to work on this right away so I can tell you what I can do when I come out and take a look, John. How soon would you be interested in selling? Key1: WHEN? 1) No hurry, anytime, whenever (Could be a smoke screen to real motivation) 2) Within (2 to 8 weeks) 3) After I find another house, the tenant moves out, etc 3) ASAP o Where are you moving to? I m not moving. This is a rental/vacant/etc. How long has it been? Is it occupied? What is the agreement with the occupant? Not sure yet Have you done anything yet to sell the house? Across the Street/City/State/County What s taking you there? Into the home we just bought/own/plan to buy When would you like to move? How much time do you have? Section 3: Prescreening & Planning Your Exits Page 7

52 o OK John. Let me ask you this. What do you think the property is worth or in other words if I sent a real estate appraiser over tomorrow and had your property appraised, what do you think it might come in at? Key 2: WORTH? $200,000 OK great. Do you base that on a recent appraisal or is that just you knowledge of the market? I don t know o Real estate agent o Recent appraisal o Resent sales o That s what I got into it o That s what other houses for sale are on the market for OK John. No problem? But if you did know, or were to take guess, giving me some idea, what would you say? Are you aware of any similar houses that have sold recently in the neighborhood? How do they compare to yours? Do you know what the tax assessor values you house at? o (Ask only if tax values are less than market values in your area) How long have you owned it? What did you pay? Did you negotiate on price when you bought it? It has already appraised for $200,000 When was that? What was the purpose of the appraisal? Do you think that is high? What do you think it really is worth based on what is happening no in the market with (all the homes for sale, all the problems in the lending industry, all the foreclosures were seeing, etc.) o Is that after bringing it into excellent condition to please a buyer or as is, John? It s in excellent condition So it does not need a roof, or carpet or any paint? After some work What do you think I might do to bring it into excellent condition? What do you think it needs? Were you planning on doing that work or would you like to sell as is? If you know, how much do you like it would cost to do this work? Section 3: Prescreening & Planning Your Exits Page 8

53 o Do you own the property free and clear of a mortgage John or is there a loan balance we need to take care of for you? Key 3: OWE? -- Or -- Is there a mortgage on your place or is it free and clear? Yes, it is free and clear (Go to GATHER COMP DATA) I have a mortgage No problem, approximately what do you owe left on that? Is it current or does that include some back payments? Tell me John, how much is that payment each month? Does that include taxes and insurance? Is there a second mortgage or home equity line? o (GET COMP DATA: So you can determine value and plan your exits) Good John. Just a few more questions so I can do my pre-work this afternoon. Address/location Year built and type of property Beds baths, garage Size of lot or acreage o (If there is equity, GO!) o End Script Is it or has it been listed Other than yourself John, who else is on title with you? Would you like to get together next week or would sooner be better? I say I m booked for weeks, oops I see you are on street, I ll be there today Is 4 ok for you and sally (I already have sally s name) Sooner please Anytime o Tell you what, John. I m kind of booked with the way the market is. We ve been getting a lot of calls this week. I ll look at my schedule and see what I can do for you. o OK. Let s set this up. I can meet with the both next week to see if I can make you an offer that works o Now let me see. Hmmm. You know, it looks like I will be in your neck of the woods (this afternoon, tomorrow, etc) looking at properties. I should be able to get my work done on your file by then and I could meet with you at that time. Sound good to you? [NOTE: You WILL be in their area because you will be driving the comps on their house prior to meeting them!] Section 3: Prescreening & Planning Your Exits Page 9

54 o Now set appointment and end the call Research property and plan your exit prior to going IF YOU HAVE TIME Call back if your research raises questions Example: Someone else on title Cancel appointment if you later discover it is a non deal for you Section 3: Prescreening & Planning Your Exits Page 10

55 2) Preparing a seller property information file o Property information sheet o Tax assessor data Assessed value Recent sale date and price Owners of record Do they own other property? Are you meeting with all owners Compare square footage, lot size, year built, etc. With what they told you With MLS history Mortgage information Condition or quality of construction or improvements o Comparable sales data How to become a property value expert: Use Dan s game and make it fun Resources: Data Subscription Services o Multiple Listing Service (MLS) o First American Core Logic RealQuest.com Volume 1 of Marking Mastery Training Collections: Super Direct Mail Secrets of Finding Deals includes the best sources for mailing lists and comps. o How to Get Comps by Tim Randle o Effectively Using Real Estate Comps by David Whisnant o o Most recent MLS listing for this house Active or expired listing Previous sale Listing history o MapQuest.com directions o MAO worksheet Section 3: Prescreening & Planning Your Exits Page 11

56 3) Doing a Pre-Call from your Office The selling process includes 4 stages o The Approach Handled with your marketing systems and prescreening process o The Pre-Call o The Appointment o The Close A Pre-Call is to help you mentally prepare for going on an scheduled appointment o In the office before you leave o In the car on the way to see the seller (covered in later section) Talk to the person who took the info from the seller, if not you o What are their hot buttons? o What is their need for cash? o How is the rapport building so far? o What objections came up already or that you can expect? Talk to the person in charge of selling your houses, if not you o Do we have potential buyers for this property? o How hard would it be to occupy fast? Section 3: Prescreening & Planning Your Exits Page 12

57 4) Determining your exits Why is this important? o To structure multiple offers in advance of meeting the seller o So you can make an offer and get a contract when you meet the seller o (More reasons will become clear after completing upcoming course sections) How long to do want to hold this property if you owned it? o What price would you agree to sell it for now, within 60 days, offering flexible terms? To a tenant buyer closing on a wrap later To a contract buyer closing on a wrap now o Will you just rent and hold for 6 or 10 or 15 years? What price can you reasonable expect in the future? Be conservative with appreciation projections o What is the minimum resell price? What income can you rely on? o From a tenant o From a tenant buyer o From a contract buyer o What is the minimum income? What are you monthly holding costs when vacant only? o Utilities o Marketing to sell or occupy o Staff o Raise enough cash to handle holding costs while vacant What are you monthly holding costs when occupied? o Taxes o Insurance o HOA dues, etc. o Payment to hard money or private lender loan o 15% off for vacancy, repairs and maintenance The 25% banks use is more conservative and protective Section 3: Prescreening & Planning Your Exits Page 13

58 What is your NET positive income when it s occupied? o Minimum income less monthly costs Without any income to the seller yet Best to only offer the seller what the house can afford Unless you can get super high rate of return on the money you put into property, causing a negative cash flow Example: Seller needs $3,000 a month for assisted living and needs all of that income from the house. The house would only net you $2,000 positive cash flow. You would be feeding $1,000 in equity and principle reduction into the house if you offered the seller the $3,000 they needed. Based on how you structure the deal (covered later) you can lower you price or sweeten the terms to ensure you get $1,400 back each year for every $1,000 invested each month. If you have extra cash to invest, a 40% return is quite respectable. Will you occupy fixed up or as is? o As is or fixed up to Contract buyer Tenant buyer o Fixed up for Straight tenant o How much cash do you need if you wind up fixing it up? Do you want cash now? o How much? o Pull out up to 60% of 20% of your resell price Worth $300,000 Resell for $300,000 Gross profit 20% or $60,000 Pull out up to 60% of gross profit or $36,000 max 12% interest only payments would cost you $360 a month That reduces cash flow by $360 a month Do you want to create a middle for cash flow? o Offer less than the NET positive cash flow to the seller Offer none For maximum cash flow long term You get all the cash flow each month Section 3: Prescreening & Planning Your Exits Page 14

59 Offer half? So you can get some principle reduction each month Offer all? For rapid principle reduction and forced equity appreciation Good for uncertain markets What is the most you can reliably borrow using a collateral lender? o Up to 65% loan to value Minus any points or loan costs $195,000 on $300,000 property Less $10,000 if 5 points Nets $185,000 for: o Paying all cash o Holding costs o Fix up costs o Cash down offered to seller o Extra cash to you o From who? Hard money? Private lender? Do not use banks More help on planning your exit will be covered in next Section on Deal Structuring. Section 3: Prescreening & Planning Your Exits Page 15

60 Action Steps! 1) Get prepared to take calls Have Property Sheets handy Personalize and practice your script 2) Setup up how you will gather data for seller property file Accessing public records and MLS Pulling and learning comps 3) Begin lining up sources for cash needed for deals Hard money lenders Private investors 700 W. Hwy 24 Suite E Woodland Park, CO Customer Service: (719) Ext. 105 Fax: (719) Sales & Coaching Support: Section 3: Prescreening & Planning Your Exits Page 16

61 Example: Property Information Sheet Download from Support Site or: Property Information Sheet Property Information Sheet Section 3: Prescreening & Planning Your Exits Page 17

62 Action Notes: Customer Service: (719) Ext. 105 Fax: (719) Sales & Coaching Support: Section 3: Prescreening & Planning Your Exits Page 18

63 The Ultimate Strategy for Buying & Selling Houses Creating a Free & Clear Real Estate Money Machine with Richard Roop and Dan Doran Section 4 Deal Structuring: Creating Cash Now, Cash Flow and Cash Later Section 4: Deal Structuring - Version 2 Page 1

64 Section 4 The Ultimate Strategy Creating a Free & Clear Real Estate Money Machine Deal Structuring: Creating Cash Now, Cash Flow and Cash Later You ve ramped up your marketing to get leads coming in. Then your prescreened those leads and have set some appointments. Next you want to structure some offers that you can present. We do this before meeting with the seller. In this section we will cover: How to create compelling offers that get sellers what they want How to guarantee you net 15% profit on every house you buy Free & Clear Deal Structuring software Create multiple offers with 0% owner financing If doesn t matter what price a seller wants for their free and clear house. You can always pay it. The only question is when. The longer they can wait, the more you can pay. The benefits of creating owner carryback financing at 0% interest include: You can offer a higher purchase price and get more of your offers accepted by having the seller wait for part or all of their equity. You can create a lump sum balloon payment due in 3, 6, 10 even 15 years and then collect all the cash flow from the property during that term. You can give all the net positive cash flow to the seller if you want to rapidly pay off the principle balance and build huge equity positions without ever relying on appreciation. This is ideal for post-hot, slow or uncertain markets. Ensure you get a 15% net profit on every house Based on your projected a Resell Price (either now or in the future), make offers that guarantee you at least a 15% net profit on every deal. If that drives the price down so low that it s unacceptable to the seller, you can now raise the price back up by pushing part (or all) of their equity into the future using the simplified deal structuring formulas with The Ultimate Strategy. Questions to ask your self: Does seller need cash now, cash flow or cash later? Do YOU need cash now, cash flow or cash later? Do you have private or hard money lined up? What is the cost of your quick and easy money? What can you sell the house for now or later? Use the Free & Clear Offer Generator spreadsheet to generate offers in minutes Section 4: Deal Structuring - Version 2 Page 2

65 The Ultimate Strategy Offer Generator Software Instructions: Applies to Version 3c - Download Here Visit your Membership site for latest updates How to use the Offer Generator Part 1 Offer Generator - sheet ARV After repaired value What the property comps out at or appraises at, fixed up Resell Price To occupy within 60 days Appreciation will adjust it if you plan to hold longer than 3 years Target Net Profit 15% suggested Or enter % to get minimum $20,000 Or enter % using calculator to a fixed amount desired Repairs Use a minimum $500 to clean Cash Down (to seller) Start with $0 and $0 payments o Example of a Cash Later offer Section 4: Deal Structuring - Version 2 Page 3

66 o Returns highest price with shortest term Use 20% down of seller s new home and $0 payments o Example of a Cash Now offer Assume maximum cash available is 65% ARV less repairs Payments (to seller) Start with $0 Use net positive cash flow and $0 cash down o Example of a Cash Flow offer Use net positive cash flow and 10% cash down o Example of a Cash Now & Flow offer Minimum income (to you) Use market rent Use projected wrap payment if less than market rent References wrap income (ITI) with 8% down payment at 7.99% interest o ITI = Interest only payment, taxes, insurance o From contract or wraparound buyer Cash Now (to you) Amount of your future profit you ll borrow when you buy There s a cost -- but your offer price will be adjusted to compensate Start with $0 since all the cash needed for the deal will be raised o Remember you should get money down from your buyer too o Your buyer s money you get can be your cash now for the deal Don t pull out more than 60% of your targeted net profit o Leave a cushion of equity in the deal Section 4: Deal Structuring - Version 2 Page 4

67 Part 2 Offer Generator - sheet Your offers will be calculated using the Input % numbers. After inputting data in all the fields, in all Parts, a Projected % is shown in yellow cells. Transfer this amount to Input % cell, rounding up. Costs to: Buy Enter estimated % of ARV Used as initial estimate for calculations before using actual costs enter in Part 3 & 4 Use projections to adjust and re-enter % as needed Costs to: Hold Enter estimated % of ARV Used as initial estimate for calculations before using actual costs enter in Part 3 & 4 Use projections to adjust and re-enter % as needed Costs to: Sell Enter estimated % of Resell Price Used as initial estimate for calculations before using actual costs enter in Part 3 & 4 Use projections to adjust and re-enter % as needed Taxes Enter estimated % of ARV Use calculations and projections to re-enter % as needed Enter actual annual taxes into calculator field if desired to project % Insurance Enter estimated % of ARV Use calculations and projections to re-enter % as needed Enter actual annual insurance in calculator field if desired to project % Section 4: Deal Structuring - Version 2 Page 5

68 Cash MAO Range FROM the most cash that s typically available using hard money (65% of ARV less repairs), up TO traditional all cash MAO (70% of ARV less repairs) Free & Clear MAO As you run different scenarios, print this (Offer Generator) sheet out to compare offers To change term years, use the fields on Cruncher sheet o Typically not required Buy Price in white boxes are offers that are 90% to 105% of ARV o Very acceptable range for the seller o Cash Later in white boxes are above $0 o Means backend is positive o Negative backend is in red means you will need to bring cash to close out Means you collected more than your target profit in advance o Profit with staff (w/staff) is less the cost of your Buy & Sell Managers, if any o Section 4: Deal Structuring - Version 2 Page 6

69 Part 3 Offer Generator - sheet Appreciation We will not assume any appreciation for 3 years Enter annual appreciation % that begins after 3 years o OK to use 0% but be realistic o 3% is conservative for most markets Imputed interest The time value of money used to generate offers Rate is used to calculate a premium for seller s 0% payment stream and balloon The premium is added to raise your offer price to seller for 0% terms Recommend using a % rate close to the Federal Funds Rate o You can look up current Fed Funds Rate up at: o Fed Funds Rates vary depending on number of years 4.5% suggested o Change rarely if at all Lender rate The annual interest rate you expect to pay on a private or hard money first lien Use higher hard money rate if uncertain about the availability of private money 12% suggested Lender points The loan fee as a % of the loan Private money is typically 0% or no points Use hard money points if uncertain about the availability of private money Section 4: Deal Structuring - Version 2 Page 7

70 Months to sell We intend to get each property occupied within 2 months or 60 days Use 3 months as a minimum to be more conservative Use more months if you expect it to go longer (special circumstance) Staff cost to Buy and Sell Enter % of ARV as a cost for your Buying Manager Enter % of Resell Price as a cost for your Selling Manager The Fixed net profit projections assume no staff o You will net less than fixed profit projection if you re paying staff o But you can buy and sell MORE houses with staff, making more overall profits If you pay a flat fee then use the calculator to suggest a % to enter o o Then transfer % to get fixed in yellow cell to input cell Use 0% if you are not paying anyone to buy or sell houses for you HOA Dues Enter if any This will be a monthly costs while owning, whether vacant or rented o This cost may be passed on to a wrap buyer If so, add this amount to projected minimum income Utilities Paid while property is vacant o Not an expense while occupied Click on next sheet tab titled Other Inputs: Section 4: Deal Structuring - Version 2 Page 8

71 Part 4 Other Inputs - sheet (Sheet Notes) Enter date on this sheet based on your local market. Many of the numbers on this sheet will not change from deal to deal. Term Keep at 3, no need to change Use calculators if desired to Determine a % to be entered in Part 2 for o Buy Costs % o Hold Costs % o Sell Costs % o o Not normally required Vacancy rate The percent of you monthly income that will used for o Vacancies o Repairs o Maintenance Banks use 25% when you borrow again rental income 15% suggested OK to use 0% if your only planned exit is a wrap buyer Section 4: Deal Structuring - Version 2 Page 9

72 Monthly Costs Monthly costs while occupied or vacant Enter other monthly costs to own, if any Buy Costs These costs may rarely change from deal to deal Enter these one time costs when buying, not included in Part 3 o Cost of leads to get a deal Use $1,000 until you have history o Transfer Tax Enter as % of ARV Or input a fixed amount into calculator Yellow cell gives a % to transfer to input field Purple cell shows calculated amount from input field Use 0% if paid for by seller o Title insurance Enter as % of ARV Or input a fixed amount into calculator Transfer % in yellow cell to input cell Use 0% if paid for by seller o Enter other closing costs: Section 4: Deal Structuring - Version 2 Page 10

73 Hold Costs Utilities in Part 3 is auto-filled in blue cell Enter monthly costs only incurred while vacant, not included in Part 3 o Advertising each month until occupied o Include any other monthly costs while vacant Sell Costs Enter one time costs when selling, not included in Part 3 These costs should rarely change from deal to deal You will rarely be paying outside commissions % when selling with terms o To pay a flat fee to sell: Enter amount (example $500) in calculator Transfer % in yellow cell to input cell as % Enter closing costs and other one time costs to sell o Section 4: Deal Structuring - Version 2 Page 11

74 Cruncher sheet Reveals total amount to borrow Reveals total annual appreciation Reveals adjustment in balloon amount needed to fix for the targeted net profit You can change Term Years row of numbers - If ever needed or desired Section 4: Deal Structuring - Version 2 Page 12

75 Offer Recap - sheet Before making a Fixed Profit offer, check this page to see if you will make more using Suggested MAO instead. Suggested MAO Shows MAO using suggested approach Cash Later to Buyer in red means cash is needed out of pocket when closed out Net Profit % may not meet Target Net Profit unless adjusted to the Fixed Profit MAO Numbers below Target Net Profit are in red Notice if your profit goes DOWN over time o Indication of high holding cost verses expected income o Could indicate valid reason for shorter hold times o Solution may be to sell on a wrap for higher income or reduced costs o Use Fixed Profit MAO if profit is less than target net profit or goes down fast Notice if your profit goes UP over time o Use Suggested MAO if you make more money over time Like above example Section 4: Deal Structuring - Version 2 Page 13

76 Fixed Profit MAO Used on Offer Generator sheet (first tab) Cash Later to Buyer in red means cash is needed out of pocket when closed out o You collected more than your total profit ahead of time Section 4: Deal Structuring - Version 2 Page 14

77 Deal Structuring Examples Applies to Version 3c - Download Here Visit your Membership site for latest updates Example #1 - $110,000 House Here s an example of a low end houses worth $110,000 after $5,000 in work. Income expected is $795 rent. We want to make at least $25,000 but a 15% profit will not do it on a low-end houses. So we enter $25,000 into the calculator and get 22.73%. Enter numbers In Part 2 use 4%, 3% and 1% for costs Use 1% for taxes and insurance In Part 3 use 12% interest and 3 points for hard money Keep appreciation and imputed interest the same for most deals. Use 0% for Buy and Sell managers Use $100 for utilities while vacant Section 4: Deal Structuring - Version 2 Page 15

78 Go to Part 4: Other Inputs In Part 4 on next sheet, use $1,000 for cost to gets leads for a deal Enter rest of input fields as follows: Go to back to Part 1: Offer Generator Section 4: Deal Structuring - Version 2 Page 16

79 Start with $0 down and $0 payment for a Cash Later offer I always like to start with $0 down, $0 payments and $0 Cash Now to me. This should help determine the highest price we can pay the seller over the shortest time frame. Even with no Cash Now to us, we will get the cash we collect from our buyer or occupant. Notes (results here may be different until all data is input as per this example): The most cash down available on this deal is $66,500 Net cash flow is $382 but may change as we enter data in other Parts Projected wrap income is $854 but may change as we enter other data The most cash you should pull out is $15,002 Go to Offer Recap sheet Section 4: Deal Structuring - Version 2 Page 17

80 Example #1 - $110,000 House Review Offer Recap sheet What we can determine from Suggested MAO grid: My target profit is 23%. Suggested MAO profits start at a 26% profit for 3 years and grows each year. If Suggested MAO produced less than 23% then I d only use the Fixed Profit MAO. I can use the Suggest MAO if I like for this example. My Cash Later goes negative in year 10 (not shown here) meaning by then I have collected all my profit Section 4: Deal Structuring - Version 2 Page 18

81 What we can determine from Fixed Profit MAO grid: My Cash Later goes negative in year 6 We can make a $33,019 using Suggested MAO verses our fixed $25,300 on a 5 year plan Suggested MAO is sometimes better if cash flow is high verses property value. Now go back to Offer Generator sheet Section 4: Deal Structuring - Version 2 Page 19

82 Example #1 - $110,000 House Pick a Cash Later offer from Offer Generator sheet Offer #1 Cash Later Free & Clear MAO (based on a fixed net profit) offers near retail for a 5 or 6 year term The 5 year term still has a backend, or Cash Later to Buyer Choose an offer from 4 to 7 years (based on your needs or seller s needs) My pick is 6 years for a Cash Later offer o Price: $110,300 (max) o All due as a balloon in 6 years o No payments or money down Print out this sheet as Offer #1: Cash Later Now let's change the down payment and monthly payment to create multiple offers Go to Offer #2 Section 4: Deal Structuring - Version 2 Page 20

83 Example #1 - $110,000 House Offer #2 Cash Now Change $0 to $15,000 down Double check Part 2 o Our Projected % costs need to be less than our Input % costs o o o They are. Otherwise you'd change as needed Result with $15,000 down Now a 7-8 year plan looks good with $15,000 down My pick is 8 years for a Cash Now offer o Price $109,700 (max) o $15,000 down o $94,700 balloon due in 8 years o No payments Print out this sheet as Offer #2: Cash Now Now go to Offer #3 Section 4: Deal Structuring - Version 2 Page 21

84 Example #1 - $110,000 House Offer #3 Cash Flow Change $15,000 down to $0 Net cash flow shows $382. Shave a little off and enter $375 for Payments Double check Part 2 - looks OK Result: Now a 5-6 year plan looks good with payments of $375 to seller My pick is 6 years for a Cash Flow offer o Price $110,300 o $0 down o $27,000 at $375 a month for 72 months (6 years) o $83,300 balloon due in 6 years o No money down to seller Print out this sheet as Offer $3: Cash Flow Now go to Offer #4 Section 4: Deal Structuring - Version 2 Page 22

85 Example #1 - $110,000 House Offer #4 Cash Now & Cash Flow Change $0 down to $8,000 Change payment to $0 Net cash flow shows $297 Change payment to $250 Double check Part 2 - looks OK Result: Now a 6-7 year plan looks good with payments of $250 My pick is 7 years for a Cash Now & Cash Flow offer o Price $110,400 o $8,000 down o $21,000 at $250 a month for 84 months (7 years) o $81,400 balloon due in 7 years Print out this sheet as Offer #4: Cash Now & Cash Flow Now go to Offer #4a Section 4: Deal Structuring - Version 2 Page 23

86 Example #1 - $110,000 House Offer #4a Borrowing about 60% of our net profit Change Cash Now to buyer from $0 to $15,000 Change Payment to $0 Leaves $138 net cash flow. Let's keep it ourselves Double check Part 2 o Hold Costs is Projected above the 3% in the Input % o o o o Change Hold to 3.5% in Input % cell Result: o New Cash Now offer with $8,000 down: Now an 8 to 10 year plan looks good with payments of $0 My pick is 10 years for a different Cash Now offer o Price $110,900 o $8,000 down o $102,900 balloon due in 10 years Section 4: Deal Structuring - Version 2 Page 24

87 Offer #4b Note that in above offer we will have to come out of pocket $6,472 in 10 years when cashed out. So Let's give most the $137 a month net positive cash flow to seller to pay down this balloon: Change $0 payment to $135. Results to offer: I like this better. I will never miss the small cash flow and now avoid taking too much profit in advance. Offer #5 All Cash Cash MAO $66,500 to $72,000 Start at low end (or lower) and never exceed the high end of this range o Represents 65% ARV less repairs to 70% ARV less repairs Know what you can pay all cash o You may never offer it o Use it if they insist on cash o Use it to contrast your higher priced offers Section 4: Deal Structuring - Version 2 Page 25

88 Deal Structuring Examples Applies to Offer Generator Bets V3c -- Visit your Membership site for latest updates Example #2 - $600,000 House This is a bread and butter in a high priced city worth $600,000 after $20,000 in carpet, paint and updating. We can expect to get $2,495 rent. We want to make 15% profit or $90,000. Starting with same numbers from Example #1, now... I always like to start with $0 down, $0 payments and $0 Cash Now. Go to Part 2 Enter $3,500 for taxes in calculator Enter $2,300 for insurance Change Taxes & Insurance input %: Enter.60% for Taxes (rounding up from Projected % of.58%) Enter.40% for Insurance (rounding up) Result: Change Buy Input % to 2% Change Hold Input % to 1.5% Change Sell Input % to.5% Result: Section 4: Deal Structuring - Version 2 Page 26

89 Go to Part 3 Change Utilities to $300 a month Result: Go to Part 4 Enter $1,400 for title insurance into calculator Change Input Field % to.23% Result: GO to Offer Recap sheet Section 4: Deal Structuring - Version 2 Page 27

90 Review Offer Recap sheet Suggested MAO does not meet 15% profit requirements so is in red. Profit goes down over time due to the hold costs verses income o However, we can still make $75,880 on a 3 year plan To make our fixed profit of $90,000 (or 15% net) we need to use the Fixed Profit MAO Section 4: Deal Structuring - Version 2 Page 28

91 Go to Offer Generator sheet A 4, 5 or 6 year plan looks good to me. This is Offer #1 for Cash Later Section 4: Deal Structuring - Version 2 Page 29

92 Example #2 - $600,000 House Now add $30,000 for a Cash Now offer Results: A 5-7 year plan looks good to me. This is Offer #2 for Cash Now Change down to $0 Change payment to $1,225 Results: A 4-6 year plan looks good to me. This is Offer #3 for Cash Flow Section 4: Deal Structuring - Version 2 Page 30

93 Deal Structuring Examples Example #3 - $240,000 House This is a bread and butter in a normal priced city worth $240,000 after $2,500 in repairs. We can expect to get $1,495 rent. We want to make a 15% profit or $36,000. Seller insists on a price of $240,000. We need cash... so let's pull out $20,000. Start with $0 down, $0 payments and $20,000 Cash Now. For this deal we only have hard money at 15% and 5 points. Change Utilities to $150 a month Part 4 Enter $700 for title insurance into calculator Change Input Field % to.29% Go to Part 2 Section 4: Deal Structuring - Version 2 Page 31

94 Example #3 - $240,000 House Part 2 Enter $1,600 for taxes in calculator Enter $1,400 for insurance Change Taxes & Insurance input %: Enter.70% for Taxes Enter.60% for Insurance Change Buy% to 3.0% Change Hold % to 2.0% Change Sell % to 1.0% GO to Offer Recap sheet Section 4: Deal Structuring - Version 2 Page 32

95 Example #3 - $240,000 House Review Offer Recap sheet Suggested MAO is close profit requirements Profit % does not grow over time Best to use Fixed Profit MAO Section 4: Deal Structuring - Version 2 Page 33

96 Go to Offer Generator sheet A 3 or 5 year plan looks good. Cash Later to negative so it may be best to give some cash flow to seller since we got $20,000 upfront This is Offer #1 for Cash Later Section 4: Deal Structuring - Version 2 Page 34

97 Example #3 - $240,000 House Now enter $40,000 for a Cash Now offer Recheck Part 2 that Input % is higher than Project% Change Hold % to 3.0 % Results: A 7-10 year plan looks good to me. This is Offer #2 for Cash Now Section 4: Deal Structuring - Version 2 Page 35

98 Example #3 - $240,000 House Change down to $0 Change payment to $605 Results: A 4-5 year plan looks good to me. This is Offer #3 for Cash Flow Section 4: Deal Structuring - Version 2 Page 36

99 Additional Resources Volume #6: Creating and Presenting Offers Sellers Accept Marketing Mastery Training Collection Includes: o Nov 2004: Strategies for Structuring Multiple Offers How to Become a Transaction Engineer o Feb 2006: The 7 Laws & 21 Principles of Successful Negotiation How to Increase Your Closing Ratio Immediately o Mar 2006: Advanced Deal Structuring The Path to More Cash Now, Cash Flow and Cash Later Volume #9: Profit Guaranteed Deal Structuring Marketing Mastery Training Collection Includes o March & April 2007 o Structuring More Profitable Offers that Get Accepted - Part I & II Generate more cash now, cash flow and cash later by buying better, negotiating better and locking in more profits per deal! o May 2007 o Free & Clear Deal Structuring Collect cash now, uncommon cash flow and huge backend profits... in any market... by targeting houses with equity! Marketing Mastery for Real Estate Entrepreneurs boot camp In-depth, up-to-date instruction, successful student panels and deal structuring sessions Million Dollar Coaching Weekly Bonus Coaching calls Monthly Peer Group calls W. Hwy 24 Suite E Woodland Park, CO Customer Service: (719) Ext. 105 Fax: (719) Sales & Coaching Support: Section 4: Deal Structuring - Version 2 Page 37

100 Section 4: Deal Structuring - Version 2 Page 38

101 Offer Generator Sheet As you input all the date and create each offer, print out the different Offer Generator sheet. 1) Add address 2) Add notes Refer to this header showing differences in offers after you print them out 3) Fill in Part 1 4) Fill in Part 2 10) Change Cash Down and Payments to generate various offers 5) Fill in Part 3 6) Go to Other Inputs sheet and fill in Part 4 8) Check Offer Recap sheet to determine if Suggested MAO is more profitable over time 7) Double check Part 2 after each offer (cash later, cash now, cash flow, cash now and cash flow) making sure Input % is higher than Projected % 9) Choose or identify a term in years to present as an offer (all of them work) Section 4: Deal Structuring - Version 2 Page 39

102 Offer Generator Sheet Cash Later #1 No Cash Down and no Payments to seller 5 Year Plan Notes: 1. Always start with no money down and no money each month. 2. When a seller accepts $0 down and $0 per month they are waiting for all their money and you can pay the highest price in the shortest number of years. 3. You will be collecting your profits each month from the net positive cash flow of the property. Section 4: Deal Structuring - Version 2 Page 40

103 Offer Generator Sheet Cash Now $20,000 Cash Down with no Payments to seller Notes: 10 Year Plan 1. Create an offer giving the seller about 20% down. 2. The more cash you pay down, the higher cost to you for borrowing those funds and the longer the plan must go to compensate. Section 4: Deal Structuring - Version 2 Page 41

104 Offer Generator Sheet Cash Flow #1 No Cash Down and $395 Payments to seller 6 Year Plan Notes: 1. Change down payment back to $0 and note the net positive cash flow. 2. Create an offer giving most of net cash flow to the seller. 3. The NET cash flow is the income less interest on cash needed for deal, less monthly costs to own, less the Vacancy Rate entered in Part 4, typically 15%. 4. You will be building rapid equity growth by applying all of the net positive cash flow from the property toward paying of the seller s note with principle only payments. Section 4: Deal Structuring - Version 2 Page 42

105 Offer Generator Sheet Cash Now & Cash Flow $8,000 Cash Down and $310 Payments to seller 7 Year Plan Notes: 1. Change Cash Down to $8,000 and Payments to $0. Now there is only a $315 net cash flow. Change Payment to $ Because of the cost of borrowing $8,000 for the down the cash flow is reduced from before, but an amount the house can generate. Section 4: Deal Structuring - Version 2 Page 43

106 Offer Generator Sheet Cash Flow #2 No Cash Down and $240 Payments to seller PLUS $15,000 Cash Now to you at closing 8 Year Plan Notes: 1. Add $15,000 to Cash Now. Reduce Cash Down to $0. Enter $240 for Payments. 2. The Cash Flow offer goes from 6 years (#1) to 8 years (#2) because this time we pulled cash out when we bought. Section 4: Deal Structuring - Version 2 Page 44

107 Offer Generator Sheet Cash Later #2 $20,000 Cash Down and no Payments to seller PLUS $15,000 Cash Now to you at closing 12 to 15 Year Plan Notes: 1. Add $20,000 to Cash Down. Change Payments to $0 as this property can no longer avoid it. 2. The more cash you borrow against the house the longer the plan will need to go to keep you Offer Price up. 3. The longer plan you can get a seller to accept, the better for you since you will more likely experience the bonus profits of added appreciation and increases in monthly income from your occupants. Section 4: Deal Structuring - Version 2 Page 45

108 Offer Generator Sheet All Cash Revealed on this sheet and does not change. 0 Year Plan Paying All Cash Notes: 1. Cash MAO is the MAXIMUM you d pay all cash 2. It s is OK to pay all cash if it s at a price that excited you. 3. Refer to Max Cash Available as well 4. You all cash price may help get your terms price accepted when they do want to discount the price so much. It s good to present when they insist on all their cash. You never know what is more important cash now or price. Section 4: Deal Structuring - Version 2 Page 46

109 The Ultimate Strategy for Buying & Selling Houses Creating a Free & Clear Real Estate Money Machine with Richard Roop and Dan Doran Section 5 Negotiating: Mastering the Secrets of the Pros Section 5: Negotiating Page 1

110 Section 5 The Ultimate Strategy Creating a Free & Clear Real Estate Money Machine Negotiating: Mastering the Secrets of the Pros In this Section we will cover: How to do a value building presentation How to build trust and rapport How to identify and use hot buttons How to overcome common objections How to get more of your offers accepted Steps to be covered: 1) Doing your Pre-call in the car 2) Delivering your presentation 3) Closing on your proposal 1) Doing your Pre-call in the car Driving the comps o A best practice o Get there early and do this o Helps to verify your value assumptions o Become more knowledgeable of values o Get a feel for activity in the neighborhood Normal way Section 5: Negotiating Page 2

111 o Fears and doubts racing through your mind They won t like my offer They want all cash and I can t give it to them They won t want to wait for their money New way o Build your confidence and positive expectations Get centered Remember a recent success Last great seller appointment Recent goal achievement A recent highlight in your life Know that your proposition is great for the right person If it does not work for them, they should not take it! Anyone who accepts your offer gets the benefits SW-SW-SW Some will, some won t, so what? Visualize your outcome Effectively doing your presentations Handling questions with ease Making them fell comfortable Having them excited and relieved that you came Working out all the details and getting a contract that excites you Affirmations Think of all the reasons why they should do this Benefits to be gained by seller Quick and easy Fair price Can sell as is No need to market the house No need to have buyer drop out Peace of mind Relief from property management Cash now Section 5: Negotiating Page 3

112 Reliable cash flow - secured by property 2) Delivering your presentation Rapport and trust starts while touring home o Where are you moving to? Helps reveal their situation and needs o Do you have your next home yet? - Pleasure Did they already buy it? If Yes o How much? o Did they get a loan? o May want to payoff other houses Cash flow can offset other payments instead o May not need any cash now If No o Will they buy, rent or other? o What price range? One offer may include 20% down on their new home o Have they looked? Are they very motivated? o Do you need to help find them a home? When do they want to move? New monthly payment? On a new home? For nursing home? For rent? Attempt to offer a Cash Flow offer that fits their needs o Look for opportunity to discuss Where do you invest their money now? Prospect for private lender? Do not discuss your private money program yet o Don t get them thinking about 7%-12% returns yet! Section 5: Negotiating Page 4

113 Identifying hot buttons This will help you determine their need for cash now or cash flow o Definition Non-financial reason for selling the house o Numbers verses emotion Do be like all other investors just offering price Using hot buttons always you to get better price or terms It shows you care and understand They will appreciate that o Identify pain and agitate What will happen if they don t or can t? o Identify pleasure and paint them in How mice will it been when they can? Gathering at the table o Price Proof & Market Conditions Use news local and national What to add to your presentation o Record foreclosures o Lender meltdown o Tough or slow market o MLS data by zip What statistics to gather o Seller Discount % o Days on the markets o Average home values o Home value trends o Unsold inventory o Compare to o Last quarter o Last year To help persuade them to take action now Section 5: Negotiating Page 5

114 o What builders are doing (a crystal ball) They need to sell o How to present transaction costs Commissions Seller discount Buyer fix up requests Holding costs Closing costs Commissions Making your offers o Decide what you think they should do, based on their situation Cash later? No money down to you They can wait for their money They get best price in shortest term Cash flow? To offset new expenses To offset other loan they want paid off To offset new loan they need on new house Offer up to full net positive cash flow you expect Cash now? For down payment on another house To pay off other debts to improve cash flow All cash? o Use all cash MAO o Hold back unless they insist o Contrast it to higher price with terms o It s OK to pay all cash at right price Cash now and cash flow? When they need some cash and some cash flow Section 5: Negotiating Page 6

115 3) Closing on your proposal Assume, write and submit o Assume o Write o Submit Close by filling out the paperwork o Let s go through the paperwork and work out all the details so you can feel comfortable with this and you can. Objections o Process Call them by name Always agree Ask a question o Don t want to wait for my money By waiting for all or part of your money I can get you this higher price o I want interest I calculated interest into my offer price. You get a higher price we won t need to report any part of you payments as interest income to the IRS I can redo this with interest but the price would come down. Are you willing to look at a lower price? o I ll think about it What type of interest are you getting on money in the bank? Great, while I am here, what will you be thinking about. Perhaps I can t answer some more questions for you. Once you feel comfortable I will get to work on this. Do you want me to hold off or get my part started? o Need to talk to my son/daughter, attorney, etc. No problem. Are you OK with the price and terms we discussed? We have spent a lot of time on creating a plan that can work for you. Would it be OK if we talked to them together so I m available to answer any of their questions just like I did for you? Section 5: Negotiating Page 7

116 o I m not ready to move yet Let me help you find your new home We can do this whenever you want In fact, we can close now so it all done and they I can rent back to you until you line up you new place! No payments to seller during rent period Hold back some of their cash down, if any for leverage Use an Occupancy Addendum o How do I know you ll pay me My promise to you is well-secured by the property I would not make any promises to you I don t plan to keep If I don t I would lose everything I am putting into this. o I won t live that long This is a good reason to be around! Of course everything thing you own will go to your heirs, including any note payments from us. Who would that be? What do you want to use the money for now? o I ll list/rent/keep it o Resources: Walk them through the process in detail Point out all the pitfalls and suggest you re OK handling those types of issues, right? Demonstrate how selling get them their hot button and avoids problems Volume 3: Power Negotiation & SALES Strategies for Investors including June 2005: How to Leave the Seller's House with a Contract -- Getting Your Offers Accepted More Often Apr 2006: Handling Objections from Buyers and Sellers -- How to Improve your Communication & Negotiation Skills Volume 6: Creating & Presenting OFFERS Sellers Accept including Feb 2006: The 7 Laws & 21 Principles of Successful Negotiation -- How to Increase Your Closing Ratio Immediately Volume descriptions: Section 5: Negotiating Page 8

117 The Ultimate Strategy for Buying & Selling Houses Creating a Free & Clear Real Estate Money Machine with Richard Roop and Dan Doran Section 6 Funding & Raising Cash: Buying Better than No Money Down Section 6: Funding & Raising Cash Page 1

118 Section 6 The Ultimate Strategy Creating a Free & Clear Real Estate Money Machine Funding & Raising Cash: Buying Better than No Money Down This Section includes: 1) Cash you may need when buying 2) How to fund your purchases 3) How to pay off your houses 4) What is a hard money loan? 5) What is a private investor loan? 6) How to find hard money lenders 7) How to find private investors 8) How to use your private investor s money Resources How to Raise Millions in Private Money Over the Next 45 Days 7 Ways to Raise Cash for Real Estate Deals without Banks - Part 1 of 2 6 Ways to Collect Cash when Buying with No Money Down 17 Ways to Generate Monthly Cash: How to Overcome Real Estate Cash Flow Challenges General Disclaimer Private Investor Flyer/Postcard/Letter Example Additional Resources Maximizing Profits with Private Lenders 7 Ways to Raise Cash for Real Estate Deals without Banks - Part 2 or 2 17 Ways to Generate Monthly Cash - Million Dollar Coaching Call Replay Equity Trust Company Volume #2: Generating Monthly Cash While Building a Fortune Section 6: Funding & Raising Cash Page 2

119 1. Cash you may need when buying Down payment to seller Paying off existing liens and encumbrances Funds for rehab, remodeling or repairs Closing costs to buy Holding costs until sold or occupied Collecting part of your profits in advance 2. How to fund your purchases Borrow from the seller o The Ultimate Strategy Borrow from private investors o Always plan to have at least a small first o Unless buyers down can fund the deal Borrow from hard money lenders o Sometimes quicker and easier o OK until you get private money o You can replace them later with private money Use your buyer s cash down payment o Purchase deposit from tenant buyer o Down payment from contract buyer Use your buyer s cash from a new loan o Move your seller s 0% money to seconds other properties 3. How to pay off your houses Use the net positive income o Pay off 12-15% hard money loan o Pay off 7-12% private investor loan o Pay off 0% seller carry back loan Use additional non-refundable purchase deposits paid monthly from tenant buyer o To pay off hard money or private money faster Use buyer down payment or deposit o 3-5% down or more form tenant buyer o 5-20% or more from contract buyer o You can buy the note back from first position lender Keeps seller in second position Section 6: Funding & Raising Cash Page 3

120 Pay off 12-15% hard money loan first Pay off 7-12% private investor loan next Pay off 0% seller carry back loan last o Negotiate a discount for paying them off early Use your buyer loan proceeds o Move your seller s 0% money to seconds other properties 4. What is a hard money loan? Collateral loan against high equity Sometimes easier and faster than private money Up to 70% loan to value (LTV) o May consider a second lien position Not to exceed maximum total loan to value o May hold money back in escrow until repairs are completed Should loan on value and not purchase price Lender should be OK with owning the property in case of default Loan fees of 2 to 10 points Term is typically one year o May get 2-3 years o May charge you points to extend May require a personal guarantee o Signing as trustee When property is owned by trust House is responsible o Signing as President When property is owned by your corporation All corporate assets are at risk Best not to HOLD investments in a corporation Use LLC or other o Signing personally Added security for lender All your personal assets are at risk May require a credit check o Wants to make sure you are not a deadbeat Lender may do their own appraisal o Could just do online research and a drive by o You can provide most current appraisal and comps Section 6: Funding & Raising Cash Page 4

121 o May charge you extra for this o Cost could be included in the loan fee Lender may do all the closing paperwork o Could be included in the loan fee Lender s Title Insurance policy required For business or investment purposes o They may prefer not to do owner occupied loans o Home Owners Equity Protection Act (HOEPA) Hazard Insurance o Have valid policy at closing properly endorsed o Use an insurance agent 5. What is a private investor loan? Collateral loan against sufficient cushion of equity Up to 85% loan to value (LTV) Investor probably does not want to own the property No loan fees o You could offer 1% to investor if needed o You could offer 1% to a private money manager Someone you hire to find and manage private investors Term is flexible o Get 3 years minimum o Ask them o Shoot for 7-10 years May require a personal guarantee o Only if they ask o Don t offer it needlessly o It s up to you Are you willing to do whatever it takes to protect them? Should not require a credit check o They are protested by: Cushion of equity Seller in second position Income from the occupant Lien against the property o In case of your default, they get The property through foreclosure Section 6: Funding & Raising Cash Page 5

122 All their principle All accumulated interest All collection, legal fees and any other lender disbursements May require an appraisal o Follow federal or state guidelines o Lender may be happy with you value estimate o OK to provide list of comps o Use your resell price or contract price as the value Paperwork is done for them o Use FNMA note and deed of trust o Can be done in houses For experienced buyer only o Best handled by attorney or title company You pay all the costs Explanations in paperwork No payments Interest only payments Special provisions to add o First right of refusal on the sale of the note o Substitution of collateral o Subordination agreement o Due on sale clause Get the right to sell on a wraparound Don t let other assume your obligations Lender s Title Insurance policy may be required o Discounted when getting with an Owners Policy o Will you do it on all purchases? o Will you do it when pulling cash out of a house you already own? Hazard Insurance o Have valid policy at closing properly endorsed o Update policy endorsements as required over time If you replace or add a private investor o Use an insurance agent Section 6: Funding & Raising Cash Page 6

123 6. How to find hard money lenders Local REIA Newspaper Yellow pages Mortgage brokers Referrals o Mortgage brokers o Other real estate investors Online research o o o o TUS Membership Site updates 7. How to find private investors Inner Game verses Outer Game o Outer game is the technical step by step process o Inner game is your check up from the neck up (Zig Ziglar) Habits Attitudes Beliefs Expectations Create your program o So you can easily explain it o anyone and everyone you come in contact with o Example: How to Raise Millions in Private Money Over the Next 45 Days Create a 60 second elevator speech o Examples: How to Raise Millions in Private Money Over the Next 45 Days Build you information and credibility kit o What to include: How to Raise Millions in Private Money Over the Next 45 Days Create your presentation o Deliver one-on-one o Deliver to groups o Deliver online Section 6: Funding & Raising Cash Page 7

124 o Print out and add to kit o Example: Jake Jordan s Presentation use as example only Michael Moulton s Presentation use as example only Flap your lips to everyone you know o Do before advertising for cold leads o List of ideal prospects: How to Raise Millions in Private Money Over the Next 45 Days Indentify interested prospects and follow up o Meet with someone weekly o Create goals and milestones Track controllable inputs Number of postcards, letters or phone calls Number of presentations 8. How to use your private investor s money Questions to ask: o How much do they have to work with? o Where is it tied up now? o When will it be available? o Is it in a retirement fund? o Are you most interested in income or growth? Good to know: o Will they do land, mobile or modular homes? Offer them a deal like this first and then see if they object o Do they want to get a higher return on deals where you need a second lien? They will do it for more money Smaller seconds may accrue interest with no payments Offer payments if you wish to reduce your payoff obligation later If you have a deal now, present your opportunity o I m buying a house worth $220,000 o I m going to borrow $40,000 o I m will to pay my investor 9% secured by a first mortgage o If you were my investor you d get $300 a month Section 6: Funding & Raising Cash Page 8

125 Or offer principle and interest Or offer to have the interest compound each month, or each year Or offer simple interest for the term o Do you have any money you d like to get 9 % on? o How long would you like to get that type of predictable return? If you do not need cash now o I ll put you down as one of my investors and call you on my next deal Action & Implementation Plan 1) 2) 3) 4) 5) 700 W. Hwy 24 Suite E Woodland Park, CO Customer Service: (719) Ext. 105 Fax: (719) Sales & Coaching Support: Section 6: Funding & Raising Cash Page 9

126 How to Raise Millions in Private Money Over the Next 45 Days By Richard Roop If you're being challenged by recent market changes... or struggling from a lack of cash... here s a solution for you Raising and using private money can help you enjoy more profits in a slow, normal, hot or post-hot real estate market. I want to help you start buying more, holding more and flipping more houses... all without ever using any of your own cash or credit. Many cities and counties across the nation have recently shifted from a hot or normal market to a more challenging slow or pot-hot market. This is especially true for regions like California, Florida, Washington D.C., etc. If you're having any trouble collecting cash when you buy, collecting positive cash flow each month or building long term wealth by capturing lots of equity, this article will give you the competitive and strategic advantage you want and need to achieve your financial goals as a creative real estate investor. Dan Doran and I work one-on-one with hundreds of real estate entrepreneurs each month. One of the keys to some of our most profitable strategies (that are working best right now) is finding, nurturing and using private investors as part of your house buying operation. The benefits of developing your private lender program and lining up dozens of investors eager to give you cash are substantial and significant: First, you can begin buying more houses for 'all cash' at significant discounts... up to 70% off retail value. Second, you can structure offers on houses that have lots of equity... receiving $20,000 or more of your profits in advance... in cash... on the day you buy... even if you plan on holding a property for many years. Next, you can get back all the cash it takes to find, fix and occupy a deal so none of your money or credit is tied up in a house... allowing you to collect dozens (or hundreds) of 'free houses' each year for long term wealth accumulation. Finally, you can turn many non-deals with no equity into super profitable deals with substantial equity by paying off existing debt at a discount... using private money. Here are the steps to systematically raising private money: 1) Create your program so you can explain it to others 2) Write your 60-second elevator speech 3) Build your info/credibility kit Section 6: Funding & Raising Cash Page 10

127 4) Create your presentation 5) Flap your lips to everyone you know 6) Follow up on your leads Understand lots of people that you come in contact have idle cash savings or retirement funds that are experiencing little or no growth. Offering double digit returns secured by local real estate is a great opportunity for them. Your private investors can enjoy higher profits thanks to you. And you can make for money, thanks to them. It s quite simple 1) Create your program so you can explain it to others Private Lender Program EXAMPLE: I pay my private lenders 9% interest on a first lien. I prefer paying monthly interest only payments supported by the income on the property but I can pay principle and interest if needed. Interest only payments keep my lenders entire investment working and they make more money. I pay my private lenders 11% interest on smaller second liens. I prefer to have their interest accrue with no monthly payments. My investor can earn interest on interest and I can avoid a negative monthly cash flow. I prefer making no payments on a first or second lien when rehabbing a property that I expect to be sold and cashed out within 6 months. I prefer my note payments are due on the 15 th of each month allowing the properties income to help cover the payment. My minimum investment is $10,000. I am confident that I can payoff an investor early with 60 days advance notice by replacing them with another private investor. I offer a minimum earned interest of 6 months in the rare case I pay off my investor in less than 6 months. Since they probably do not want their money back that fast I will attempt to substitute the collateral or reinvest their payoff into another property. Interest begins on the day their cleared funds are received by my closing or escrow agent. I will never pool funds together. If I need more than one lender to fund a deal I will give one lender a lien and the other lender a junior lien. I will buy my lender title insurance when acquiring a new property. I may not buy a lender title insurance policy if I m borrowing against a property I already own. I always keep valid hazard insurance on all my properties and each and every lender on the property will be added to the policy as a mortgagee. I will never accept private money from my lender until they have received an original promissory note and the security instrument (deed of trust) has been sent off for recording. I will never pressure an investor to do a deal. It s pass or play. If they pass I will offer it to my next lender waiting for a deal. If I cannot find private money I will use hard money lenders as a back up. I structure my offers taking into account the cost points and higher Section 6: Funding & Raising Cash Page 11

128 interest I might have to pay to a hard money lender. Using a private lender instead just increases my profits. If I can t raise hard money or private money from my existing contacts then perhaps the deal is not really a deal. I keep all my promises. If a lender wants me to sign personally I will do so since I am committed to take care of them first if anything goes wrong with the deal. However, I never offer to guarantee my lenders investment as that may violate federal or state rules and regulations related to securities. I prefer to sign as trustee or as president. I follow state and federal rules and regulations related to offering securities and seek expert legal advice as needed. Now create your own program using the example and ASK YOURSELF Will you pay simple interest or compounded interest? Will you pay a higher interest for no monthly payments? Will you do second liens, and if so, will you pay a higher rate? Do you ever want to make quarterly or annual payments instead of monthly? What day of the month will you pay all your notes? What is your minimum investment? How will you handle a lender s request for early pay off? How quickly can you respond to such a request? Will you offer a minimum earned interest or prepayment penalty? When will interest begin? What will you do if you need two lenders on one deal? 2) Write your 60-second elevator speech How can you quickly grab someone s attention and peak their interest about your private lender program? What do you say to someone you know or meet? Review these examples and then develop you own, brief script. Then practice it. Example #1: I m a professional buyer of single family homes throughout <area>. I buy and fix up houses and can offer my sellers call cash plus a quick and easy sale. When I pay all cash I use private lenders. We make excellent profits helping our buyers and sellers and that allows me to offer a high rate of return to my private investors. Do you know anyone who might have cash savings, other investments or retirement funds that are not consistently and safely getting them a high rate of return? Example #2: My company is always looking to buy several houses each month throughout <area>. We can pay all cash and close within a few days if needed. When we pay all cash for houses, we use private lenders and pay them a very high rate of return. Do you have any idle cash or retirement funds that are not getting you a well-secured, double digit return? Example #3: We buy houses and when we pay cash for a house we use private lenders. We pay 9% to 11% on notes secured by local real estate. If you are not getting that type of predicable return on some of your money, I ll be glad to get you the details. We could sit down sometime, whenever you like and Section 6: Funding & Raising Cash Page 12

129 show you how it works. Or I could send you some info. If it looks good just let me know how much you re looking to invest and how long you can have your funds tied up. I ll put you on my list and look for an investment opportunity that meets your needs. When I find one, I will call you. At that time you can pass or play. There s no obligation. Example #4: I ve been building my real estate investment company here in <area> over the last <X> years. We buy and sell a number of houses each month and can pay all cash quickly and easily. That s because when we buy houses cash we use private lenders. My private lenders can make 300 or 400% more money than they can get sitting in a savings account or in bank CDs. Do you know anyone that might have a retirement account or some other investment that is not paying a consistent 9 to 11%? That s what I pay on notes well-secured with local real estate. 3) Build your information and credibility kit Here are some ideas to help you put together an information package for prospective clients. Always carry some kits in your car and a few standing by to be mailed out. Much of what would go into your kit can be used with buyers and sellers also. Personalized Cover letter Bio: Write a biography about you with achievements even if not industry related. Your Team: Write up information about other people and staff in your company. Mission Statement: Tell prospects what your operation is about and what s important to you. Certificates: Memberships, associations, recognition, awards, licenses, etc. Testimonials: From buyers, sellers, investors, CPA, attorney, banker, insurance agent, title company, etc. Free Special Reports: For sellers, buyers and foreclosure. It s OK to use the one page advertorial flyers or copies of advertorials that have run publicly. Press Write-Ups: Stories about you, your company, your community service, etc. and articles you have had published in print or online. Actual Deals: Show a number of buy/sell transaction perhaps with how much your private lender made or could have made on the deal. Photos are an added touch. Associations: Real Estate Investor Association, BBB, Chamber of Commerce, Rotary, etc. Private Lender info: Sales letter, information kit or lender presentation slides. Lumpy mail items: $100 bill business cards, customized pens, magnets, custom key chain, audio CD, DVD, etc. 4) Create your presentation Use a written outline, brochure or PowerPoint slides to cover all the important benefits of your private investor program. Use examples, answer common questions or objections, include testimonials and have a call to action. 5) Flap your lips to everyone you know Always be on the lookout for an opportunity to deliver your elevator speech. Explain your program to anyone who shows an interest. Many of your best prospects will not be wealthy. Offer to mail Section 6: Funding & Raising Cash Page 13

130 information to anyone interested. Set appointments whenever possible to more fully explain your offer or to deliver your prepared presentation. Work your warm list before ever cold calling or cold mailing. Your warm list includes: All friends and family members Business associates, employees, contractors, vendors and dream team Fellow attendees of seminars, conventions and retreats Sellers, homeowners with equity and retail buyers Real estate entrepreneurs, investors and landlords Your previous and current private lenders plus their referrals Business owners, executives and professionals you meet Members of your REIA, Chamber, Rotary Club, etc. Contacts made during business or pleasure travel Retirees, retirement plan owners or IRA holders you know Your in-house buyer/seller follow-up list Your entire in-house contact list 6) Follow up on your leads Close for a phone appointment, office meeting or lunch. Deliver your presentation one-on-one by appointment. Take a new prospect to lunch once a week. Add your goal for 4 appointments to your monthly marketing plan. Follow-up after appointments with phone calls, postcards and letters. Add new lender marketing campaigns for generating new leads to your monthly plan. In Conclusion There you have it. Six steps for getting more private money. Now for some good news all you have to do immediately is step 1 and step 5. There is no need to what until everything is perfect to get started. Build this bicycle while you are riding it. Perfect your elevator speech and lender presentation as you re flapping your lips to everyone you know and lining up cash for when you need it. Entire contents 2007 RichardRoop.com, Inc. About the Author: Richard Roop is one of the top direct response marketing gurus and consultants dedicated to helping real estate investors generate more leads, negotiate better deals and create more consistent, predictable cash each month. He has done over 300 deals, manages millions of dollars in real estate and still actively buys and sells houses every month. But his real passion is to sharing his knowledge, systems and strategies with other investors. Very few speakers and trainers get down so in-depth into the real nitty gritty, step by step and how to of capturing equity and generating cash without using your own cash or credit. Known as THE Marketing Consultant for Real Estate Entrepreneurs, much of Richard s time now is dedicated to helping other investors improve their marketing results and increasing the profits generated from each deal. He has developed some of the most effective marketing systems and strategies that can help you leverage all your efforts toward growing your investing business. He specializes in creating direct marketing strategies and automated systems that have proven to work with all types of properties especially single family homes including both pretty or ugly houses. Section 6: Funding & Raising Cash Page 14

131 7 Ways to Raise Cash for Real Estate Deals without Banks Part 1 of 2 By Richard Roop Buying and selling houses is a great business. Actually it s one of best business opportunities around. Savvy real estate entrepreneurs learn how to buy houses with little or no money down. They also learn how to pay all cash if the price is right. Here are my rules for doing deals that require cash at closing: 1. Avoid using your own cash Putting your money into a deal reduces your cash reserves. That means you can actually run out of cash. Your own funds are limited. If you use your own money, you may get to the point where you might have to pass on a great deal because all your money is tied up in other properties. 2. Don t rely new bank financing Many real estate entrepreneurs are self-employed. Some may have bad credit or no credit. Therefore, qualifying for a new mortgage to buy an investment property is a limited strategy. Even if you can qualify, it is possible for a bank to cut you off at some point maybe even after just 5 houses. What about all the paperwork and loan processing? What a pain in the butt. Besides losing control on when your deal closes, things can crop up that can kill your deal altogether. 3. Don t use your own credit Cash on hand is a limited asset. Your personal ability to borrow is also limited asset. Save your credit for business emergencies or very special opportunities. Keep you borrowing power available for personal requirements, not business or investing needs. 4. Flip deals if you don t have sources for cash You can make an all cash offer to buy a house at a deeply discounted price even if you don t have any cash. You can also offer some cash at closing on subject to and owner financed deals. Assign or flip these deals to another investor if you can t raise the cash needed. However, you must leave money on the table. Therefore, it s better to line up sources of funds you can rely on. 5. Use your buyer s money to fund a deal I have 4 typical exit strategies after buying a new property: Section 6: Funding & Raising Cash Page 15

132 1) I find a buyer who quickly pays me off in full with cash or a new loan. This is rare for my business since it s not my focus. I call this retailing or selling to the retail market. That s a world for real estate agents, builders and rehabbers. It s not my world and I never rely on finding an immediate cash buyer. 2) I find a buyer who comes up with most the cash from a new loan and I take back a small second mortgage to help them get closed now. This is more common than getting completely cashed out. That s because I usually advertise the home for sale with owner financing using phrases like these: Owner can finance Owner can finance or rent to own Owner can help finance Seller can help finance down payment and closing costs Flexible terms No money down No bank needed 3) I find a buyer who would like to avoid qualifying for a bank loan now and wants me to finance them. I will sell on a wrap if they have 8% or more of the purchase price in cash to put down at closing. In most cases I have an underlying mortgage to pay on so I close using an installment land contract or similar instrument that places their deed in escrow pending their successfully performance on the owner carry back note. Most of my prospective buyers seeking flexible seller financing have less than 8% to put down on one of my houses for sale. Therefore 4) I find a buyer who can put at least 3% down as a non-refundable purchase deposit. In this case I will move them in as a tenant buyer, allowing them to rent the house until they can close with owner financing or a new mortgage loan. Because of the smaller cash requirement and lack of bank qualifying needed, this type of owner financing works for the largest number of buyers. When you re in a cash flow position to keep your profits tied up in houses, you can enjoy these benefits: You get market appreciation and wealth building Not long ago, I analyzed the increased tax assessed values of the properties I hold that are occupied tenant buyers. About 51 of my properties increased a total of $538,000 in one year. You get tax benefits By keeping the property you avoid having your profits treated as ordinary income or shortterm capital gains. You can also reduce your tax liability through deprecation. You get a better tenant with an owner mentality My tenant buyers do not call me for minor maintenance and repairs. Our deal is they take care if it. I offer a credit good toward buying the house for each on time payment. I do not Section 6: Funding & Raising Cash Page 16

133 require a security deposit (which I d have to manage and potentially return) since I am protected by collecting at least 3% of the purchase price in cash before they move in. You occupy your houses faster Many homebuyers need some flexibility and help to own a home. By offering time to close, you ll be providing a valuable service that is in high demand. You avoid relying on mortgage brokers and real estate agents Get your houses occupied fast with yard signs, pointer signs, flyer boxes, classified ads and an in-house buyer s list. You can even do a round robin bid sale for terms by doing one open house and then have buyers bid up the price, down payment and monthly payment. This is a good strategy for finding a buyer or tenant buyer. However, I mostly use signs, ads and my buyer s list. Be sure to incorporate a real estate hotline, website and lockboxes to automate the process. As you can see, whenever I buy a house, I will get at least 3% of my selling price in cash quickly. Sometimes I will get 8% or more. Sometimes all cash. If a prospective deal requires some cash, I m OK using my cash temporarily until I get it back from the 3% deposit I get from my tenant buyer. Otherwise, I prefer to have the seller wait for any equity they are getting out of the deal until my buyer cashes me out. Since I do not rely on getting more than 3%, I use a different strategy for raising that money which I will share in a moment. 6. Use cash from hard money lenders I have borrowed millions of dollars with no bank qualifying from lenders who do collateral loans on real estate. Since these lenders are in the business of getting their money out they charge points. One point is one percent of the loan amount. On average I pay 5 points. That means if I borrow $100,000 then I only net $95,000 in cash. His loan fee is $5,000. Or my lender will lend me $100,000 divided by 95% (which totals $105,263) and then I net $100,000. His fee in that case is $5,263. A lot of money? Expensive? Yes. So what? I just make sure I buy the house for at least $5,000 less (usually $10,000 less) than I would if I did not need to get such a loan and raise the cash. Imagine... I've paid about $250,000 in loan fees for the last $5,000,000 I borrowed but my net profit in doing so (after all expenses) probably exceeds $2,000,000. It certainly can be a profitable strategy if you use the money right. The maximum loan to value (LTV) on this type of money is 65% or 70%. 7. Use cash from private investors How do you fund a deal that requires up to 85% of the properties value in cash? I look at it in two ways when you are not using your buyer s money or having the seller help finance the deal. Both ways involve private investors or private lenders same thing. And unlike hard money lenders, I do not pay points to my private investors. The first method is to get a private investor first mortgage for up to 70% of the property s present value. The second method is getting a private investor second mortgage for up to 85%. Section 6: Funding & Raising Cash Page 17

134 #1: Private investor first mortgages You can borrow up to 70% of a properties value without qualifying and without going through a bank. Private investors are people you know who want to get a high return on their idle cash or retirement funds secured by a safe loan to value on real estate. As of today, I offer 9% interest only payments. If I borrow $100,000 to buy a $160,000 house, my payments are $900 a month. I give my lender a promissory note secured by a first mortgage or deed of trust (one of these security instruments will be in use in your state). They get a lender s title insurance policy. I put them on as the mortgagee for my hazard insurance policy. I will close the deal with an attorney or title company so they send their money directly to the closing agent. The agent can prepare the note and security instrument using terms and instructions I provide. Notice that if I can buy a $160,000 house for $100,000 cash, I am getting in with no money and the property will have positive cash flow, even at 9% interest. My formula for offering all cash to a seller is 70% of the after repaired value, minus the costs of repairs. If it s worth $200,000 fixed up and needs $10,000 in remodeling, then my Maximum Allowable Offer (MAO) is 70% of $200,000 or $140,000 less $10,000. Therefore I cannot offer more than $130,000. I can then borrow up to $140,000, give the seller $130,000 and have my $10,000 for fixing it up. I prefer to get a 2 to 5 year term, usually 3 years. I prefer interest only payments but might do a 30, 20 or 15-year amortization with a balloon payment due at end of the term. Any cost of closing the loan with a closing agent, recording documents or cost of title insurance is paid by me, the borrower. There is no cost to the private lender. Common elements of any loan are: PV = Prevent value or principal amount N = term in number of months PMT = monthly payment amount I = annual interest FV = Future value or balloon amount COMMON TERMS for private 1st mortgage: PV = Up to 70% LTV N = 36 months PMT = Interest only payments monthly I = 9% interest FV = PV WHEN TO USE private 1st mortgages: Use these loans to fund all cash offers to homeowners or on houses owned by banks. It is most commonly used on fixer upper properties where we can get a deeply discounted purchase price. Use these loans also on short sales with banks and for buying defaulted real estate notes at a discount. Sometimes a seller will insist you pay off their loan instead of unofficially assuming their existing debt (i.e. taking it subject to the existing mortgage). If they owe less than 70% of the value, then you can fund it with this type of loan. Section 6: Funding & Raising Cash Page 18

135 Many times I have bought houses where the seller owed little or nothing. I have used these loans to payoff anything they owe, plus have cash to give the seller as a down payment, plus have money for remodeling the property plus have money for holding costs. If the seller is getting any money beyond the cash they get at closing, I like to give them a second mortgage with very good terms to me. You pay off your lender when you sell the property later for cash or refinance it in the future. At the end of the term you can get a permanent bank loan, extend the term with your lender or replace your lender with a new one. #2: Private investor second mortgages This is a more advanced strategy that very few investors use or know about. It offers less protection (breathing room) because you ll have less equity left in the property. It would normally be used to raise cash in the 70% to 85% LTV range. It is best used on deals where you have created an owner carry first mortgage or on deals where you have bought the house subject to the existing bank loan, taking over the monthly mortgage payments with the seller s permission. You can also use these smaller second mortgages to pull dead equity out of properties you already own, raising cash when you need it. Here is an example of how it works: You have a deal worth $200,000 after it is fixed up. The seller owes $110,000 plus $5,000 in back payments. Their existing loan has 25 years remaining and has an interest rate of 7%. Monthly principal and interest payments are normally $777. It needs $5,000 in repairs. The seller insists on getting $2,000 cash or they cannot move. They want $165,000 for the house. Therefore, you need to raise at least $12,000 in cash to do this deal: $2,000 in moving money $5,000 in repairs $5,000 back payments You plan to sell the house for $209,500 with flexible owner financing or rent-to-own terms. Let take off a $29,000 minimum equity spread and the $12,000 cash needed. That s $168,500. I then like to take off another $12,000 for the inconvenience factor of raising the cash and paying extra interest on that cash. So I d prefer not to pay more than $156,500. My offer: $110,000 taken subject to $5,000 in arrears brought current $2,000 to seller at closing $39,500 (up to) to the seller in a third lien due upon the resell of house Total purchase price (up to) $156,500 How much cash could I raise on a private second? 85% of $209,500 is about $178,000. Subtract the $110,000 first for $68,000 in borrowable equity. I would probably raise $18,000 on this deal so I have some extra money for holding costs. I offer my private investor 11% interest, no payments, compounded interest, 36-month balloon. This $18,000 note grows to $25,000 if it goes the full 3 years. Section 6: Funding & Raising Cash Page 19

136 Here is how the financing looks at closing: 1st lien: $110,000 at $777 P&I monthly, 7% interest 2nd lien: $18,000 at $0 monthly, 11% interest 3rd lien: $39,500 at $0 monthly, 0% interest Total owed is $167,500 We walk away from the closing with $6,000 in cash. We get at least $6,000 more when we move a tenant buyer in (3% down). Here is how the financing looks after 3 years: 1st: $104,600 2nd: $25,000 3rd: $39,500 Total owed is $169,100 If we held the house for 3 years, perhaps we sell it for $235,000. We ll assume we only took one purchase deposit (or option consideration) from our buyer of $6,000 and they earned $1,200 in rent credit from our rent-to-own program. We collect $58,700 on the back end. Not bad. What about positive cash flow? Getting $300 a month on above example is not out of line. That s another $10,800 we collected. COMMON TERMS for private 2nd mortgage: PV = Up to 85% LTV less PV on 1st mortgage N = 36 months PMT = No payments, interest accrues I = 11% interest FV = PV plus accrues interest Realize that your private investor will yield a 12.75% annual percentage rate if the note goes the full 3 years and the interest compounds. That is very attractive. You will find more people with $5,000 or $10,000 or $20,000 to invest on 2nd liens than investors who can fund a 1st mortgage for up to 70% LTV. This program is great for your private lenders retirement funds. Usually the investor does not need monthly payments. If you do make monthly payments from you positive cash flow ($165 in this case), your investor may squander that money away. The I.R.S. allows you to invest in real estate notes using a tax free or tax deferred retirement account but you need a custodian such as Equity Trust Company at In part 2 of this report I will cover the 3 M s of marketing to find all the private money you may need. Password: cash Section 6: Funding & Raising Cash Page 20

137 6 Ways to Collect Cash when Buying with No Money Down Part 1 of 2 By Richard Roop By definition, a real estate investor puts up some money and invests it into real estate deals. As a real estate entrepreneur, I prefer to avoid tying up any of MY money in my investments. In fact, I prefer to collect some of my profits on the same day I buy a house. That way I don t have to be in a hurry a sell. Then I have money to further my real estate education, pay my operating costs, invest in systems to grow my business and write myself a paycheck! Now, I m willing to wait for my profit on the back end. And I ll even consider investing small amounts into a house like a small down payment plus money for holding and touching up the property. Ideally though, I ll want to quickly get MY money back out when the house is occupied by a buyer or tenant buyer. There are many different approaches to real estate investing. And I certainly don t have the perfect plan. Your approach will depend on your own personal desires and skill set. But to put these collect cash when buying strategies into context, I ll briefly describe my real estate business I buy mostly single family homes. I rarely buy houses listed with real estate agents unless it s an all cash deal. I prefer to be negotiating directly with the owner. I don t use my good credit or banks to finance my purchases. Typically I acquire homes taking them subject to the existing mortgage using a land trust or agreement for deed. That means I get no bank qualifying owner financing. For cash deals, I use hard money lenders or private lenders. To buy directly from sellers, I use a number of low-cost marketing methods to get sellers calling me, ASKING ME to buy their house. I prefer using marketing systems which are easy to implement and easy to repeat. I don t call sellers. For each of the 5 to 15 calls I receive, I ll find at least one seller who is flexible and motivated enough to allow me to buy creatively, or at a price and terms that works for both of us. You won t get that type of closing ratio calling ads in the paper. Working 10 hours a week with a small staff, I buy and occupy 2 or 4 houses a month. If I cannot make at least $20,000 net profit, it s just not a deal. If the seller has lots of equity, they typically take it back in a note due upon the refinance of the home. The refinancing occurs when my buyer or tenant buyer gets their new loan. That s between 1 and 60 months down the road. Most common is 2 to 3 years. But some of the 57 or so properties I own today were bought over 7 years ago and have appreciated nicely. Section 6: Funding & Raising Cash Page 21

138 After I buy a house I put it on the market with a flexible seller financing. That includes doing wraparound owner financing or selling on a rent-to-own. I don t list my homes with agents or rely on my buyer getting a bank loan to close. By offering terms, I make the home more desirable and more valuable. I get it occupied fast and under contract for top dollar, even in a slow market. I can also sell a house as is if it needs some work offering my trade sweat for equity program. Many buyers like that opportunity... and I can eliminate some of the frustration or costs that are common with dealing with contractors. I avoid dealing with renters and all the landlording challenges that come with that. Instead, the homes I still own are occupied by tenant buyers who have paid me a non-refundable purchase deposit to buy at a later date. They can earn a modest credit toward buying the home for each on time rental payment plus they agree to take care of all repairs and maintenance. Since they are planning to buy, they typically are interested in taking care of the property even doing major improvements which are also non-refundable in the event they do not close. Think about it. If you don t tie up your own money for very long when you buy, or you actually collect some cash when you buy, what s the limit to the number of houses you can buy each month? And if you avoid landlording headaches by selling with owner financing or rent until close terms, what s the hurry to cash out? Most of the homes I buy require little or no money down. I still find investors to this day who say that that is not possible. That amazes me. On my best deals, I actually get cash when buying So here are my top 6 ways to put cash in your pocket when you BUY a house Over borrow with no bank qualifying when paying all cash. Most of the houses I buy are subject to the existing mortgage. That s because most sellers owe more than I d be willing to pay cash. So I tell them, You owe more on the house than I can pay cash as an investor. I get a high return on my cash. It wouldn t make much sense to pull my cash out of other investments to buy your house at the price you say you need. The only way I could come close to your price would be to take over the existing loan and relieve you of the debt. Would you even consider that... if I can get you an acceptable price? Other times they have enough equity. What if the seller insists on all cash? Most of the houses I buy all cash need a lot of repairs, or are owed by a bank, or both. That s for my market. Prices here range from $50,000 to $300,000 with an average $165,000. When you buy in the very low price ranges, then you may be doing more cash deals. For me, only one out of 10 houses I buy require a lot of cash. I get my cash from hard money lenders and private lenders. I pay 9% to 13% interest for quick and easy money. And then I pay 0 to 10 points. I have credit lines that would cost me less, but they have limits. I like having unlimited funds to buy houses and keeping my credit or credit lines open for emergencies. I consider the cost of these funds when I construct my offers so I ll make a huge profit regardless of the interest or points I pay. My collateral lenders don t look at my credit report, only the value of the property being used as security. I can borrow 65%-70% of the property s value with no qualifying. In fact, if I cannot borrow enough to buy and fix the house without qualifying, the it may not be a great buy and there are better deals to out there. Section 6: Funding & Raising Cash Page 22

139 EXAMPLE: So, a seller of a $100,000 house needs cash, I may offer $61,237 cash, an amount plucked out of the air (near 60% and looks like I really crunched the numbers). I then borrow $70,000 and pay 5 points, costing me $3,500 and netting $66,500 in cash to close. I walk away from the closing table with over $5,000 in my pocket on the day I buy the house. Recently, just so there d be no confusion on a transaction, I called Beth (my closing agent at the title company) and let her know I d be GETTING money at closing as the buyer. She responded, Richard, that s no surprise. It would be more unusual if you BROUGHT me a check to closing. Can you find a lot of deals like this all the time deals you can buy so cheap? No. But they are out there and you ll find them now and then if you re in the game. 2. Over borrow with no bank qualifying when buying with owner financing. When I started my real estate business in 1996, I couldn t find enough cash deals to keep me busy. I still can t all cash deals that is. That s why I developed a number of ways to buy all types of houses, using creative financing. And this is my favorite. When I find a motivated seller with lots of equity, there s a good chance I ll use this strategy to get them a higher price than an all cash offer. CASE STUDY #1 I had a seller who agreed to sell a free and clear property for $107,000 if I gave him $30,000 down. He d carry $77,000 at 7% interest, or about $700 a month for 15 years. It needed $20,000 in repairs and would resell for $169,500 with owner financing after it s fixed up. I borrowed the $30,000 down plus $20,000 in repairs plus an extra $20,000 for a total of $70,000 from a private lender. My lender got a first lien and the seller got a second lien. The seller also agreed to subordinate (stay in second position) to any new first loan on the property in the future. The terms of the first lien were 13% and 5 points with a 3 year balloon. Payments worked out to about $760 a month. The total monthly with the first and second mortgages totaled $1,460. Market rent was $1,395. I d have a small negative cash flow but I d walk away from the closing with $36,500 in cash which included my rehab money of $20,000 (less a couple thousand for closing costs.) I put the house on the market for $169,500 fixed up, make offer as is. Owner can finance. After 2 weeks I did not have a buyer so I began fixing up and spent $5,000 but then found my buyer. They agreed to buy for $160,000 on an agreement for deed if they could do the rest of the work as their down payment before moving in. They agreed to pay $1,300 a month and refinance within 2 years. To me it was like getting $15,000 down because that s what I would ve paid to finish the house. Some real estate investment educators say don t over borrow. But I only owe $147,000 and I am collecting on a $160,000 note. I still have $13,000 coming to me. 3. Over borrow with no bank qualifying, buy with owner financing and substitute other equity as collateral. Section 6: Funding & Raising Cash Page 23

140 CASE STUDY #2 On a recent oversized postcard I bought five houses in six weeks. On the 5th house, the seller only owed $18,000 on a nice $170,000 house. He did not need all his cash but he insisted on getting $63,000 at closing. The $18,000 he owed would be paid off out of that. He also insisted on 6% interest on the money he carried back in a note. And he insisted on a price no less than $153,000. He s getting 90% of retail value. That s quite a fair price, isn t it? Here s what I could ve done... Borrow $70,000 at 11% and 8 points, 15 year amortization with 3 year balloon. Loan would cover cash to seller, lender points and closing costs. My payments would be about $800 a month, leaving enough extra positive cash flow from rental income to give the seller a monthly payment on his equity. At a price of $153,000, he would have a second mortgage for $90,000. I d owe $160,000 on a house to be sold for $179,500 with terms. But here s what I did instead... I borrowed $123,000 from my private lender. Payments are about market rent, or $1,400. I gave seller his $63,000 cash, but I walked away at closing with $60,000 less closing costs. The seller agreed to have his $90,000 secured with five different second mortgages on five different houses the five houses I just bought from the postcard campaign... including his. If I used his house in the deal only, I d owe $213,000 and be upside down. So... I offered his price for $153,000 with $63,000 down. I gave him 5 second mortgages each with no payments and a five year balloon. I agreed to the 6% interest but it would accumulate for 5 years with no payments. His $90,000 would grow to $121,000 by the time I paid him off. In essence, I was able to tap into the profits I just created in these 5 houses... equity at the highend of each house s loan-to-value PLUS I got it at 6% interest, no bank qualifying, minimal closing costs, no discounting of my equity and no payments. AND I had him grant me the right to substitute equal or better collateral in case I resold any of those homes over the next five years! What would you do with an extra $60,000 in cash? CONTINUED Richard Roop has fast become known as The Marketing Consultant for Real Estate Entrepreneurs. He has been a full-time creative real estate investor since 1996 and continues to buy and sell 3 to 4 houses each month near his home in Woodland Park, Colorado. Besides running his own real estate investment business, Richard shares his marketing expertise to help individual investors build their businesses nationwide. Each month he speaks to hundreds of real estate investors from experienced pros to budding entrepreneurs. He specializes in sharing proven, low cost direct response marketing strategies for getting a steady flow of motivated sellers calling you to buy their house, as well as systems for getting your properties occupied fast. Richard also likes to teach systematic approaches to growing your business, leveraging your time and increasing the profitability on each deal. Richard s marketing approach to investing is an excellent model if you like the idea of achieving your financial goals WITHOUT the need to hunt for deals, rely on agents, use your credit, offer large down payments, struggle with tenants, borrow from banks or call sellers. FREE real estate investor how to articles, steaming audio presentations and eletters can be accessed instantly online at Section 6: Funding & Raising Cash Page 24

141 6 Ways to Collect Cash when Buying with No Money Down Part 2 of 2 By Richard Roop In Part 1 of this article you discovered the first 3 methods for collecting cash when buying with no money down: 1. Over borrow with no bank qualifying when paying all cash. 2. Over borrow with no bank qualifying when buying with owner financing. 3. Over borrow with no bank qualifying, buy with owner financing and substitute other equity as collateral. Let s look at a few more strategies 4. Close only when you find your buyer If you ve noticed a slow down in your housing market, or found it s taking longer to get your houses occupied, then be more cautious and buy better. In fact, you can buy with no risk when you find the right type of house and motivated seller... EXAMPLE: I appreciate the fact that you ll sell me your house for what s owed plus $1,000 in moving money, but with the way things have been going, I cannot commit to taking over your loan until I line up my occupant. Your house has too much owed against it. Now, I do have a program to help homebuyers get into a house when they need some time before getting a bank loan. And 60% of the general public is in that position. This gives me a strong marketing advantage when I buy houses. I can offer to finance my buyer myself or rent the home until they close later. Therefore, I ll agree to buy your house if you can give me some time to find a buyer. Once I do, I ll give you your $1,000 and start making the loan payments, getting that debt off your back. When they agree, I advertise the house with Owner financing or No bank qualifying or Rent-toown. We get at least 3-5% down from a tenant buyer as a non-refundable purchase deposit. This works the same as option consideration on a lease option. If I m selling for $179,500 then I ll get at least $5,000 plus the 1st month s rent. Then I can complete my deal with the seller, and enjoy the difference ($4,000) immediately. Be careful to use this only if the seller doesn t care what you sell it for, or use it when they have already vacated the home. Sometimes I ll have the seller show the house for me! Section 6: Funding & Raising Cash Page 25

142 You can also use this strategy if the seller s payments are behind, and then use your new buyer s money to cure up the default. 5. Require the seller to pay you when buying the house An important lesson here. For years I did not do this. I think it s critical to always tell the seller what you are willing to do, even if (in your mind) it s unlikely they would ever accept your offer. You ll never know ALL their underlying motivation, so don t make decisions for them. When you re not EXCITED about the deal, consider what price or terms WOULD get you excited. CASE STUDY #3 I had a couple call off my marketing. They owed $147,000 and wanted to sell for what they owed. I did comps and determined it was worth $147,000 and I could sell for $157,000 with easy terms. At the time I needed a minimum $20,000 spread between my buy price and my sell price. These days it s a minimum $30,000 or 10%. I told them they owed too much, and thanks for calling, but there was nothing I could do. They called me back one year later after listing it for $159,500. It didn t sell because it was overpriced to cover commissions and closing costs with a retail buyer. When they called the second time it was still the same situation. But this time I said The only way I can buy your house is to take over your loan and have you come up with $10,000 in cash at closing. Are you in a position to do that? Apparently they were going to raise the cash anyway to get the house sold through another agent at a lower price. The house was now vacant and they were getting desperate. They got a signature loan not secured by the house and brought $10,000 to closing one week later. Three weeks later I found a buyer with $13,000 to put down. When occupied, I had already collected $23,000 of my $20,000 spread! I knew I d have to bring some money to closing once my new buyer refinanced down the road. But that was OK. I could have paid down the mortgage by $3,000 but I decided to keep the cash. 6. Simultaneously buy and sell for cash Bonus Strategy! Need cash to get started in real estate investing... or pay some bills? Find a deal and sell it the same day you buy it. No cash needed, no holding costs and no landlording. This is called flipping and yes, it s legal. There are several ways to do this. I use this strategy only when a seller must have all cash, but needs more cash than I can raise using a hard money or private lender. Retailing for me is when you sell a house for cash or new loan for market value. I hate retailing. I prefer to be offering a great price or great terms. I need a marketing advantage to resell. Otherwise I m not interested in the deal. I can still offer terms to a buyer who is getting a new loan by taking up to all my profit in a second mortgage. I d be willing to do this rather than lose the deal. CASE STUDY #4 Section 6: Funding & Raising Cash Page 26

143 Recently a seller called me. Sometimes I get so many leads I don t have time to call back everyone, as in this case. He called several times which forced me to respond. This is a lazy way of prescreening leads... but to works! His house had gone to foreclosure. In my state, he had a couple months to redeem the house by coming up with the auction sale price in cash. I agreed to buy his interest (get the deed) and then look for a new buyer. I made no guarantees. He had nothing to lose. If successful, I d get the first $10,000 in profit and then we d split any profit over that. He agreed. He was about to get nothing. I placed a sign in the yard, ran a classified ad and added the house to our website. I said owner can finance since I d be willing to take my profit in a note. Bottom line: The neighbor bought the house with a new loan, did not ask me to carry a note so we got cashed out. I made $18,000 and the seller got $8,000. My only risk was the cost of marketing and a little time. I also created the equity by getting the second lien holder to take a huge discount. The bank was happy to get $4,000 for their $40,000 mortgage because they were about to be wiped out after the redemption period. I forgot to ask the first mortgage holder to discount! Conclusion: There s no limit to the number of houses you can "invest in" when you buy AND collect cash at the same time. The top reason real estate entrepreneurs sell off a house is for cash. Use these ideas when you have the opportunity to supplement your monthly cash flow needs. Then you can keep more houses, enjoying additional real estate benefits including depreciation, appreciation and principal pay down helping to build a bright financial future for you and your family. Richard Roop has fast become known as The Marketing Consultant for Real Estate Entrepreneurs. He has been a full-time creative real estate investor since 1996 and continues to buy and sell 3 to 4 houses each month near his home in Woodland Park, Colorado. Besides running his own real estate investment business, Richard shares his marketing expertise to help individual investors build their businesses nationwide. Each month he speaks to hundreds of real estate investors from experienced pros to budding entrepreneurs. He specializes in sharing proven, low cost direct response marketing strategies for getting a steady flow of motivated sellers calling you to buy their house, as well as systems for getting your properties occupied fast. Richard also likes to teach systematic approaches to growing your business, leveraging your time and increasing the profitability on each deal. Richard s marketing approach to investing is an excellent model if you like the idea of achieving your financial goals WITHOUT the need to hunt for deals, rely on agents, use your credit, offer large down payments, struggle with tenants, borrow from banks or call sellers. FREE real estate investor how to articles, steaming audio presentations and eletters can be accessed instantly online at W. Hwy 24 Suite E Woodland Park, CO Customer Service: (719) Ext. 105 Fax: (719) Sales & Coaching Support: Section 6: Funding & Raising Cash Page 27

144 17 Ways to Generate Monthly Cash: How to Overcome Real Estate Cash Flow Challenges By Richard Roop One of the biggest challenges you may face buying and selling houses, and building millions of dollars in equity, is balancing your desire for building wealth with generating the cash you want (and need) each month. Without knowing and applying these strategies, you face the danger of cash flow crunches that can slow your growth, cause you to miss out on killer deals, and maybe even put you out of business altogether. In the pretty house business you can build tens, even hundreds of thousands of dollars in equity each month. But you can t spend equity, can you? We all have bills, expenses, overhead and personal income requirements. Being able to meet all those monthly cash flow needs without selling everything you get your hands on will put you in a stronger wealth building position. Now there are pros and cons of trading your equity for dollars. Creating a fine balance between building equity for cash later and raising plenty of money for cash now can help you achieve your financial goals more quickly and easily. I have found that most investors, even wildly successful investors, think they need less cash flow than they really do. Not knowing their numbers is a common mistake. But think about it. Why do you need cash? As a creative real estate entrepreneur you need to shell out dough for both capital and expenses. Capital gets you equity or a good return on your investment. Expenses on the other hand are a cost of doing business. First, there s capital or investments that can get you a high rate of return: Offering binder deposits and option consideration to control properties Giving down payments to sellers at closing Funding your all cash offers so you can buy at deep discounts Paying off other people s defaulted loans at a discount to create equity Paying off owner carry back notes at a discount for bonus profits Marketing campaigns to generate leads for both buyers and sellers Rehabbing, remodeling and making improvements Hiring contractors or employees to make more profits while working less Furthering your education through books, CDs, seminars and mentors Eliminating high interest credit card debts Funding your retirement or savings plan Section 6: Funding & Raising Cash Page 28

145 Then there are costs and expenses that reduce your net profits: Writing yourself a paycheck and living your preferred lifestyle Taking care of taxes, fees and licenses Paying for outside professionals for their work and expertise Leasing or buying office space, equipment, supplies and vehicles Services and supplies to get your properties sold or occupied Subscriptions to data, internet and phone services Holding costs, repairs and property maintenance Negative cash flow Commissions, loan fees and closing costs As a general rule, invest more into capital and investments and then control your spending the best you can on all the other costs and expenses. But either way, you need consistent, reliable cash coming in, don t you? Let s look at 17 different ways to generate monthly cash. Some you can use now. Some you ll tap into later. Refer to these strategies as a checklist whenever you re hurting for cash. 1. Keep collecting income from your present career or business It s nice to have multiple streams of income. But most new investors have current income they re looking to replace with profits from real estate. Annual earned income from a job or business can be totally offset with the benefit of tax deductions allowed for investing in real estate. Paper losses from depreciation on property you hold can reduce your other taxable income now, allowing you to pay less tax now. I m no tax expert so get professional advice on this. Imagine if all your monthly cash needs were met from other sources, instead of real estate deals. In many cases you can create bigger profits on a deal if you re in a position to wait for profits later. The longer you hold a property for investment, the more profits you can potentially make. It s not always the case, just usually the case. Soon, if not immediately, you can replace that reliable income with positive cash flow and regular lump sum cash profits using some of the other strategies we ll explore. 2. Tap into your savings or retirement plan I started my real estate investing part time while still taking on marketing consulting clients and copywriting jobs. But as my real estate business grew I had less time to generate that income. Before real estate, I had acquired some assets like equity shares in my previous business. I also had started a retirement account. There was a time when I decided to sell my shares and tap into my retirement savings to support my family while building my real estate business. I never paid taxes on the money I put into a tax deferred retirement account. But I had to pay taxes when I pulled it out. I also had to pay a 10% early withdrawal penalty. Why would I do that? Well, if I did not put it into a retirement account I would have had to pay taxes anyway. And if that money was in my account for 3 years then it only cost me 3.33% per year when I took it out early. In effect, it was like getting a low interest rate loan from the government. Raising cash by selling stocks and pulling money out of savings helped me survive until I generated enough cash profits in real estate. There was a cost to raising those funds but after generating Section 6: Funding & Raising Cash Page 29

146 millions of dollars in cash and equity, it looks like it was a good decision. Again, you may want to consult with your tax advisor on this and avoid this strategy if possible. 3. Establish and use lines of credit Before you quit your job or give up your regular income, you may want to apply for some credit cards, leases or lines of credit including overdraft protection and home equity loans. You also want to look at refinancing some existing investment properties to pull out some business operating cash. I guarantee you will make better investing decisions if you have 3 to 6 months of your monthly cash needs sitting in the bank or easily available. You probably know someone (perhaps intimately) who flipped a deal for a quick $4,000 now instead of netting $30,000 later by holding or rehabbing. Why? They really needed cash now. Not cash later. All these ways to generate cash will help you avoid selling off a deal when you don t want to. Remember, it will be more difficult to qualify for credit when you change careers or start a new business. With a little planning, you can setup your real estate operation, collect any income you need and take all your allowable tax deductions. But that may actually reduce your taxable income making it harder to get credit. Just keep that in mind if you re new or just getting started. Put aside some the credit lines you establish or the cash raised. Use it to get through unexpected cash flow crunches when you can t use the other strategies we re outlining here. The good news is you do not need to have good credit or use your credit to succeed as a real estate entrepreneur. 4. Collect cash when you buy real estate with owner financing Buying a house that s free and clear and having the seller finance my purchase by being the bank is one of my favorite type of deals. You can buy with no money down, avoid loan costs, avoid using your credit and get some great loan terms. But you can also collect cash on the day you buy. Borrow money on a first lien from a hard money lender or a private lender. Then give the seller a second lien for what you owe them. You can raise cash to give to the seller as a down payment, money for repairs, closing costs, holding costs and even part of your profit in advance. For example, the house is worth $200,000. You plan to sell at a premium for $209,500 because you can offer your buyer some type of owner financing. Say you buy it for $170,000 with $10,000 down and a $160,000 note to the seller with low interest or no interest. You can then bring in a lender to put up $20,000 on a first mortgage or deed of trust. The seller takes back a $160,000 2 nd lien. You now owe $180,000. Out of the $20,000 you raised, you give $10,000 to the seller. Then you earmark $5,000 to fix-up, holding and closing costs and you still have an extra $5,000 for yourself. The house does not have to be free and clear. You can do this on houses that have low loan balances too. Raise additional hard money or private money to payoff what the sellers owes. Direct some of your marketing to mailing lists of houses with lots of equity. You have more ways to get your offer price accepted when you can get creative on a seller s equity. I have collected as much $79,000 on the day I bought a pretty house using this strategy. 5. Raise extra cash when you buy houses subject to Section 6: Funding & Raising Cash Page 30

147 Another type of owner financing is buying a house and taking over the existing loan subject to. This is where the seller allows you to take over their current monthly payments. You re not officially assuming the loan, just agreeing to make the payments each month. Why would a seller allow you to do this? Debt relief is one reason. Getting a higher sales price is another. Now if a seller s loan balance is less than 85% of what their house is worth, it s possible to borrow some cash from a private lender who ll take a second lien against the property. Do this to raise $5,000, $20,000 or more when you buy. Typically I set up these small second liens with no payments to the lender, just accumulated interest. Therefore it does affect my cash flow. I usually give my investor a 3 year balloon. I pay them their principle and accrued interest when I cash out, refinance or on a balloon date. I like a 3 year term but if I need more time I just ask them to extend. Otherwise I replace them with another investor. There are new laws and proposed laws in several states which may affect your ability to buy houses subject to the existing loans. For a list of related legislation being proposed or passed, visit the National Association of Responsible Home Rebuilders and Investors at 6. Put cash in your pocket when buying with Other People s Money When you offer a seller all cash you should get a great break on the price. Usually I will not pay more than 70% of the after repaired value minus the cost of repairs required to bring it into excellent shape. To fund such a deal I use no bank qualifying private money or hard money. Doing over 300 deals, I have never qualified for a bank loan to buy an investment property. My cash offer will typically be: Whatever I can borrow, up to 70% of the after repaired value Less the cost of repairs Less estimated holding for 3 months, and Less an extra $3,000 or more I can put in my pocket at closing For example: If a house is worth $200,000 fixed up and needs $5,000 in repairs, I may borrow private or hard money of $140,000 at $1,400 a month. If I want $5,000 for holding costs, $5,000 for repairs and an extra $5,000 in my pocket, that s $15,000 less cash available to close the deal. So it leaves $120,000 I can offer my seller should they insist on all their money at closing. (Of course if they agree to a combination of some cash now and some owner financing then I can offer a higher price.) Increase your opportunities for collecting cash when you buy by targeting houses that: Are in the lower price ranges but above the war zone, or Have over 50% in equity, especially free and clear, or Need a lot of repairs or rehab, or Have been owned for 15 or more years, or... A combination of the factors above Note that when you collect extra cash when you buy, you re typically collecting part (or all) of your back-end profit in advance. It will cost you interest and sometimes loan fees to collect this money upfront. If borrowing against your future profits allows you to buy more houses now, or keep more houses, it might make a lot of financial sense. 7. Lease option no money down, occupy with a tenant buyer Section 6: Funding & Raising Cash Page 31

148 I did about 30 sandwich lease/option deals before I began focusing on getting ownership and buying subject to the existing financing instead. I d put a tenant-buyer in the home until they got their new financing. I d then exercise my option to purchase and do a simultaneous or double closing and pocket the difference in the two prices. Your cash will come from a 3-5% non-refundable purchase deposit you collect from your subtenant. Of course you don t offer your seller any money, if possible. In fact, you may ask them wait for your lease payments until you ve found your subtenant. This is still a valid strategy but I prefer to own right up front which gives me more exit strategies and control. You may also run into some challenges doing a simultaneous close. One is that you re not on title and the lender may have a problem with seasoning or the period of time you have owned the property. It will certainly become an issue if your buyer is getting an FHA or VA loan. However, it may make sense to control higher end properties with a lease option where you can get a lease payment lower than the seller s existing mortgage payment. Or when you think home prices could decline and you want an easier way out. Lease with the option to buy and not the obligation to buy when you re not confident you want to own the property. Ask for a 6 month lease term with the right to extend 9 more times. That can give you 5 years of control with an out every 6 months. 8. Option a house and sell your option An option agreement gives you the right to buy at a certain price during a specific period of time. Once you control a property with an option you can go out and finder a buyer. Sometimes it s OK to reveal your option or strike price to your buyer. If that s the case, you can sell your position by assigning your option contract for cash. The amount they pay you in cash is the difference between what they are willing to buy the house for, and the price your option allows you to buy the house for. Example: A seller agrees to let you buy their house valued at $600,000 for $490,000 cash. You find a buyer who will buy the house from you for $530,000 cash. They are getting a great deal so they may not care that you are making a profit and will buy your contract for $40,000 cash. 9. Option a house and resell for quick cash This is a great strategy especially for hotter markets. We have a lot of clients reporting good success negotiating an all-cash offer but contingent upon reselling the house fast. By selling a qualified property though an auction or bid sale process you can get dozens (and sometimes hundreds) of bidders at a single open house. Reducing your risks, avoiding closing fees, eliminating holding costs and successfully selling the house quickly for all cash can allow you to offer a higher cash price to the seller and get more leads converted into deals. In 1994, I wrote a book on How to Sell Your Home in 9 Days outlining how to advertise and conduct a round robin bid sale for finding a retail cash buyer with one open house. More recently, Dan Doran and I interviewed Steve Miles on how he uses this method to quick turn pretty houses for cash. You can listen to or download a replay of the call at: Option a house and resell house with terms Another way to reduce your risk is to negotiate to buy a house with little or no money down with owner financing, but only close once you find and contract with your buyer. The difference in cash Section 6: Funding & Raising Cash Page 32

149 that you give to the seller (hopefully $0) and the cash you collect when you get it occupied can add to your monthly cash. I always want the ability to offer terms to my buyer. That gives me a marketing advantage when reselling. Depending on the price range of the house, it s easier and faster to find a buyer who wants terms or flexibility compared to relying only on a retail cash buyer. For example, you find a motivated seller who will sell to you their nice $200,000 house for their loan balance of $180,000. The payments are good, it s in a nice area and it s in excellent shape. Even if you find a buyer who will buy for $209,500 down the road, it s a very tight deal if you buy for what s owed and take over the payments. That s because you may have several months of holding costs and marketing costs. Plus if you have trouble selling it, you may wind up reducing your sales price to $197,500. But what if the seller continued to maintain the property, pay utilities and keep the loan current UNTIL you lined up your buyer at $209,500? You d want to get at least $5,000 down plus the first month s rent from a tenant/buyer, or at least $15,000 down from a contract buyer. That means you could NET $5,000 or more in cash upfront since you ve eliminated holding costs and got in with no money down. 11. Contract to buy a house and assign your contract I avoid doing this on deals where the seller is relying on me to make their loan payments or pay them on an owner carry back note. But if it s an all cash deal you can allow your buyer (typically another investor) to close on your contract. They bring the cash to the table and pay you a contract assignment fee. In order to pass on a deal to another investor, you must leave money on the table and let them make a good profit. But if you need cash you can quickly get $3,000 to $15,000 by selling your contract. In fact I have clients who do several deals like this a month for an average of $20,000 each in cash. They target fixer uppers and flip to rehabbers. One way to increase your average profit when flipping your contracts is to build a large wholesale buyers list. 12. Find a potential deal and refer it for a referral fee Instead of doing a contract, here you just gather some details and let someone else negotiate the price and terms. Referrals fees are typically $500 to $3,000 due only if a deal is closed. For example, you may decide you have enough easier deals to pursue than the ones that are upside down and over financed or require a short sale. If you align yourself with another investor who wants to do short sales you can refer it as opposed to trashing it. Sometimes you ll get sellers who call with the wrong type of real estate, or are located far from where you want to buy, own and sell. Get the numbers. If it is a potential deal, refer it to another investor in that area or specializes in the particular type of real estate. 13. Collect extra money each month from your tenant buyers How d you like to boost your monthly cash flow 50% or more? Here s how. Whenever you occupy a house with a tenant/buyer who has plans to buy the house in the future, or a contract buyer who plans to refinance later, look for opportunities to collect additional money each month. Section 6: Funding & Raising Cash Page 33

150 Example: The rent you collect each month is hopefully covering any principal, interest, taxes and insurance you pay out each month. If your buyer has the ability to pay more each month than your required rent, see if you can persuade them to give it to you! I sold a house to my tenant/buyer for $97,000. They rented the house for 20 months at $895. I normally get 3-5% down before a tenant/buyer moves in. From their application I could see that they may have some disposable income each month so I asked them if they d like the opportunity to close with owner financing and not be forced only to qualify for a bank loan. They liked the idea. I told them if they built up their down payment over time, we d have that option. They said they could afford to pay an extra $500 mid month, every month. And that s what they did. They built up an extra $10,000 in equity over 20 months and I financed the balance of what they owed me on a wrap around instrument actually an installment land contract. They were almost in tears telling me that they would never have been able to save up that much money or buy a house if it wasn t for that program. You can offer a number of benefits to a buyer for giving you extra money each month. Here are just a few: You can offer owner financing once they build up a large enough down payment It will be easier for them to get bank financing with more money down You can offer to give them extra rent credit toward buying To offer extra rent credit, you may say If you give us an additional non-refundable $300 purchase deposit (or option consideration) each month, we can offer you an additional $100 purchase credit good toward buying the house. Each month you ll build up $400 toward buying. You can submit it along with your rent payment or we can set it up to be due mid month. I have a client who does this systematically. He always asks buyers for 10% down. Most buyers who want flexible terms have less than that. So his program is always to explore what extra money they can handle each month and lay out a schedule to get them up to at least 10% down. He reports that this extra mid-month cash flow equals his month-end cash flow! Use this strategy immediately but also look to see if you have any tenant/buyers in your houses now that can start paying you additional non-refundable purchase deposits each month. When they buy, they are better off. If they never buy, you can use the extra income to increase your overall profits or help offset any costs of reoccupying the house. 14. Pull cash out of houses you already own without selling If you can raise private money to collect cash when you buy (as we previously discussed), you can also use the same program to convert some of your equity (up to 85% loan to value) into cash on properties you own now. I ll do this if I need cash sometimes. I can create a note to a private investor with no bank qualifying and no new monthly payment obligation. As a result, I can raise cash and enjoy the continued benefits of owning the property instead of selling it. Recently I spoke to one of my coaching clients who had a $300,000 house he did not want to sell. He only owed $85,000 on it. But he really needed to raise some cash soon and was thinking of selling to raise the $100,000 he wanted in 30 days. I shared this strategy with him and was surprised he had not thought of it. I m amazed how many times I speak to investors about their deals where they want to sell or flip a property for quick cash, but fail to see the opportunity to collect the same amount of cash (or more) simply by borrowing against the equity. Section 6: Funding & Raising Cash Page 34

151 On a second mortgage position, I ll offer my private investors 10-11% interest with no monthly payments. Their interest will accrue for typically 3 years. All their interest and principal will come due at that time. If I have not sold or refinanced the house during the 3 years then I ask them to extend or I can replace them with a different private lender. You can set up the terms of these notes in many different ways. This is just typical for me at this time. Consider cashing out of some of your dead equity whenever you need to raise $10,000 to $30,000 quickly and don t have a better way to raise the cash. Always keep 15% or more equity in each house you hold as a cushion. 15. Cash out quicker by targeting the pre-foreclosure niche Another method for fast cash is the pre-foreclosure niche. These prospects are highly motivated and have a time deadline, that is, the sale date, ticking away. The typical strategy is to find someone in pre-foreclosure and get the house at a deep discount (60 to 75% LTV) and resell it to a cash buyer. There are many challenges to this business that you need to be aware of. If you plan to fund the deal you must have your private or hard money lined up to close. To do a simultaneous close with a buyer s new loan is possible, but to RELY on it is very risky. Another challenge is to get the deep discount (short payoff) you need to do a short sale. This can take months. Plus there s a lot of competition for a limited number of prospects. But of course that s why it pays so well. If you re willing to do the work, it can be a very BIG pay day rather quickly. Successfully completing just an average deal can satisfy your cash needs for many months. Six-figure profits on a single deal are not unheard of. Getting a first lien holder to accept less than what is owed requires you to offer all cash. When you use your buyer s cash that means your cash profit will come now. With the right marketing plan and ability to negotiate with banks, you should be collecting $15,000 or more in cash on these preforeclosure deals. Closing one every month for two while you re doing your other deals should help with your monthly cash needs. 16. Fill your pipeline, start collecting over $20,000 each month This is where you may be headed! To illustrate, let say you might buy 10 houses. I have clients buying 10 houses a year and others buying 10 houses a month but let s use 10 in a year for this example. If you planned to make a $25,000 average net profit per house, then that s $250,000. Not bad part time! However, it s very common on pretty house deals to only get $5,000 now and then collect $20,000 later, perhaps in 6 to 24 months. After paying for marketing and holding costs, it s more likely to net $0 once it s occupied and be waiting for you $25,000 down the road. This is what s known as a free house. But these types of deals generate cash later, not cash now. I ll do these deals because, heck, a quarter of a million dollars in equity in the above example. But realize you need to implement some of these other strategies to meet monthly cash needs. But here s the payoff! If you do this for a year or two, guess what? At some point you begin getting cashed out and collect your back end profits automatically. It s great to fill up your pipeline with deals that begin popping down the road. As you build wealth and equity collecting a portfolio of tenant/buyer occupied houses collecting a portfolio of real estate notes you ve taken back from buyers you ll soon enjoy getting calls from closing agents asking you where to send your check. Perhaps that was a big check you did not expect that month. Section 6: Funding & Raising Cash Page 35

152 I manage over 40 properties at this time. And I keep buying each month to fill my pipeline. It seems each month one or two backend paydays arrive. Would you like that? Work toward getting in this position. Decide on a goal with a specific date, create a plan and then work your plan. 17. Build tens of thousands in cash reserves Here s a final strategy I use. We ve set up a separate savings account to be used for emergencies. Each time we collect a payment of $3,000 or more, we put 5% in this account. If we get an $8,000 purchase deposit, we put $400 in reserves. If we collect a $36,000 check from a closing, we sock away $1,800. You ll never miss the 5%. Over time it grows very nicely. Don t use it. Don t look at it. Just let it grow. If you need to raise cash for your operations, use one of the strategies in this article. But you may ask, OK, Richard. When can I use it? Use it when it s the ONLY way you can keep your promises and meet your obligations on time. Then raise some cash fast and put it back immediately! Let it grow. You ll sleep better at night. Ok. There you go. 17 different ways to raise cash each month as needed. Use this as a checklist next time you re in a cash flow crunch. Better yet, work some of these ideas into you regular business and marketing plans. Now there is an 18 th strategy 18. Just a tease I d love to share a new strategy with you which is one of my favorites. Dan Doran and I call it the middle. It s super valuable especially if you re in a real estate market where it s hard to hold properties or get them to cash flow. I m working on how best to use this more consistently myself and how to teach it to others in a simplified and complete way. At this time, it looks like we ll be ready to share it at our next boot camp. After that we will see how to get it out to those who could not join us. IN SUMMARY: Do you have a killer strategy for helping manage your monthly cash requirements? Please share it with me. Do you have some tips related to any of these 17 ways to generate cash? Let me know. 17 Ways to Generate Monthly Cash FREE audio: Million Dollar Coaching Call Replay Version 2a 2005, 2007 Bottom Line Results, Inc. Section 6: Funding & Raising Cash Page 36

153 Private Investor Flyer/Postcard/Letter example Do you have bank CD s, retirement accounts or other investments not returning 9% to 11%? How to get 400% higher returns on your idle cash or retirement funds Dear Fellow Investor, Many people, just like you are frustrated by low returns on your investment dollars. In response to that problem, we ve created a solid program that can replace some of the low returns that you re now receiving, and pay you a passive, predictable 9% to 11% interest on notes secured by real estate. I m Richard Roop, a professional real estate investor with over 300 successful transactions completed since I m not a financial planner, but a full-time buyer of single family investment properties throughout Teller and El Paso counties. I d like to show you how you can invest in well-secured, low loan-to-value notes and deeds of trust. I offer my investors 9% on a first lien and 11% on a second lien. We borrow from you to do our real estate deals and payments comely direct from us. It s a hands-free, hassle free opportunity to enjoy very attractive returns. You get monthly income or you can have your profits accrue monthly for growth. Let s look at an example investing $10,000 for 36 months with compounded interest. A bank CD paying 2% will grow to $10,618 in 36 months for a gain of $618. A real estate note paying 11% will grow to $13,889 after 36 months for a gain of $3,889! That s not 400% but a 529% greater return. Would you like to have some of your idle cash or retirement funds working like that for you? Call me and I ll send you an information kit... or we can set up meet by phone or in person. Sincerely, Richard Roop President Bottom Line Results, Inc Fax Section 6: Funding & Raising Cash Page 37

154 General Disclaimer This program is designed to provide information in regard to the subject matter covered. While all attempts have been made to verify information provided, the authors do not assume any responsibility for errors, omissions or contrary interpretation of the subject matter. The information in this program is not intended to be legal advice, nor a substitute for obtaining legal advice from competent, independent legal counsel. It also is not designed or intended to be relied upon as authoritative financial, investment or professional advice. The authors are NOT engaged in rendering legal, accounting, or other professional services. If legal or expert assistance is required, the services of a competent professional should be sought. The author wants to stress that information contained herein may be subject to varying state and/or local laws or regulations. All users are advised to retain competent counsel to determine what state and/or local laws or regulations may apply to the user s particular business. Neither RoopDoran.com, RichardRoop.com, Inc., nor the authors warrant the accuracy, reliability or timeliness of any information covered in this program and shall not be held liable for any losses caused by reliance on the accuracy, reliability or timeliness of such information. The user of this program assumes responsibility for the use of these materials and information. Adherence to all applicable laws and regulations, both federal and state and local, governing professional licensing, business practices, advertising and all other aspects of doing business in the United States or any other jurisdiction is the sole responsibility of the user. The authors assume no responsibility or liability whatsoever on the behalf of any user of this program. 700 W. Hwy 24 Suite E Woodland Park, CO Customer Service: (719) Ext. 105 Fax: (719) Sales & Coaching Support: Section 6: Funding & Raising Cash Page 38

155 Additional Resources Maximizing Profits with Private Lenders Marketing Mastery Training System o o Password: rich 7 Ways to Raise Cash for Real Estate Deals without Banks Part 1 is included in the Section Part 2 o o Password: cash 17 Ways to Generate Monthly Cash Article is include in the Section Million Dollar Coaching Call Replay o Equity Trust Company Set your clients up to use their retirement funds Volume #2: Generating Monthly Cash While Building a Fortune Marketing Mastery Training System Description: Section 6: Funding & Raising Cash Page 39

156 Action Notes: Customer Service: (719) Ext. 105 Fax: (719) Sales & Coaching Support: Section 6: Funding & Raising Cash Page 40

157 The Ultimate Strategy for Buying & Selling Houses Creating a Free & Clear Real Estate Money Machine with Richard Roop and Dan Doran Section 7 Selling & Occupying Quickly: Creating Multiple Paydays Section 7: Selling & Occupying Quickly Page 1

158 Section 7 The Ultimate Strategy Creating a Free & Clear Real Estate Money Machine Selling & Occupying Quickly: Creating Multiple Paydays What are the best strategies, tools and proven methods for getting all of your houses sold or occupied in 60 days or less? What are our newest and best practices for pulling cash out of single family homes? What is your biggest challenge with selling your houses fast? When you know how to sell or occupy your houses quickly, you have more confidence when making offers to buy. Fix this vital part of your investing business and you ll can immediately begin buying more houses, and making more money. In this Section we will reveal how to How to create multiple paydays How to make your houses more attractive, desirable and easier to sell How to confidently predict the price you can get and when How to line up multiple buyers before you close on your next deal How to systemize, automate or outsource the entire selling process How to avoid getting stuck with hard to sell properties How to get higher prices, larger down payments and more cash flow How to profit more working with real estate and mortgage brokers How to sell fast using cheap ads, signs, postcards and flyers How to enjoy a strong marketing advantage when selling How to consistently get your houses sold or occupied within 60 days How to qualify and negotiate with buyers How to use the magic and power of direct mail to find your buyer before you buy Resources 5 Ways to Get Houses Sold Fast Selling Quickly in Slow Markets How to Use Cheap Ads & Direct Mail to Sell Houses Selling Checklist & Marketing Checklist Examples of Signs Contract Examples Additional Resources Section 7: Selling & Occupying Quickly Page 2

159 1) Creating Multiple Paydays Collect cash when you buy o Future profit Collect cash when it s occupied o Deposit or down payment Collect positive cash flow each month o If any Collect extra cash mid-month o Additional non-refundable purchase deposit from tenant buyer o Build them up to 5% for rent credit o Build them up to 10% for owner financing Collect cash to extend buyers term o Additional non-refundable purchase deposit o No more rent credit o Increase price? o Increase rent? o See Rent To Own Addendum Collect a backend when a buyer cashes you out o Increase with principle reduction o Possible appreciation Multiple buyers Don t sell, rent! o Liquidity crisis o Rents should be rising Wrap that rascal! o No landlording o Get higher income Taxes HOA dues o Good exit on higher end properties o With no payments you can sometimes afford to wait o Exit comparisons in upcoming Section Section 7: Selling & Occupying Quickly Page 3

160 2) Make your houses more attractive, desirable, easier to sell Buy the most desirable properties Price it right o Offer the best deal on the market Fix it up right or sell as fixer upper o Fixer Upper: Owner can finance. $297,500 fixed up. Maker offer as is. Get it ready for sell o Stage your houses o Make it nice Get the word out o Signs o Ads o Direct mail o o Selling web site Make it easy to see o Use a lockbox Don t pre-qualify buyers o Let the house sell the house o New resource become available when they fall in love with it Offer an opportunity o Rent now, buy later o Own now without bank qualifying o Trade repairs and remodeling for down payment Section 7: Selling & Occupying Quickly Page 4

161 3) Confidently predict the price you can get and when Become a valuation expert o Driving comps o Researching prospects o Buying in your farm area Research your market prices and trends o Local market conditions Become a big fish in a small pond o Dominate your markets Buy with a 60 day exit price o That you are confident in 4) Line up multiple buyers before you close on your next deal Control with option and close when you find your buyer Control with contingencies and close when you have a contract Build a buyers list o Add non-converted leads to your buyer list o Work your buyers list Section 7: Selling & Occupying Quickly Page 5

162 5) Systemize, automate or outsource the entire selling process Use a lockbox Have instructions in the house o Little signs o Flyers Use a 24 hour real estate hotline on each house o Update your list of homes for sale o Multi-property flyer o Owner can finance: 5 nice homes to choose from. Call for recorded list. o Selling web site Sell your buyer programs in advance with tools o Free recorded message lines o Free Special Reports Use a Selling & Marketing Checklist o So you don t forget something Hire someone to sell your houses o Project manager Hire someone to pass out flyers and post signs o Not you! o What is your time worth 6) Avoid getting stuck with hard to sell properties Buy nice, not weird, houses Know your exits before making your offers Make your offer contingent Buy in the median price range plus or minus 20% Never rely on appreciation Wait for a real deal Don t rely on real estate agents or mortgage brokers o You can sell on your own o You can finance your buyer Section 7: Selling & Occupying Quickly Page 6

163 7) Get higher prices, larger down payments and more cash flow Offer flexible terms Stage your homes Work your buyers list Fix up right Target houses with equity Build up a buyer s down payment over time Consider trading value for part of down payment Create incentives for more money each month and more down o Rent credit at 5% down o Owner carry after 10% down o Better interest with more money down o Better price with more money down 8) Profit more working with real estate and mortgage brokers Use the turn your trash into cash approach o They are hurting o You can sell to their buyers o You can buy from their sellers Build relationships with campaigns o Calls o Visits o Letters o Postcards o s o Faxes Offer referral fees o If you can Section 7: Selling & Occupying Quickly Page 7

164 9) Sell fast using cheap ads, signs, postcards and flyers Make classified ads work using the right publications How to make sure all neighbors are aware of your house o Mail pick you neighbor postcards o Flyers o Signs Install lots of directional signs Use a flyer boxes on signs at the houses and away from the house Create virtual marketing using mufti-property flyers Use 2-step marketing in ads o Use the smallest ads, lines or words o Use a USP o Drive to free recorded message o Drive to website Use Sale Team Live o To build buyers list o List acquisition Retail buyers Wholesale buyers Tenant buyers o List management o Postcards o Multiple hits Use USPS.com o To sell a house or new list of houses o Postcards Use announcements o Buyers list o Web site should focus on getting them on it Avoid the biggest ad mistakes o Use price o Use terms only if compelling Section 7: Selling & Occupying Quickly Page 8

165 10) Enjoy a strong marketing advantage when selling Buy using The Ultimate Strategy Offer a good to great price Offer good to great terms Offer a unique opportunity Use a strong headline or Unique Selling Proposition (USP) Only focus on benefits to the buyer in your marketing Let the house sell the house Be a flexible and creative seller 11) Consistently get your houses sold, occupied within 60 days Buy right using a resell price in mind that can get it sold within 60 days Work your buyers list Launch your selling plan without delay o Don t wait Get the house ready to show ASAP! o Cuts into your profits Buy houses you have buyers for Avoid problem properties 12) Qualify and negotiate with buyers Just send them to the house o If this is the houses for you we will do whatever we can to get you in it Negotiate only after they want the house o Application review o Interview o What they can put at risk Cash Credit Job income Add to buyers list if they don t want the houses Follow up Section 7: Selling & Occupying Quickly Page 9

166 Additional Resources Volume #8: Selling Faster For Bigger Profits Marketing Mastery Training Collection Includes: o January 2007 o Collecting Fast Cash with Ugly Houses Super Strategies for Finding, Funding, Fixing and Quick-Turning Fixer Uppers While Avoiding the Rehabber's Trap! o February 2007 o How to Sell Houses Fast In a Changing Market Fill All Your Houses within 60 Days and Generate More Cash Now... Regardless Of Market Conditions! o June 2007 o Qualifying & Negotiating With Buyers Handle All Your Buyer Leads Systematically... And Then Get The Best Price And Terms When Selling! Volume #2: Generating Monthly Cash While Building A Fortune Marketing Mastery Training Collection Includes o Dec 2004 o Selling & Occupying Houses Fast In Any Market Buy More Houses with Confidence and Reduce Holding Costs Selling Houses Fast In a Slowing Market With Ron LeGrand, Jason Loucks and Richard Roop The 60 Day Cash Flow Solution with Steve Miles, Dan Doran And Richard Roop Free Call Replay Instant Marketing Tools Free with Boot Camp o Free with Sales Team Live o Sales Team Live New buyer campaigns Free Call Replay Section 7: Selling & Occupying Quickly Page 10

167 Action & Implementation Plan 1) Set up a selling web site 2) Set up a recorded message line 3) Setup with USPS.com or Sales Team Live 4) Start building your Buyers List database 5) Read Section: How to Use Cheap Ads and Direct Mail to Sell Houses 700 W. Hwy 24 Suite E Woodland Park, CO Customer Service: (719) Ext. 105 Fax: (719) Sales & Coaching Support: Section 7: Selling & Occupying Quickly Page 11

168 5 Ways to Sell Houses Fast By Richard Roop Have you ever stopped buying because your houses were not selling fast enough? Would you agree that you make your money when you buy, and then only realize it when you sell? Never turn off your buying machine. If you re having challenges selling, then fix that part of your operation. You must buy houses to get cash now get cash each month or get cash later. Capturing and building real estate equity is how you build wealth. Equity is cash later. If you want to make a lot of money, I suggest you buy houses each month and then sell only enough to meet your personal income needs. A steady growth in unrealized profits can help you create a substantial nest egg even if you decide to live extremely well today. Don t you always want great deals coming to you? Then don t stop generating leads. Your next killer deal could be just one call away. No matter what you do with a house, whether you sell it now or sell it later, you need a buyer FAST to occupy the house. When selling, you want to overcome the common challenges faced by real estate agents and homeowners trying to sell for sale by owners. A real estate agent will list the house for sale. They get paid whether they find the buyer or not. They ve secured an interest in the houses for the listing period without much risk. If it sells, it sells. If it doesn t, it doesn t. They re not paying holding costs. And if they drop the price $10,000, it doesn t cost them $10,000. Not true for you. You have to be better at selling houses, don t you? A homeowner has no choice on what house to sell. But you do. Homeowners typically insist on finding a cash buyer. Buy you don t have to. They can sometimes live in the house until they find the ideal buyer. But that will rarely, if ever, be the case when you re selling. Here are the 5 ways you can sell or occupy your houses faster 1. Buy the right house One way to sell a house fast to is buy one that will attract many buyers. You can focus on marketing to sellers who own the type of house you want to sell, in the areas you d prefer to sell in. That means directing your we buy houses message directly to homeowners, or directly to neighborhoods, that have very desirable houses. You can make big money buying in very high priced or low priced area. You can make huge profits buying small houses, one bath houses and even weird houses. But You can rely on selling your houses much faster if you Section 7: Selling & Occupying Quickly Page 12

169 Avoid high priced houses Avoid poor areas Avoid one bath houses Avoid small houses Avoid weird houses Avoid houses difficult to finance Avoid houses too far from the city 2. Have multiple exits You want to be a transaction engineer. Ideally, you want to be able to accept a variety of terms when selling. Buy houses that give you this type of control and freedom. Price it right In normal or hot markets you can demand a 5-10% premium when you re in a position to sell to a tenant buyer or sell with some type of owner financing. In slow markets you may get only a 0-5% premium. When you re relying on a retail cash buyer, you want to be able to sell at a discount. So make your offers accordingly. Avoid houses you must only sell for cash Selling only for cash to a retail buyer is tough. You can t rely on selling fast. If you must sell for cash, then be sure to buy super cheap or control the house with little or no risk using an option instead. Be willing to wait for your equity You ll be able to find someone who wants to own the house faster if you re willing to sell on a lease option, sell on a wraparound contract, or be willing to take back a small second to help finance their down payment and closing costs. Sell on a lease option That fastest way I have found to get a house occupied is to rent it to a buyer who needs time before qualifying for a bank loan. They can live in the house they want now with as little as 3% down. I find many more buyers who can do this than can put more down or qualifying for a loan now. Be willing to sell with owner financing Create financing for most or part of the purchase price using an installment land contract, agreement for deed, wraparound mortgage or all-inclusive deed of trust. If you bought cheap enough all cash then you can wrap your hard money or private investor loan. If you bought subject to then you can do the same. Sell ugly houses as is To sell fast, you can flip an ugly house for cash to an owner occupant or investor. Or you can also sell on a wrap. Or you can sell to a tenant buyer who will be fixing up the house. The key is that you will not have to spend time (and frustration) getting the house fixed up and then occupied later. 3. Make sure the house is ready for sell A big reason houses don t sell fast is because they are not ready. Always make sure the houses to ready. If it needs work, advertise it as a fixer upper. Even if it s just carpet and paint. I like to advertise the fixed up price and say make offer as is. In most cases, you do not sell the house the houses sells itself. Your job will be a lot easier if you only deal one-on-one with buyers who already want the house. Section 7: Selling & Occupying Quickly Page 13

170 Buy pretty houses Buy a house that needs no work and you can sometimes get it shown and under contract even before the seller moves out. Get the house fixed up and cleaned quickly In most cases, there may be minor repairs even on pretty houses. It s better to spend $200 to $2,000 fixing up a house than sitting on it empty for six months. Buy any house just a little better and the extra cost won t affect your net profit. Stage the house Many of my clients report that when they spend a few hundred (even a few thousand) dollars to stage a house, it sells faster. That means putting in some attractive furniture items, plants, mirrors, rugs, towels, soap dishes, etc. Staging a home can go a long when to creating an emotional appeal. If you spent $1,500 and only saved $1,500 in holding costs you would still be better off. That s because you d be focused on buying more houses (where the money is) instead of worrying about when you re going to get this one occupied. Avoid rehabs I ve made big money on rehabs. But rehabs take time. You can do them. I will still do them. But don t expect to sell quickly especially if you are relying on a retail cash buyer. Use a lock box Unless you group a bunch of appointments, have a super qualified buyer or you re conducting a 9 day sale auction in one weekend, the last thing you need to be doing is showing houses. If the house is vacant and ready to show, place a builder s lock box on it and let your buyers easily get in on their own. Let the house sell the house. Then you can sell the price and terms. 4. Use proven marketing systems The best way to sell houses fast is using classified ads, flyers, signs and a buyer s list. Run classified ads Advertise in daily or weekly newspapers where other sellers or agents are advertising. Run every day in a daily or every week in a weekly. You can test online classified ad opportunities. Keep the brief but be sure to include a free recorded message or selling website. Distribute flyers Have flyers in the house, posted in the window and in a flyer box attached to one of your signs out front. The back of my flyer usually has my free special report for buyers. If you insert flyers in the newspaper then add your we buy houses message to the other side. Signs The more signs the better. Signs are the number one way to sell in most markets. I use two handwritten signs at the houses and multiple direction signs leading to the house. See examples at Have a USP Your advantage when selling is to have a Unique Selling Proposition. Your USP will be the first words in a classified ad or web site listing. This is the headline on your flyer. This will be on your signs. Here are just a few proven USPs to sell or occupy fast: Section 7: Selling & Occupying Quickly Page 14

171 Owner can finance Flexible owner financing Lease option Rent to own No bank qualifying needed Fixer Upper 100% rent credit Trade repairs and remodeling for down payment Must sell Use real estate hotlines If you re not describing your houses, giving directions and sharing the unique benefits of buying each house on a 24 hour recorded message line, you re working to hard. Allow your prospects to get more info in a non-threatening way, 24/7. Go to for service providers. Use a selling website Buyers today expect to shop online for houses. Let them. And be sure your website is designed to capture leads to build your buyers list for follow-up. Contact your buyers list Any prospect that contacts us about a house but does not buy is placed on our buyers list. You can sell houses faster than you can buy them with enough qualified prospects on your list. Buy a house and then call, mail and your list immediately. Sometimes you ll buy a house only because you already have a buyer for it. This list is also a great source for referrals whether you offer a referral fee or not. I offer $500. Sell for cash in one weekend You can sell for cash (or terms) by conducting a two day open house and hosting a round-robin bid sale. To learn more and listen to a free teleseminar archive on this, go to 5. Be a creative and flexible seller Ron LeGrand once told me 80% of the problems with selling fast can be attributed to the person in charge of selling the house. This is particularly true with for sale by owners and real estate agents. When you buy a house, you re probably going to be this person. If you are advanced, then maybe you ve delegated to and trained someone. Regardless The person responsible for selling needs to be: Friendly, flexibility and excited Familiar with available financing options Focused on generating leads Following up on qualified buyers Frequently on top of the loan process Fast at updating the marketing systems People I ve hired to sell my houses take all calls from buyers and send them to the house. They run my checklists and get all houses ready to sell. They update all the marketing systems, ads and flyers. They deal with contractors, closing agents and mortgage brokers. They find out what a buyer can do and then and only then I ll take over. If they meet my qualifications and they want the house, I ll take to them. Cool, eh? You may do it all in the beginning. Soon you ll want to bring on a good person so you can double or triple your real estate investing business with less time and effort on your part. Section 7: Selling & Occupying Quickly Page 15

172 To summarize: The 5 ways to sell or occupy your houses fast are 1. Buy the right house 2. Have multiple exits 3. Make sure the house is ready for sell 4. Use proven marketing systems 5. Be a creative and flexible seller The monthly training calls, live boot camps and one-on-one coaching my buddy Dan Doran and I do with real estate investors always includes best practices for selling houses fast. We do a great job teaching the strategies for finding deals and negotiating with sellers but to really succeed, you must feel confident about what you re going to do with each house. Eliminating your fears and fixing this part of your house buying machine will, I m certain, allow you to make more money with less stress. Richard Roop is known as THE Marketing Consultant for Real Estate Entrepreneurs. He has been creatively buying and selling houses since 1996 with over 300 deals under his belt and he still buys and sells 3 or 4 houses each month, part-time. Today, much of Richard s time is dedicated to helping other investors improve their marketing results and increasing the profits generated from each deal. Richard has developed some of the most effective marketing systems and strategies that can help you leverage all your efforts toward growing your investing business. He specializes in creating direct marketing strategies and automated systems that have proven to work with all types of properties especially single family homes including both pretty or ugly houses. For more information visit RichardRoop.com, Inc. Section 7: Selling & Occupying Quickly Page 16

173 Winning Big in Changing Markets: Chapter 2 Selling Quickly in Slow Markets Real estate and housing markets across the nation are changing. You can hardly turn on the national news without hearing a story on how home prices are peaking or declining. Homes are taking longer to sell. The spread between asking prices and selling prices is widening. Unsold inventories are up. Foreclosures are on the rise. As real estate entrepreneurs, we make money buying and selling houses. What does all this mean to us? Armed with the right mental attitude and proper investment strategies, you can now begin helping more people than ever before. By helping buyers and sellers solve the problems they are facing now, you cannot only survive but in fact generate huge profits now and in the future. It doesn t matter what your market is doing. Real estate markets always change. And you must change also in order to compete and succeed. When houses start taking longer to sell it s what many people might call a Buyer s Market. With more homes to choose from, buyers can become pickier. Sellers become more flexible. This puts pressure on prices. It s the law of supply and demand. How can we change our investing strategies to compete for the buyers who still want to buy a home? First, don t forget the basics. 1. Price it right SELLING FAST: My basic formula for includes: Any property will sell if it is priced right. You may be used to getting a premium price when offering flexible terms. But if your market has slowed, you may have to settle for retail price (comparable value) or less. Use price points. Don t drop a price from $189,500 to $184,500. Bring it down to the next price point, in this case: $179, Get the house ready I ve sold or occupied hundreds of houses that were not in excellent condition. But that was not in a slow moving market. Get your homes in great shape fast. Consider staging your homes. Not minimal staging like floor mats, fake plants and colorful soap dishes but consider extensive, professional staging. It may cost $500 to $2,000 to have furniture moved and the interior decorated. But wouldn t it be worth it if you could occupy your properties just 30 days faster? Check out and other similar online resources. Section 7: Selling & Occupying Quickly Page 17

174 3. Offer flexible terms Offering flexible selling financing, rent-to-own or a lease option when selling will make your houses more desirable to more people. If you need to sell a house only to a qualified buyer using a new loan then consider offering to help finance the down payment and closing costs. That means you d consider taking back a small second mortgage to help them get closed sometimes with no money down. 4. Get the word out Posting lots of signs, running classified ads and working your buyer s list can many times be all you need to do in order to sell a house. I highly suggest you use a selling website and 24 hour recorded message lines to distribute house details and directions 24/7. Flyers in a box at the house are a must and flyers or postcards to all the neighbors are a plus. If you need more exposure, consider a flat fee listing in the Multiple Listing Service (MLS) for a few hundred bucks. 5. Manage your leads effectively You or someone you ve hired needs to take calls from buyers live, or return calls very promptly. You can add some prescreening verbiage to your website or recorded message line to weed out some callers. If they make it through your systems or they re calling from in front the house, be sure you re more easily reachable. Use a lockbox so anyone can easily view your vacant properties and then follow up on all leads. If they don t like it then send them to other properties or add them to your buyer s list. Now are you doing the basics? Good. That will help you on houses you already own or later buy. 6. Buy the right house SELLING FASTER: What else can you do to sell fast in a slow market? Recalibrate your buying criteria. What was once a deal in a normal or hot market may not be a deal in a post-hot or slower market. In other words, buy better. Get a better price or better terms from your seller. You must have a resell price in mind before you ever make an offer. Use a resell price that you believe would ensure getting the house occupied (pretty house deal) within 60 days. Not sure? Keep lowering your planned resell price (before you make your offer) until you re confident. Then back out your minimum profit requirement and projected expenses to come up with your pretty house MAO, or Maximum Allowable Offer. Then, never pay more than that ever. 7. Avoid the wrong properties Section 7: Selling & Occupying Quickly Page 18

175 If you re in a buyer s market, be pickier. Buy houses that are easier to resell or occupy. Pick nicer areas, more desirable floor plans and homes with attractive features you can advertise. Choose neighborhoods with shorter days on the market. If you stay within the median price range (plus or minus 20%) you ll have the largest pool of buyers. Very small homes, mobile homes and high-end homes will be harder to sell. If you buy those then you need to really buy them right. Think steal. Be wary of condos, town homes and newer subdivisions with a glut of unsold properties. Flip your rehabs deals for quick cash if you want to 1. Avoid competing for qualified retail buyers and 2. Avoid being subject to possible price declines Consider buying farther out if that s what s required to find the good deals. 8. Don t buy What? Quit the house business? Never. However, there are times you don t want to buy or own. Especially if you think prices in your market will go down. What if you have a potential deal but it s a little scary? You re not sure what you can do, or when you can do it so you don t want to make any promises? Then don t. Control it without ownership. You can use a straight option. Or you might use a standard purchase agreement that s contingent upon finding your occupant. You might even lease a house with the option to buy so you can bail out if desired. A 6 month lease with the right to extend 9 times gives you 5 years of control plus the opportunity to get out every 6 months. A lease option might even get your monthly payment less than the current mortgage. Section 7: Selling & Occupying Quickly Page 19

176 How to Use Cheap Ads and Direct Mail to Sell Houses Purpose of your ad Get prospects to respond Incite curiosity Systematically deliver details of your offering How to Make Classified Ads Work Gather rate sheets Examine publication Use a good, well-formed ad Use 2-step process Consider added options Run it ASAP in the right publications Run Til Further Notice (TFN) Get discounted contract rates Check it for accuracy Check it for economy Handle response efficiently Grow your buyer s list Track all your responses Sell fast and cancel ad ASAP Where to run Daily Weekly Shopper FSBO magazines Monthly Annual What section Homes for Sale Rent-To-Own Cheap Ads Section 7: Selling & Occupying Quickly Page 20

177 How to Create Good Classified Ads Ad Structure Simplified Headline Features & Benefits Call to Action Use a Good Headline Strong Attention Grabbing Bold or CAP 1 st 3 or 4 words Could be double-line headline No reverse type ALL CAPS only for a few words Placement attempts: o A Home For You (avoid) o $79,500 buys you a home o Sell Your House As Is Add a Few Benefits Only best features Use second step of 2-step to elaborate and tell all Only beneficial features o One bath is not a benefit Include Clear Call to Action Call (hotline) or (sellsite) Call Tiffany (phone) o To see o For lockbox code o For personal assistance o For details Call 24hr rec d msg (hotline#) 24hr rec d info (hotline#) Hear 24hr rec d list (hotline#) View at (sellsite) Visit (sellsite) Drive by (address) Pull flyer at (address) Creating Added Attention White space above and below Jump Off the Page ad Don t copy everyone else Tracking Pseudo Name Extension or Box # Ask which media Color Is it worth it for classified ads? Section 7: Selling & Occupying Quickly Page 21

178 Headlines & Benefits for Selling a House 100% rent credit 2 Months Free Rent All credit OK Buy for bank balance Buy for mortgage balance Buy for note balances Buy this home no money down Buy this home without bank qualifying Buy this home without large down payment Cheaper than rent Estate sale Fixer upper Fixer upper: Owner can finance or rent to own Fixer upper: Valued at $. Make offer as is Fixer upper: Valued at $. Will take $ Flexible owner financing For sale for what s owed Foreclosure Foreclosure pending Foreclosure stopped Free equity Great rental house Handyman special Home for auction I can finance regardless of credit I ll loan you money to buy my house Lease option Lease with option to buy Lender repo Move in now, close later Must sell No bank needed No bank qualifying owner financing No money down Owner can finance Owner can help finance Owner can help finance down payment and closing costs Owner financing Pre-Foreclosure Public Bid Sale Real estate blowout Rent to own Seller can finance Steal my house Take over these payments Trustees Sale Why rent? Buy this home for just You can this home Your credit is approved Section 7: Selling & Occupying Quickly Page 22

179 Features: Pets OK Horses OK Down payment assistance Flexible terms Free utilities for a year Free cable and internet for a year Free set of new appliances Incredible views Easy access Great location New carpet/paint (Square footage) if a benefit (Lot size) if a benefit Creating Small Display Ads that Work Same as classified Add more benefits Make more conversional Add photo- only if it helps sell Add handwritten notations or circle Add signature Add testimonial(s) Color o Reflex blue handwritten notation/signature o Spot red o Yellow highlighter o Photo Creating Online Ads that Work Same as classified Check out Uses for Classified Ads when Selling Houses Build buyer s list Find qualified tenant/contract buyers Find retail buyers Get referrals Hire sales manager Hire contractors Sell a house Sell multiple houses Promo an event/bid sale Hold a home buyer s seminar Section 7: Selling & Occupying Quickly Page 23

180 Ads Examples to Sell a House OWNER CAN HELP FINANCE dwn pmt & closing costs. Buy this home w/little or no $ down! 3bd/2ba, great condition, desirable Westside location. $247, hr recd info XXX-XXXX Box XXXX or FIXER UPPER: Cheap, all cash. $247.5k fixed up. Will take $167k if quick. Desirable Westside location. 24 hr recd info XXX-XXXX Box XXXX or FIXER UPPER: Owner can finance or rent-to-own w/o lrg dwn pmt. $247.5k fixed up or make offer as is. Trade remodeling for equity. 24 hr recd info XXX-XXXX Box XXXX or PRE-FORECLOSURE: Must sale. Owner can help finance. 3bd/2ba, great condition, desirable Westside location. $247, hr recd info XXX-XXXX Box XXXX or Ads Examples to Build a Buyer s List BUY A HOME without bank qualifying or large down payment. Call 24 hr recd msg XXX-XXXX Box XXXX to hear details and list of homes or FLEXIBLE OWNER FINANCING or rent-to-own. 5 nice hms to choose from. Down pmt assistance program. 24 hr recd list XXX-XXXX Box XXXX or RENT-TO-OWN and no bank qualifying owner financing. Several homes to choose from. 100% rent credit. Pet OK. 24 hr recd list XXX-XXXX Box XXXX or LEASE NOW W/OPTION TO BUY: Several homes to choose from. 2 months free rent. Pet OK. Flexible dwn pmt. 24 hr recd list XXX-XXXX Box XXXX or More Ads Examples REAL ESTATE BLOWOUT! Must sale this nice 3bd/2ba Westside home valued at $247,500. Will take $221,358 for quick cash out. Hear 24 hr recd msg XXX-XXXX Box XXXX or REAL ESTATE BLOWOUT! Local owner gives away $127,465 in total equity. 7 nice homes to choose from. 24 hr recd details XXX-XXXX Box XXXX or Section 7: Selling & Occupying Quickly Page 24

181 Ads Examples OWN A HOME for $79,500: Owner can finance, no bank qualifying needed. Nice 2BR/2BA Woodland Park mobile home. Flexible down/monthly or rent-to-own. Pets OK. Recorded info XXX-XXXX Box 7146 or visit OWNER CAN FINANCE or Rent-to-Own: Spacious mountain home, expansive views. 3BR/2BA, 2 acres, fireplace, Florissant. $159,500. Recorded info XXX-XXXX Box 7196 or visit 40 ACRE FOREST ISLAND with remodeled 3BR/2BA/2CAR home above Manitou Lake, Woodland Park. Owner can help finance down payment. Rare find. Pikes Peak views, fantastic 2nd building site for dream home. No neighbors. $529,500. Recorded info XXX-XXXX Box 7026 or visit OWNER CAN FINANCE or Rent-to-Own: Nice 2BD/2BA townhome, views, Westside. $109,000. Recorded info XXX-XXXX Box 7096 or visit FIXER UPPER WOODLAND PARK: Owner can finance. Trade remodeling for down payment. $197,500 completely fixed up or make offer as is. 3BR/2BA,2CAR, unfinished basement. Recorded info XXX- XXXX Box 7106 or visit FLEXIBLE seller financing available: Lovely hilltop mountain home, awesome views, Florissant. Spacious 4BR/2BA, 2 acres, stone fireplace. Attractive paint, tile, carpet. $187,000. Recorded info XXX-XXXX Box 7176 or visit OWNER CAN FINANCE or Rent-to-Own: 3 bedroom home, S. Academy. $137,000. Flexible down payment. Pets OK. Recorded info XXX-XXXX Box 7136 or visit Section 7: Selling & Occupying Quickly Page 25

182 Direct Mail Purpose of your mail Sell a house Advertise all your houses Build a buyers list Best Practices for Selling Use naked mail - postcards Small post cards o 6 x 4 Oversized postcards o 8 ½ x 5 ½ Use 2-step process Use Sales Team Live Use o Send postcard & letters o Download postcard template o Modify template o Upload list o Upload postcard o Schedule up to 28 days out Best mailing lists Your buyer s list Your entire contact list Local mortgage brokers Sales Team Live Section 7: Selling & Occupying Quickly Page 26

183 Small USPS.com postcard to build buyer s list Small USPS.com postcard sent buyer s list Section 7: Selling & Occupying Quickly Page 27

184 Pick Your Neighbor style postcard Build a buyers list Add non-converted leads to your buyer list Work your buyers list When you buy a house o Call buyers who have credit or money o everyone on the list o Mail a small postcard to everyone via UPSP.com o Ask for referrals and offer an incentive Every month o update list of properties to everyone o Mail a small or large postcard with updated property list to everyone via UPSP.com The Bottom Line... Display ads will usually cost more than a regular classified ad, especially when it takes more ad space to use this technique. My advice is to test. If you make more money using this technique than with regular classified ads, then continue to use it. However, when you have an important onetime event, like advertising an open house to sell your home, it ll probably be worth the extra money to get the added exposure, increase your response...and make your ad jump off the page! Section 7: Selling & Occupying Quickly Page 28

185 Selling Checklist Property Address Retail Sales Price $ Seller s Name Pricing: $ Min. Price with terms $ Min cash price $ Asking price fixed up $ Needed Repairs $ Min monthly $ Asking monthly payment $ Rent payment $ Rent Credit (monthly) Available date Owner carry Wrap Owner Carry 2 nd As Is Credit $ 3% down $ 5% down $ 8% down $ 12% down AS IS $ Min Price $ Purchase details: $ Purchase price $ 1 st Loan balance Balloon date % 1 st Loan interest Terms (L/O, Wrap, Deed) $ 1 st Loan payment $ 2 nd Loan Balance $ Total Underlying Payment % 2 nd Loan interest $ 2 nd Loan payment Selling Objective: Section 7: Selling & Occupying Quickly Page 29

186 Refinance by Close ASAP New loan Keeper Rent to own Easy Rent to own Hard Owner finance Wrap Flip to investor $ Required down OOPS: Poor Area (war zone, etc.) House is very small Only one bathroom Functionally Obsolete Too far from city High price for market Section 7: Selling & Occupying Quickly Page 30

187 Is the property ready to sell? Trash & Debris hauled? Has it been cleaned? Curb appeal? Notes Marketing Checklist Repair list complete? Notes: Needed repairs: Paint inside / outside Carpet Roof Interior trim Exterior trim Pet smells Advertising: Selling Message? " " Flyer completed? Recordings updated? Info box Directions Index box recording updated for all properties? ResultsQuick.com website updated Ads running UPC GT TN Signs posted? Direct mail sent? Office staff informed of new property? Copies of flyers distributed to office staff? Special Action Items: Section 7: Selling & Occupying Quickly Page 31

188 Examples of signs We scan handwritten artwork and send to the sign printer, or you can handwrite yourself on blank signs fro smaller quantities. I recommend professional typesetting of signs when buying, and handwritten when selling. 18" x 24" 18" x 24" 12" x 18" (2 up per sheet) We place a buy sign, Rent to Own sign and Owner Finance sign at each property for sale. We attached a flyer box to the Owner Finance sign. I prefer 4 foot wooden stakes, attached with roofing nails. We then post 8-12 pointer signs from all directions leading prospects to the house. Section 7: Selling & Occupying Quickly Page 32

189 General Disclaimer This program is designed to provide information in regard to the subject matter covered. While all attempts have been made to verify information provided, the authors do not assume any responsibility for errors, omissions or contrary interpretation of the subject matter. The information in this program is not intended to be legal advice, nor a substitute for obtaining legal advice from competent, independent legal counsel. It also is not designed or intended to be relied upon as authoritative financial, investment or professional advice. The authors are NOT engaged in rendering legal, accounting, or other professional services. If legal or expert assistance is required, the services of a competent professional should be sought. The author wants to stress that information contained herein may be subject to varying state and/or local laws or regulations. All users are advised to retain competent counsel to determine what state and/or local laws or regulations may apply to the user s particular business. Neither RoopDoran.com, RichardRoop.com, Inc., nor the authors warrant the accuracy, reliability or timeliness of any information covered in this program and shall not be held liable for any losses caused by reliance on the accuracy, reliability or timeliness of such information. The user of this program assumes responsibility for the use of these materials and information. Adherence to all applicable laws and regulations, both federal and state and local, governing professional licensing, business practices, advertising and all other aspects of doing business in the United States or any other jurisdiction is the sole responsibility of the user. The authors assume no responsibility or liability whatsoever on the behalf of any user of this program. 700 W. Hwy 24 Suite E Woodland Park, CO Customer Service: (719) Ext. 105 Fax: (719) Sales & Coaching Support: Section 7: Selling & Occupying Quickly Page 33

190 Examples of contracts Section 7: Selling & Occupying Quickly Page 34

191 Standard Purchase and Sales Agreement This agreement dated is by and between (BUYER) and (SELLER), Regarding property with known by the Street Address: terms may be singular or plural and will include the heirs, successors, personal representatives and assigns of Seller and Buyer, hereby agree that Seller will sell and Buyer will buy the following property, upon the following terms and conditions if completed or marked. In any conflict of terms or conditions, that which is added will supersede that which is printed or marked. The Property is in County, State of and is described as follows (if lengthy, attach legal description): It is understood that the Property will be conveyed by General Warranty Deed (unless otherwise required) subject to taxes, existing zoning (unless otherwise specified in paragraph 16), covenants, restrictions and easements of record. 1. Total Purchase Price to be paid by Buyer is payable as follows: A. Binder deposit (earnest money) which will remain as a binder until closing, unless sooner forfeited or returned, according to the provisions in this Agreement $ B. Additional binder deposit due upon vacating of property. $ C. Approximate Exact balance due at closing (not including Buyer's closing costs, prepaid items or prorations) in U.S. cash or locally drawn certified or cashiers check. $ D. Proceeds of a new loan to be executed by Buyer to any lender other than Seller $ E. Purchase money loan to Seller on terms set forth in Para. 2C Para. 18 Attached $ F. Other financing: $ G. Approximate existing mortgage balance encumbering the Property to be assumed by Buyer $ H. Total Purchase Price: Approximate Exact $ 2. Financing: If buyer does not obtain the required financing but otherwise complies with the terms hereof, the binder deposit less sales and loan processing costs incurred, will be returned to the Buyer. A. Application: The application for the mortgage described in paragraph 1D will be made with lender selected by Seller or Buyer. Unless such mortgage loan is approved without continued contingencies other than those elsewhere covered in this agreement within days of the date of acceptance of this agreement, Seller and Buyer will have the right to terminate this agreement, and Buyer will return to Seller all the title evidence and surveys received from Seller. Buyer will make application for financing within days of the date of acceptance of this agreement and in a timely manner furnish any and all credit, employment, financial and other information required by the lender. In the event the original loan application is denied, Buyer, if requested by Seller, will reapply within days of such request at an alternate institution. B. Loan Assumption: Buyer understands that interest will will not, escalate and is variable fixed rate. Buyer will within days make required application and timely provide qualifying information as required by lender. Buyer's obligation to close is contingent on lender's approval of the assumption within days of the date of acceptance of this agreement. Section 7: Selling & Occupying Quickly Page 35

192 C. Seller: The balance due to Seller will be evidenced by a negotiable promissory note of Borrower, secured by a valid purchase money mortgage or Trust Deed on the Property and delivered by Buyer to Seller dated the date of closing, amortized on the basis of years, payable at $ per month including principal and interest at a rate of % per annum. Payments shall commence and shall be due and payable on the day of each succeeding month. If not paid sooner, the balance of principal and accrued interest shall be due and payable after closing. Terms of loan shall include a late charge of % if the loan payment is not received within days of the due date. Lender disbursements under the deed of trust shall be at % per annum. Default interest rate shall be % per annum. Privilege of prepayment does apply does not apply. The loan will be. Buyer has right-to-cure no rightto-cure. 3. Buyer Will Pay: Closing Costs: Customary Other: Including: ½ closing fee Any costs related to Buyer s new loan Buyer recording fees 4. Seller Will Pay: A. Closing Costs: Customary Other: Including: ½ closing fee Owner s Title Policy Seller recording or release fees B. All other charges required by lender which Buyer is prohibited from paying by law or regulation. C. All mortgage payments or condominium and association fees will be current at Seller's expense at the time of closing. 5. Payment of Expenses: If Buyer fails to perform, all loan and sale processing and closing costs incurred, whether the same were to be paid by Seller or Buyer will be the responsibility of the Buyer, with costs deducted from binder deposit. If Seller fails to perform, all loan, sales processing and closing costs incurred whether same were to be paid by Seller or Buyer will be the responsibility of Seller; and Buyer will be entitled to the return of the Binder deposit. This will include, but not be limited to the transaction not being closed because Seller is unable to complete the transaction for a qualified Buyer, or because the property does not appraise for an amount sufficient to enable the lender to make the required loan, or because Seller elects not to pay for the excess amount in paragraphs 4 (with respect to repairs), 9, or 11, or because the zoning is not as required in paragraph 16 or because Seller cannot deliver marketable title. 6. Prorations: All taxes, rentals, condominium or association fees, prepaid hazard insurance premiums (if assumed), monthly mortgage insurance premiums and interest on loans will be prorated as of the date of closing. 7. Title Evidence: Within days after acceptance after date of satisfaction of all conditions in paragraph 19, Seller will deliver to Buyer or closing attorney: Title insurance commitment for an owner's policy in the amount of the purchase price. Any expense of curing title including but not limited to legal fees, discharge of liens and recording fees will be paid by Seller. 8. Survey: Within days after date of acceptance after date of satisfaction of all conditions on paragraph 19, Seller will deliver to Buyer or closing attorney: A new staked survey dated within 3 months of closing showing all improvements now existing thereon and certified to Buyer, lender and the title insurer, or A copy of a previously made survey of the Property showing all improvements now existing thereon, or No survey is required. 9. Wood destroying Organism Report: "Wood Destroying Organism" means any arthropod or plant life which damages a structure. Buyer may have property inspected by a Certified Pest Control Firm to determine whether there is any visible active wood destroying organism infestation or visible existing structural damage from wood destroying organisms to the improvements. If Buyer is informed of either or both of the foregoing, Seller will have seven (7) days from receipt of written notice thereof within which to have all such wood destroying organism damages whether visible or not inspected and estimated by a licensed building or general contractor. Seller will pay costs of treatment and repairs of all structural damage up to one percent (1 %) of the purchase price. If such costs exceed the amount agreed to be paid by Seller and Seller declines to treat and repair, Buyer will have the option of (a) terminating this Agreement or, (b) proceeding with the transaction, in which event Seller will bear costs equal to one percent (1 %) of the purchase price. 10. Title Examination and Time for Closing: A. If title evidence and survey, as specified above, show Seller is vested with a marketable title, or an option to purchase subject to the usual exceptions contained in title insurance commitments (such as exceptions for survey, current taxes, zoning ordinances, covenants, restrictions and easements of record), the transaction will be closed and the deed and other closing papers delivered on or before or days after the date of acceptance, or Section 7: Selling & Occupying Quickly Page 36

193 days after date of satisfaction of all conditions in paragraph 19 unless extended by other conditions of this Agreement or this agreement is canceled by the Buyer. Closing location B. If title evidence or survey reveal any defects which render the title unmarketable, Buyer will have 7 days from receipt of title commitment and survey to notify Seller of such title defects and Seller agrees to use reasonable diligence to cure such defects at Seller's expense and will have 30 days to do so, in which event this transaction will be closed within 10 days after delivery to Buyer of evidence that such defects have been cured. Seller agrees to pay for and discharge all due or delinquent taxes, liens and other encumbrances, unless otherwise agreed. If Seller is unable to convey to Buyer a marketable title, Buyer will have the right to terminate this agreement at the same time returning to Seller all title evidence and surveys received from Seller, or Buyer will have the right to accept such title as Seller may be able to convey, and to close this transaction upon the terms stated herein, which election will be exercised within 10 days from notice of Seller's inability to cure. 11. Loss or Damage: If the property is damaged by fire or other casualty prior to closing, and cost of restoration does not exceed 3% of the assessed valuation of the improvements located on the Property, cost of restoration will be an obligation of the Seller and closing will proceed pursuant to the terms of this Agreement with cost thereof escrowing at closing. In the event cost of restoration exceeds 3% of the assessed valuation of the improvements and Seller declines to repair or restore, Buyer will have the option of either taking the Property as is, together with either the said 3% or any insurance proceeds payable by virtue of such loss or damage, or of canceling this Agreement. 12. Seller agrees to deliver the Property in its PRESENT AS IS CONDITION except as otherwise specified herein. Seller does hereby certify and represent that Seller has legal authority and capacity to convey the property with all improvements. Seller further certifies and represents that Seller knows of no latent defects to the property and knows of no facts materially affecting the value of the property except the following: Buyer has inspected the property and HAS NOT RELIED UPON ANY REPRESENTATIONS MADE BY ANY REAL ESTATE AGENT in describing the property, and Buyer accepts the property in its PRESENT AS IS CONDITION, except as otherwise specified herein. 13. Occupancy: Seller represents that there are no parties in occupancy other than Seller. Buyer will be given occupancy at closing unless otherwise specified herein, Buyer understands that property is available for rent or rented and the tenant may continue in possession following closing unless otherwise agreed in writing. Deposits will be transferred to Buyer at closing. 14. Personal Property: Included in the purchase price are all fixed equipment including ceiling fans, drapery hardware, attached lighting fixtures, mailbox, fence, plants, and shrubbery as now installed on the property, and these additional items: refrigerator range/oven dishwasher washer dryer window coverings microwave see attached list Items specifically excluded from this agreement: 15. Default And Attorney's Fees: If Buyer defaults on this agreement all deposits will be retained by the Seller as full settlement of any claim, whereupon Buyer and Seller will be relieved of all obligations under this agreement. If Seller defaults under this Agreement, the Buyer may seek specific performance or elect to receive the return of the Buyer's deposit(s) without thereby waiving any action for damages resulting from Seller's breach. In connection with any litigation arising out of this Agreement, the prevailing party will be entitled to recover all costs including a reasonable attorney's fee. 16. Zoning and Restrictions: Unless the Property is zoned and can be legally used for, or if there is notice of proposed zoning changes, deed or other restrictions that could prevent such use at time of closing, Buyer will have the right to terminate this Agreement. Buyer will have 10 days from acceptance to verify the existing zoning and current proposed changes, and deliver written notice of objections to Seller or be deemed to have waived objections under this paragraph. 17. The offer of BUYER shall terminate if SELLER has not indicated his acceptance of the Agreement by signing and delivering same or telegraphing acceptance to BUYER or submitting agent before on. 18. Additional Terms, Conditions or Addenda (lettered A, B, C, D, etc.): Section 7: Selling & Occupying Quickly Page 37

194 a) See rent to own addendum 19. Timing: The timing of paragraphs 7, 8, 9, and l0(a) will become operable after satisfaction of paragraph 2, if applicable, and those additional conditions lettered in Paragraph There are no other agreements, promises or understandings between these parties except as specifically set forth herein. This legal and binding agreement will be construed under Colorado Law, will not be recorded and if not understood, parties should seek competent legal advice. Seller and Buyer give real estate agent authorization to advise surrounding neighbors who will be the owner of this property. TIME IS OF THE ESSENCE IN THIS AGREEMENT. 21. Signed, sealed on the date herein stated Buyer Date of Offer Seller Date of Acceptance Buyer Date of Offer Seller Date of Acceptance Mailing Address Phone: FAX: Mailing Address Phone: FAX: 22. Receipt Of Binder: Seller, by the signature below, acknowledges receipt of $ in the form of Cash Check Cashier s check Money order(s), as binder deposit, which is the amount mentioned in paragraph 1.A. of this Agreement. It will be deposited and held pending disbursement according to terms hereof, together with all additional binder deposits escrowed by terms of this agreement. Seller Date of Receipt Section 7: Selling & Occupying Quickly Page 38

195 Rent-to-Own Addendum to Standard Purchase and Sales Agreement This agreement dated is by and between (BUYER) and (SELLER), Regarding property with known by the Street Address: Notwithstanding anything to the contrary in the main part of the above mentioned Contract, the parties agree as follows: A. Buyer will be in breach of this agreement if buyer vacates property before closing for any reason, or if seller has to initiate eviction action for breach of Rental/Lease Agreement. B. Seller agrees to rent home to buyer until closing for at least $ (discounted) per month as outlined in Rental Agreement dated in exchange for Buyer's agreement to purchase the home and be responsible for repairs and maintenance. Monthly rent is subject to 10 % annual increase beginning with the rental payment due. C. $ of the amount shown in paragraph of P&SA includes an additional non-refundable purchase deposit due each month per Promissory Note beginning through. D. $ (total rent credit) of the amount shown in paragraph of P&SA includes a $ non-refundable purchase credit (rent credit) from each monthly rental payment made in full on or before the due date. Purchase credits are only applied against the purchase price at closing and a mortgage lender will typically not apply this amount to the amount they require a borrower put down in cash. E. Unless otherwise agreed in the P&SA, Seller is relying on Buyer's ability to close with cash or a new loan within months. Failure to close forfeits all purchase deposits paid, however Buyer may extend the closing date months by notifying Seller AND paying an additional non-refundable purchase deposit of $ no later than 45 days in advance of closing date. No rent credit will accumulated during any extension beyond the total rent credit shown in Para. D above. (Check here if applicable) Seller has agreed to finance the buyer per terms in the P&SA. F. The purchase price will increase % each month on the rental payment due date beginning. G. All purchase deposits, purchase credits, rent credit and improvements made to the property are non-refundable. Signed, Buyer Date of Offer Buyer Date of Offer Section 7: Selling & Occupying Quickly Page 39

196 Seller Date of Acceptance Seller Date of Acceptance Section 7: Selling & Occupying Quickly Page 40

197 REAL ESTATE SALES AGREEMENT (Preliminary Agreement to Sell by Installment Land Contract) Property Address: Seller(s) Buyer(s) County: Teller Tel: Tel: For consideration received, the seller agrees to sell and the buyer agrees to buy the above-referenced property (with all improvements and subject to easements, covenants and restrictions of record) under the following terms and conditions: 1. PURCHASE PRICE. The total purchase price to be paid by the buyer(s) will be $, which will be paid by a cash down payment at closing of $ and a promissory note (substantially conforming with FNMA standards, hereinafter note ) in the principal amount of bearing an interest rate of % per annum and requiring monthly payments of principal and interest in the amount of (includes a $7.00 loan servicing fee) per month based on interest only commencing 30 days after closing (first payment prorated) and due and payable on or before ("Balloon Date"). The promissory note will require a late payment of 5% each payment received after the 5 th day of the month. The default interest rate shall be at 18% per annum. Check if applicable INSURANCE & PROPERTY TAXES. Monthly payments by buyer shall be increased by 1/12 of (Monthly Estimate: Existing) the estimated annual property taxes, insurance and (if applicable) homeowner s assoc dues. 2. NON-REFUNDABLE EARNEST MONEY. Buyer has given in the form of as non-refundable earnest money to bind this agreement. The balance of $ shall be due as follows: If buyer fails to deliver required funds or close the transaction timely, seller shall retain said earnest money (and any other consideration) as liquidated damages and not a penalty and the buyer shall have no further legal recourse against the seller. 3. PERSONAL PROPERTY. The following personal property shall be included in the sale of the property in its present as is condition without warranties, express, implied or for any particular purpose of the buyer 4. CLOSING. The closing date shall be on or before, time being of the essence. Closing of this transaction shall be completed by buyer and seller executing an "Installment Land Contract," ("contract") which shall, among, other things, require buyer to make payments under the above-mentioned note. Seller shall choose closing agent and Buyer shall pay closing fee not to exceed $. Water/sewer charges will not be prorated at closing. Property taxes, hazard insurance and HOA dues (if applicable) will not be prorated at closing. All parties consent to closing by electronic signatures and recording of closing by audiotape or videotape. 5. ESCROW OF DOCUMENTS. The parties will designate as escrow agent to hold the original executed Installment Land Contract, Warranty Deed, Bill of Sale and Quitclaim Deed from Buyer in escrow pending seller's and buyer's performance of the terms of the Installment Land Contract. Buyer shall pay escrow agent s fee of $. 6. PREPARATION OF DOCUMENTS. The installment land contract, note, deeds and other related legal documents will be prepared by seller's attorney, Bronchick & Associates, PC, and Buyer agrees to pay legal fees for preparation not to exceed $. 7. TITLE. Seller will not be providing buyer will evidence of title, title report or title insurance. Title to the property will not be delivered to buyer at closing, but will be held in escrow pursuant to paragraph 5 of this contract. 8. LEGAL REPRESENTATION. Buyer acknowledges that an Installment Land Contract is not an ordinary real estate transaction and that there are certain legal consequences that cannot be explained by seller or the closing agent. It is recommended and encouraged that Buyer obtain legal counsel before signing this agreement or any closing documents. 9. DISCLOSURES. Seller is not aware of any lead-based paint hazards on the property, nor has any reports in his possession regarding lead-based paint hazards on the property. Buyer waives his right to inspect the property for lead-based paint hazards and has received a copy of the EPA pamphlet "Protect Your Family from Lead in Your Home."

198 Buyer understands that there is an underlying loan and accompanying deed of trust encumbering the property that will not be assumed by the buyer nor paid off by the seller at closing, and that said loan contains an acceleration clause. 10. ENTIRE AGREEMENT. This written contract constitutes the entire agreement and understanding of the parties and any statements made orally or in writing prior to this agreement are incorporated and merged herein. Any subsequent agreements regarding the property or modifications of this agreement are void unless reduced to writing. 11. ADDITIONAL TERMS: See Rent To Own Addendum & Note BUYER DATE BUYER DATE SELLER DATE

199 ADDITIONAL TERMS, CONDITIONS AND EXPLANATIONS (The following is not intended as legal, tax or financial advice) INSTALLMENT LAND CONTRACT. An installment land contract, also known as agreement for deed and contract for deed, is an owner-carry sale wherein the buyer makes monthly payments on an installment basis. The buyer is the equitable owner, having the right to live in the property, but does not have title in his name until the balance of the debt is paid in full. The buyer cannot use the property as collateral for a second mortgage or line of credit. TEMPORARY FINANCING. The buyer must be aware that the seller is financing the sale of this agreement and will be collecting monthly payments of interest. The buyer must obtain permanent financing from another source, such as a conventional lending institution before the balloon date. If the indebtedness is not paid in full by such date, the seller has the right to commence legal proceedings to regain possession of the property and the buyer may lose all rights he has to the property and will forfeit all payments made. The buyer should understand that there is no guarantee that the property will increase in value or that institutional financing will be available for the buyer when he is ready to refinance. It is in the buyer s best interest to make immediate arrangements to review his credit report and income qualifications with a mortgage broker or lending institution to determine his eligibility for future financing. LOAN CHARGES. In addition to a down payment and closing costs, the seller may require that you pay a loan origination fee. This amount will be disclosed on a Good Faith Estimate you will receive from the seller. YOUR EARNEST MONEY IS NON-REFUNDABLE. The earnest money paid by the buyer binds this sales agreement, and thus prevents the seller from offering it for sale to other potential buyers. Thus, if the buyer does not complete the transaction, the seller has the legal right to keep the buyer s earnest money. CLOSING. A traditional closing of a real estate transaction involves the seller passing title to the buyer by deed. In this transaction, the deed will be signed by the seller and placed into escrow. The escrow agent will hold the deed until the debt has been paid in full by the seller, which will usually happen if the buyer wants to sell the property or refinance the debt owed to the seller. Once the debt has been paid, the escrow agent will release the deed to the buyer. The escrow agent will also hold a quitclaim deed from the buyer, which will be delivered to the seller in the event of buyer s default. WHAT TO BRING TO CLOSING. At closing, you must bring CASH OR CERTIFIED FUNDS and a copy of a driver s license or other official photo identification. Make all certified funds or money orders payable to yourself or the closing agent. NO WARRANTIES OF PERSONAL PROPERTY. The personal property included in the sale usually means the appliances and other property not permanently attached to the house. These items should be inspected by the buyer before closing. The seller makes no guaranty or warranty about the condition or useful life of these items. TITLE INSURANCE. Title insurance is customarily purchased when title passes to the buyer at a regular closing. However, since title is being held in escrow at closing, title insurance will not cover any problems that occur between the closing and the time title is delivered to the buyer (after the indebtedness is paid in full). Seller will not be providing a title report or title insurance, but will provide buyer a copy of the deed to the property showing the seller as the rightful owner. The buyer may further inspect title or obtain title insurance at his own expense. The buyer should also obtain a copy of any recorded covenants, conditions and restrictions on file with the County Clerk & Recorder s Office. SALE OF PROPERTY. The buyer may sell the property at any time. The seller will deliver title to the buyer simultaneously with the payoff of the indebtedness due under the note. The buyer may not lease or assign his rights in the installment land contract to another party without the seller s consent. UNDERLYING FINANCING. The buyer should understand that the seller purchased the property using conventional financing secured by a deed of trust lien recorded against the property. Said financing will be paid in full by the seller and the lien will be released before the escrow agent releases title to the buyer (after the indebtedness is paid in full). Said deed of trust may contain an acceleration clause that gives the lender the right to declare all sums due and payable under the note if the property is transferred. In the event the lender discovers the land contract sale, it may consider such a sale to be a transfer and declare all sums due and payable under the note. If not paid by the seller at such time, the lender may commence foreclosure proceedings that would put the buyer s legal position under the land contract in jeopardy. It is recommended that the buyer obtain legal counsel to review the consequences of such an event.

200 LEGAL REPRESENTATION. Although the buyer may be paying the expense of preparation of legal documents for closing, the buyer is not being represented by seller s attorney or the closing agent. It is recommended that the buyer obtain legal counsel to review all closing documents before signing. This form is intended to enhance the buyer s understanding of the transaction, but is not intended as legal, tax or financial advice. ENTIRE AGREEMENT. This written contract constitutes the entire agreement and understanding of the parties and any statements made orally or in writing prior to this agreement are incorporated and merged herein. Any subsequent agreements regarding the property or modifications of this agreement are void unless reduced to writing and signed by the parties. It is recommend that the buyer ask the seller to reduce any agreement or promises made to writing to ensure that the parties are in agreement on all terms.

201 PROMISSORY NOTE FOR VALUE RECEIVED, whose address is:, promise(s) to pay to the order of the principal sum of, in legal tender of the United States, with interest from the date hereof at the rate of % month. Should this Note be paid in full within thirty days from the date hereof or at any time during a thirty day period, interest shall be charged at a daily rate of $ per day. Principal and interest shall be payable at the offices of: BOTTOM LINE RESULTS, INC. PMB 239 PO Box 220 WOODLAND PARK CO or at such other place as the holder hereof may designate in writing. Should any installment not be paid when due, or should the Maker or Makers hereof fail to comply with any of the terms of this agreement, or if Holder deems itself insecure or if Maker defaults under these terms, the entire unpaid principal sum evidenced by this Note, with all agreed interest, shall, at the option of the Holder, and without notice to the undersigned, become due and may be collected forthwith, time being of the essence of this Agreement. It is further agreed that failure of the Holder to exercise this right of accelerating the maturity of the debt, or indulgence granted from time to time, shall in no event be considered as a waiver of such right of acceleration or stop the Holder from exercising such right. Installments, or payment if single payment Note, not paid within 5 days of due date shall incur a late fee of 15% of the installment or payment, but not less than $ The Holder shall be entitled to all costs of collection should this Note, or any part of the indebtedness evidenced hereby, be accelerated and not paid. Should this note be collected at law or by an attorney at law, an Attorney/Collection Fee of 15% of the balance due, but not less than $100.00, plus any costs and administration fees, shall be added. And each of the undersigned, whether principal, surety, guarantor, endorser, or other party, severally waives and renounces demand, protest, notice of demand, protest and non-payment. IN WITNESS WHEREOF, the parties hereto have caused these presents to be signed in person: Borrower: Date Borrower: Date SSN: SSN: PAYMENT SCHEDULE: Monthly payments of $ for months due on the of each month starting. A payment of $ in interest will be waived if note is paid as agreed. Amount Due Amount Due

202 Rental Agreement THIS AGREEMENT dated is by and between, herein called "LANDLORD", and, herein called "TENANT". LANDLORD hereby agrees to rent to TENANT the real property located in the City of County of described as follows:, State of commencing on the and monthly thereafter on a month-to-month basis. LANDLORD rents the described premises to TENANT on the following terms and conditions. 1. RENT TENANT agrees to pay LANDLORD as base rent the sum of $ per month, due and payable monthly in advance on the 25 th day of each month during the term of this agreement. Rent must be received by 5:00 PM. If the rent has not been received by 5:00 PM. on the 25 th of the month, then a 3 day notice may be posted. Unless otherwise notified in writing, the monthly rental payment shall increase annually by ten percent. 2. PAYMENT OF RENT The initial payment of rent and security deposit under the terms of this RENTAL AGREEMENT MUST BE MADE IN CASH. LANDLORD must receive all initial payments of rent and security deposit prior to TENANTS taking occupancy of property. Thereafter monthly rent payments may be paid by check until the first check is dishonored and returned unpaid. Time is of the essence and no excuses will be accepted. Rent shall be made payable to Bottom Line Results, Inc. and be sent by mail to LANDLORD at: PO Box 220, PMB 239, Woodland Park, CO or hand delivered in a stamped and sealed envelope bearing landlord s name to 700 W. Hwy. 24, Ste. E, Woodland Park, CO during normal operating hours. Any rents lost in the mail will be treated as if unpaid until received by LANDLORD. 3. DISCOUNT PROGRAM As an incentive to the TENANT to pay his rent payments ON TIME or AHEAD OF TIME, and for being responsible for property maintenance and repairs, a discount in the amount of $50.00 may be deducted from the above rental sum each month. This discount will automatically be forfeited if the TENANT fails to perform as stated above. 4. APPLIANCES The house is rented without appliances. The above rental payment specifically EXCLUDES all appliances of any kind! Such appliances as are in the property, are there solely at the convenience of the LANDLORD, who assumes no responsibility for their operation. LANDLORD agrees to remove appliances at the request of TENANT. 5. ADDITIONAL RENT TENANT hereby acknowledges that late payment will cause LANDLORD to incur costs not contemplated by this RENTAL AGREEMENT, the exact amount of which will be extremely difficult to ascertain. In the event rent is not received prior to 5:00 PM. on the 25th day of the month, regardless of cause including dishonored checks, TENANT further agrees, in addition to loss of rent discount, to pay additional rent to LANDLORD equal to $5.00 per day until account is current. Neither ill health, loss of job, financial emergency or other excuses will be accepted for late payment. In the event collection of past due rent must be made by LANDORD at the property, additional rent of $30.00 will also be due for each such attempted collection. 6. RETURNED CHECKS In the event TENANT's check is dishonored and returned unpaid for any reason to LANDLORD, TENANT agrees to pay as additional rent the sum equal to $ If for any reason a check is returned or dishonored twice, all future rent payments will be cashier s check, certified check or money order. 7. USE The TENANTS agree to use the premises only as a residence for themselves ( adults) and their children and their pets. ALL adult tenants must sign this rental agreement and submit a signed application prior to taking occupancy. Resident agrees to pay $ each month for each additional person who shall occupy the premises in any capacity. If TENANTS fail to inform LANDLORD of additional people occupying property, the $ per person additional rent will be assessed retroactive to the date commencing the RENTAL AGREEMENT.

203 8. PETS There shall be no pets allowed on the rented premises except as may be granted by LANDLORD, in writing. TENANT hereby agrees that if found in violation, the rents due hereunder may be raised at the LANDLORD's discretion. If pets are allowed by LANDLORD, TENANT agrees to render an additional security deposit of $.This consent constitutes a representation by the TENANT and a consent by the LANDLORD for maintenance in house at said property, of the following described pet(s): The TENANT is to be fully responsible for any damage to property of LANDLORD or of others which may result from the maintenance of the pet. TENANTS agree to pay for pest infestation service after termination of occupancy. Said monies shall be the responsibility of the TENANT and shall be deducted from the Security Deposit. LANDLORD reserves the right to revoke this consent on three day's notice to TENANT, if in the opinion of LANDLORD'S employees, the pet has been a nuisance to other residents or has not been maintained according to these rules. In the event consent is revoked, TENANT agrees to forthwith discontinue maintenance of the pet and failure to so discontinue, shall be a breach of this RENTAL AGREEMENT. Any animals on the property not registered under this RENTAL AGREEMENT will be presumed to be strays and will be disposed of according to law, at the option of LANDLORD. 9. NON-ASSIGNMENT OF RENTAL AGREEMENT Resident agrees not to Assign this agreement, not to Sublet any part of the property, nor to allow any other person to live therein other than as named in Paragraph 7 without first requesting permission from the LANDLORD and paying the appropriate surcharge. Further, that covenants contained in this RENTAL AGREEMENT, once breached, cannot afterward be performed; and that unlawful detainer proceedings may be commenced. 10. LEGAL OBLIGATIONS TENANTS hereby acknowledge that they have a legal obligation to pay their rent on time each and every month regardless of any other debts or responsibilities they may have. They agree that they will be fully liable for any back rent owed. They also acknowledge defaulting on this RENTAL AGREEMENT could result in judgment being filed against them and a lien being filed against their current and future assets and/or earnings. 11. ATTORNEY'S COST If court action is sought by either party to enforce the provisions of the RENTAL AGREEMENT, attorney's fees and costs may be awarded to the prevailing party in the court action. 12. REPAIR POLICY The TENANTS hereby acknowledge that they have been informed that the LANDLORD and/or his agents are not always available to provide support services to TENANTS. The rental discount is offered for this reason, to encourage TENANTS to take care of themselves and the property. If a problem comes up that should cost $ or less to repair, then the TENANTS are expected to deal with it themselves or lose the discount for that month. If a problem comes up that will cost more than $ to repair then the TENANTS must get in touch with LANDLORD as soon as possible, between 9AM. and 5PM. on Monday thru Friday. After normal business hours TENANTS may leave a message and someone will get back to you as soon as possible. Under no circumstances will LANDLORD be responsible for any improvements or repairs costing more than $25.00 unless the TENANTS were given written authorization to make repairs or improvements in advance. TENANT agrees to meet all TENANT's obligations as spelled out in Colorado state law, including but not limited to 1. Comply with all obligations primarily imposed upon TENANTS by applicable provisions of building codes materially affecting health and safety. 2. Keep that part of the premises that he occupies and uses as clean and safe as the condition of the premises permit. 3. Dispose from his dwelling unit all ashes, rubbish, garbage and other waste in a clean and safe manner. 4. Keep all plumbing fixtures in the dwelling unit or used by the TENANT as clean as their condition permits. 5. Use in a reasonable manner all electrical, plumbing, sanitary, heating, ventilating, air-conditioning and other facilities and appliances including elevators in the premises. 6. Not deliberately or negligently destroy, deface, damage, impair or remove any part of the premises or knowingly permit any person to do so. 7. Conduct himself and require other persons on the premises with his consent to conduct themselves in a manner that will not disturb his neighbor's peaceful enjoyment of the premises. TENANT warrants that he/she will meet above conditions in every respect, and acknowledges that failure to perform the obligations herein stipulated will be considered grounds for termination of this agreement in accordance with Statues and loss of all deposits. 13. SECURITY DEPOSIT TENANTS hereby agree to pay a security deposit of $ N/A, to be refunded upon vacating, return of the keys to the office and termination of this contract according to the terms herein agreed. This deposit will be held to cover any possible damage to the property. No interest will be paid on this money and in no case will it be applied to back or future rent. It will be held intact by LANDLORD until at least 15 working days after TENANTS have vacated the property. At that time LANDLORD will inspect the premises thoroughly and assess any damages and/or needed repairs. This deposit money minus any necessary charges for repairs, cleaning etc. will then be returned to TENANT with a written explanation for deductions, after they have vacated the property.

204 14. CLEANING FEE TENANT hereby agrees to accept the property in its present state of cleanliness. They agree to return the property in the same condition or pay a cleaning fee if LANDLORD has the property professionally cleaned. 15. MONTH-TO-MONTH TENANCY This is a month to month RENTAL AGREEMENT only! It is not a lease or other long-term agreement. After one month's rental payment has been received, this agreement may be terminated by mutual consent of the parties; or by either party giving written notice at least 30 days prior to the end of any monthly period. Any provision of this agreement may be reasonably changed by the LANDLORD in like manner, thus THIS RENTAL ESTABLISHES A MONTH TO MONTH TENANCY ONLY. All parties agree that termination of this agreement without prior notice before 6 months will constitute breach of the tenancy as agreed on page 1, and all Security Deposits shall be forfeited in favor of the LANDLORD as full liquidated damages at LANDLORD's option following termination without notice. 16. TENANT COOPERATION TENANT agrees to cooperate with LANDLORD/Agent in showing property to perspective tenants, prior to termination of occupancy. 17. REMOVAL OF LANDLORD's PROPERTY If anyone removes any property belonging to LANDLORD without the express written consent of LANDLORD, this will constitute abandonment and surrender of the premises by TENANT and termination by them of this RENTAL AGREEMENT. LANDLORD may also take further legal action. 18. TENANT INSURANCE No rights of storage are given by this agreement. LANDLORD will not be liable for any loss of TENANT's property. TENANT hereby acknowledges this and agrees to make no such claims for any loses or damages against LANDLORD, his agents, or employees. TENANT agrees to purchase insurance at their own expense, sufficient to protect themselves and their property from fire, theft, burglary, breakage, electrical connections etc. They acknowledge that if they fail to procure such insurance it is their responsibility and they alone shall bear consequences. 19. ABANDONMENT If TENANTS leave the premises unoccupied for 15 days, without paying rent in advance for that month, or while owing any back rent from previous months, which has remained unpaid, then LANDLORD and/or his representative has the right to take immediate possession of the property and to bar the TENANT from returning. LANDLORD will also have the right to remove any property that the TENANTS have left behind and dispose of it. 20. LOCK POLICY No additional locks will be installed on any door without the written permission of LANDLORD. LANDLORD will be given duplicate keys for all locks so installed at the TENANT's expense, before they are installed. 21. CONDITION OF PREMISES The TENANTS hereby acknowledge that the said property is in good condition and that a working smoke detector has been installed. (YOU AGREE TO PERIODICALLY TEST AND MAINTAIN THE SMOKE DETECTOR). If there is anything about the condition of the property that is not good, they agree to report it to LANDLORD on the Move In/Move Out Checklist and return it within 7 days of taking possession of the property. They agree that failure to file any written notice of defects will be legally binding proof that the property is in good condition at the time of occupancy. 22. INVENTORY AND INSPECTION RECORDS LANDLORD warrants that all major systems will be functional and in good repair at time of possession, unless otherwise stipulated on Move In/Move Out Checklist. Light switches, wall plugs, doors, windows, faucets, drains, locks, toilets, sinks, heaters, etc., will either be in working order or will be repaired once the TENANTS have completed and returned Move In/Move Out Checklist. TENANTS are encouraged to report any necessary repairs no matter how slight, but they are hereby advised that LANDLORD does not normally repair or replace nonfunctional items such as paint, carpets, etc., every time a property changes possession. These items are scheduled for repair/replacement at regular intervals of tenant turnover. 23. MAINTENANCE OF LAWNS The TENANTS acknowledge that they are legally responsible for maintaining the lawns and landscaping and will be held liable for any damages caused by lack of water, abuse or neglect. 24. TENANT RESPONSIBILITY Good Housekeeping is expected of everyone. Tenant agrees to keep quarters clean and in a sanitary condition. The TENANTS agree not to permit any deteriation or destruction to occur while they are occupying the property. They agree to maintain the walls, woodwork, floors, furnishings, fixtures and appliances (if any), windows, screens, doors, fences, plumbing, air-conditioning and heating, electrical and mechanical systems as well as the general structure and appearance of the property. 25. ALTERATIONS TENANT shall make no alterations, decorations, additions or improvements in or to the premises without LANDLORD's prior written consent, and then only by contractors or mechanics approved by LANDLORD. All alterations, additions or improvements upon the premises, made by either party, shall become the property of LANDLORD and shall remain upon, and be surrendered with said premises, as a part thereof, at the end of the term hereof. The TENANTS acknowledge that they will be responsible for and pay for any damage done by rain, wind, hail, tornadoes, hurricanes, etc., if this damage is caused by leaving windows open, allowing stoppage and/or overflow of water and/or sewage pipes, broken windows or doors, torn screens, broken door and window locks, etc., or any damage caused while TENANT has occupancy.

205 26. VEHICLE POLICY The TENANTS agree never to park or store a motor home, camper, trailer or any sort of recreational vehicle on the premises and to park only automobiles license numbers only on the paved area provided. Junk cars, cars on blocks, unrunning vehicles, or unlicensed automobiles are not permitted on property. Removal will be at the expense of the TENANT. TENANTS agree that any vehicle parked on unpaved areas may be towed and stored at TENANT's expense. 27. UTILITIES Resident will be responsible for on-time payment of all utilities, garbage, water and sewer charges, telephone, gas or other bills incurred during their residency and will keep utilities on if needed to protect property from damage. They specifically authorize LANDLORD to deduct amounts of unpaid bills from their deposits in the event they remain unpaid after termination of this agreement. 28. ROOF AND TERMITE ALERT TENANT agrees to notify LANDLORD immediately if roof leaks; water spots appear on ceiling or at the first sign of termite activity. 29. NON-LIABILITY The TENANTS hereby state that any work or repairs that need to be done will be farmed out to competent professionals, unless TENANTS are qualified and capable of doing the work themselves and doing it properly, in a safe manner which meets all federal, state, and local regulations. TENANTS further state that they will be legally responsible for any mishap occurring during work either they do themselves or hire others to do. LANDLORD will be held free from harm and liability along with his agents and representatives. In the event that needed repairs are beyond the TENANT's capacity, they are urged to arrange for professional help. 30. DISCLOSURE OF LANDLORD/AGENT The owner may be represented at various times by his employees or agents, who will carry identification. Bottom Line Results, Inc. is the manager of the property and authorized to act for and on behalf of the owner for the purpose of receiving and receipting for notices and demands and for the service of process and all other acts which LANDLORD could or would personally present. Manager's address is 743 Gold Hill Pl. PMB 239, PO Box 220, WOODLAND PARK, CO , and the phone is (719) VALIDITY OF LEASE PROVISIONS Any provision set forth in this RENTAL AGREEMENT which is contrary to the RESIDENTIAL LANDLORD and TENANT ACT shall be treated by LANDLORD and TENANT as void and as if it were not set forth herein, but all other provisions of the RENTAL AGREEMENT shall remain in full force and effect. 32. PHONE When the TENANT gets a phone installed in the premises, LANDLORD will be given the phone number within 2 working days of installation and will be notified within 2 working days of any further changes in the phone number. 33. ACCESS TO PREMISES The LANDLORD reserves the right to enter the residence at reasonable times to inspect, make necessary repairs, supply services or show it to prospective residents, purchasers, mortgagees, workmen or contractors. Whenever practicable, a one-day notice of the LANDLORD's intent to enter shall be given to the TENANT. The LANDLORD may also display "for rent" and "for sale" signs on the building on which the rented residence is a part. 34. PEST CONTROL POLICY TENANT is responsible for any ongoing Pest Control Service, if the TENANT desires such a service. LANDLORD is not responsible for any damage done to the TENANT's person or property by such pests, or to the person or property of TENANT's family or any other persons on their premises. 35. WAIVER All rights given to LANDLORD by this agreement shall be cumulative in addition to any laws which exist or might come into being. Any exercise of any rights by LANDLORD or failure to exercise any rights shall not act as a waiver of those or any other rights. No statement or promise by LANDLORD, its agents or employees, as to tenancy, repairs, amount of rent to be paid or other terms and conditions shall be binding unless it is put in writing and made a specific part of this agreement. 36. LEGAL BINDING TENANT hereby states that they have the legal right to sign for any and all other residents and to commit them to abide by this contract. 37. TERMS In this agreement the singular number where used will include the plural, the masculine gender will include the feminine, the term owner will include LANDLORD, LESSOR; and the term RESIDENT will include TENANT, LESSEE. 38. CROSS DEFAULT If Resident has entered into any other agreements concerning Property and Tenant defaults on any provisions of those agreements, then this Agreement shall also be considered in default and, at the option of Management, this Agreement may be voided.

206 39. ADDITIONAL PROVISIONS A. Tenants have permission to make quality improvements to the home at their own expense and will be liable and responsible for completing any projects started. All improvements become property of the Landlord. B. Tenants to keep utilities current. Failure to do so allows Landlord to make such payments as deemed desirable to protect landlord's interests. The amount of any payments made by landlord will be taken out of the next payment received from tenant which may cause the rent to be delinquent. C. If Landlord/Agent grants this Rental Agreement prior to receiving a completed Application from each adult occupant, then Tenant agrees to return completed Application(s) to Landlord/Agent within 48 hours and then Landlord/Agent will have two business days to process application. If application is declined, Landlord/Agent may nullify this contract, and return any payments received less application fee. 40. FULL DISCLOSURE The TENANTS signing this RENTAL AGREEMENT (CONTRACT) hereby state that all their questions about this RENTAL AGREEMENT have been answered, that they fully understand all the provisions of the agreement and the obligations and responsibilities of each party as spelled out herein. They further state that they agree to fulfill their obligations in every respect or suffer the full legal and financial consequences of their actions or lack of action in violation of this agreement. Signature by the TENANT on this RENTAL AGREEMENT is acknowledgment that he/she has received a signed copy of the RENTAL AGREEMENT. ACCEPTED & DATED: X Tenant: Date X Tenant: Date Soc. Sec. Soc. Sec. X Landlord: Date RECEIPT:

207 The Ultimate Strategy for Buying & Selling Houses Creating a Free & Clear Real Estate Money Machine with Richard Roop and Dan Doran Section 8 - Part 1 of 2 Wealth Building: Creating Financial Independence Faster Section 8 - Part 1 of 2: Wealth Building Page 1

208 Section 8 Part 1 of 2 The Ultimate Strategy Creating a Free & Clear Real Estate Money Machine Wealth Building: Creating Financial Independence Faster In this section we will cover: Why to avoid paying off 0% financing early Reasons to pay off a seller early Paying off a balloon note in full - Example #1 Paying off a balloon note that has payments - Example #2 Buying a partial payment steam - Example #3 How to get 35% return on your extra cash - Example #4 For this section we will use the Financial Calculator V1 spreadsheet available from your Support site. 700 W. Hwy 24 Suite E Woodland Park, CO Customer Service: (719) Ext. 105 Fax: (719) Sales & Coaching Support: Section 8 - Part 1 of 2: Wealth Building Page 2

209 Why to avoid paying off 0% financing early... We can pay a higher price to a seller when they wait for part or all of their equity. The longer they are willing to wait the more we can pay. When they wait for all of their equity we collect all the cash flow. On a 5 year plan with a net positive cash flow of $1,000, we will collect $60,000 even if we get no money upfront and no money on the back end. If we give the seller all of our net positive cash flow, we build rapid wealth or equity. On a 5 year plan paying the seller our net positive cash flow of $1,000 per month, "the house" pays down our debt to seller by $60,000. When a seller waits for $50,000 for 5 years, that balloon note is worth $50,000 only if we are happy with a 0% return. PV = Present Value I = Annual Interest Pmt = Monthly payment N = Number of payments FV = Future Value Enter the terms into your Financial Calculator: Enter 4 of 5 variables Solve for: PV $0.00 $50, Present Value I 0.00% #NUM! Interest annually Pmt $0.00 $ Payment monthly N 60 #DIV/0! Number of payments FV $50, $0.00 Future Value But at 4.5% yield, that note is only worth about $40,000 today. PV $0.00 $39, Present Value I 4.50% #NUM! Interest annually Pmt $0.00 $ Payment monthly N 60 #NUM! Number of payments FV $50, $0.00 Future Value So we can add $10,000 to our purchase price for every $50,000 not due for 5 years. Section 8 - Part 1 of 2: Wealth Building Page 3

210 What if they wait 10 years, instead of 5? Enter 4 of 5 variables Solve for: PV $0.00 $31, Present Value I 4.50% #NUM! Interest annually Pmt $0.00 $ Payment monthly N 120 #NUM! Number of payments FV $50, $0.00 Future Value The $50,000 note is only worth about $32,000 when due in 10 years. So we can add $18,000 to our purchase price for every $50,000 due in 10 years. The Free & Clear Offer Generator makes these calculations and adjustments for you. It order to add these amounts to our price, we must make sure we stretch out the amounts due for the full term of the note. If you pay the seller off early, you need to get this consideration back in the form of a discount payoff. Reasons to pay off a seller early: They request getting some or all of their cash now, instead of later. You want clear title now and you don't have property(s) to move their note to. You have extra cash to invest and want to pay a seller off at a discount to build your equity and net worth. Would you be happy getting an 18% annual yield on any cash you invest to pay a seller off early? You can use any yield you like. Let's use 18% for our examples of paying off a seller early, either fully or partially. Section 8 - Part 1 of 2: Wealth Building Page 4

211 Example #1: Paying off a balloon note in full You owe a seller a $50,000 note at 0% with no payments due in 60 months. The seller asks if you can pay them off now. Enter: FV = $50,000 I = 0% Pmt = $0 N = 60 Solve for: PV = $50,000 Enter 4 of 5 variables Solve for: PV $0.00 $50, Present Value I 0.00% #NUM! Interest annually Pmt $0.00 $ Payment monthly N 60 #DIV/0! Number of payments FV $50, $0.00 Future Value Now enter: I = 18% Solve for: PV = $20, PV $0.00 $20, Present Value I 18.00% #NUM! Interest annually Pmt $0.00 $ Payment monthly N 60 #NUM! Number of payments FV $50, $0.00 Future Value You will get an 18% yield by buying back or paying off this note for $20, Section 8 - Part 1 of 2: Wealth Building Page 5

212 Example #2: Paying off a balloon note that has payments Original Note was for $150,000 at 0% interest with $800 monthly payments and balance due in 84 months. You have paid on this note for 26 months. There are 58 payments remaining. Enter: PV = $150,000 I = 0% Pmt = $800 N = 84 Solve for: FV = $82,800 Enter 4 of 5 variables Solve for: PV $150, $67, Present Value I 0.00% % Interest annually Pmt $ $1, Payment monthly N Number of payments FV $0.00 $82, Future Value Enter: FV = $82,800 Enter: N = 58 Solve for: PV = $129,200 PV $150, $129, Present Value I 0.00% #NUM! Interest annually Pmt $ $4, Payment monthly N Number of payments FV $82, $103, Future Value Enter: I = 18% Solve for: PV = $65, PV $150, $65, Present Value I 18.00% #NUM! Interest annually Pmt $ $4, Payment monthly N 58 #NUM! Number of payments FV $82, $282, Future Value You will get an 18% yield by buying or paying off this note in full for $65, Section 8 - Part 1 of 2: Wealth Building Page 6

213 Example #3 Buying a partial payment steam Original Note was for $150,000 at 0% interest with $800 monthly payments and balance due in 84 months. You have paid on this note for 26 months. There are 58 payments remaining. Seller wants $20,000 now in cash. How many payments can we buy back at an 18% yield? Enter: PV = $20,000 I = 18% Pmt = $800 N = 0 FV = $0 Solve for: N = Enter 4 of 5 variables Solve for: PV $20, $0.00 Present Value I 18.00% #NUM! Interest annually Pmt $ #DIV/0! Payment monthly N Number of payments FV $0.00 $20, Future Value Change fraction to a whole number, rounding up: Enter: N = 32 Solve for: I = 18.85% PV $20, $20, Present Value I 18.00% % Interest annually Pmt $ $ Payment monthly N Number of payments FV $0.00 -$ Future Value You will get an 18.85% yield by buying 32 payments for $20,000 now. They get $20,000 now verses $25,600 in payments over 32 months. Payments to seller will resume for after 32 months. They will still collect payments 33 to 60. Balloon to seller remains the same. Section 8 - Part 1 of 2: Wealth Building Page 7

214 What if we prefer 24% yield? Change 18% to 24% then: Solve for: N = 35 Enter 4 of 5 variables Solve for: PV $20, $18, Present Value I 24.00% % Interest annually Pmt $ $ Payment monthly N Number of payments FV $0.00 $2, Future Value You will get a 24% yield by buying 35 payments for $20,000 now. They get $20,000 now verses $28,000 in payments over 35 months. Payments to seller will resume for after 35 months. Section 8 - Part 1 of 2: Wealth Building Page 8

215 Example #4 How to get 35% return on your extra cash You're paying a seller $1,000 a month at 0% on a note and there's more then 12 months left on the note. You raised more cash then you need this month so you want to invest it to pay off your debt at a discount. You tell one of your sellers that you have come into some extra cash and you're looking to pay off some of your debts early. You ask if he could use $10,000 now instead of the next 12 payments of $1,000 each. Then the payments would resume after the 12th month. If he says yes, what is your yield? Enter: PV = $10,000 I = 0% Pmt = $1,000 N = 12 FV = 0 Solve for: I = 35.07% Enter 4 of 5 variables Solve for: PV $10, $12, Present Value I 0.00% % Interest annually Pmt $1, $ Payment monthly N Number of payments FV $0.00 -$2, Future Value Whenever you buy 12 payments for the price of 10, you get a 35% yield! What is the note had 7% interest? PV $10, $11, Present Value I 7.00% % Interest annually Pmt $1, $ Payment monthly N Number of payments FV $0.00 -$1, Future Value It doesn't change the results. It works no matter what rate the note is written at. End of Part 1 of 2 Section 8 - Part 1 of 2: Wealth Building Page 9

216 Action Notes: Customer Service: (719) Ext. 105 Fax: (719) Sales & Coaching Support: Section 8 - Part 1 of 2: Wealth Building Page 10

217 The Ultimate Strategy for Buying & Selling Houses Creating a Free & Clear Real Estate Money Machine with Richard Roop and Dan Doran Section 9 Leveraging Your Time & Money: Making More Money with Less Effort Section 9: Leveraging Your Time & Money Page 1

218 Section 9 The Ultimate Strategy Creating a Free & Clear Real Estate Money Machine Leveraging Your Time & Money: Making More Money with Less Effort In this section we will cover: Understanding the Business Effectiveness Wheel How to systemize, delegate and outsource everything you can t do or don t want to do Hiring tips Bonus Coaching Call How to Increase Your Productivity 400% within 60 Days Bonus Training System The ability to leverage your time, money and resources is already incorporated into The Ultimate Strategy investing system You will deal mostly with qualified prospects who can say yes if properly motivated as you focus on sellers with equity. You ll spend less time sifting and sorting through leads to find deals with true potential. Marketing to buy is easier as we simply rely on established and proven direct mail campaigns which can be easily outsourced or systemized. No need to create, test and implement all the different forms of geographic marketing for generating leads. Determining which appointments to go on is an easy decision. If there s equity go. You can spend less time gathering information on the phone and do more in person as you build rapport. It s also easier to have someone else book and manage your appointment schedule. Deal structuring is fast and systematic when use and begin to master the Free & Clear Offer Generator software. Deciding on what you can offer can take minutes, not hours or days. You ll either hold or sell with wraparound financing. This simplifies your exit plans and the process for getting properties occupied. How you fund your deals is streamlined down to just seller carryback financing and no bank qualifying collateral loans. You can avoid the time, energy and challenges relying on mortgage brokers, real estate agents and banks. You can focus on collecting cash when you buy and setting up predictable cash flow each month. This saves you the time you might otherwise use scrabbling for ways to pay yourself or pay your bills each month. Section 9: Leveraging Your Time & Money Page 2

219 Understanding the Business Effectiveness Wheel Marketing Systems Buying Systems Selling Systems Raising Funds Systems Financial Management Systems Level III Business Development Systems Administrative Systems Personal Development Systems Section 9: Leveraging Your Time & Money Page 3

220 Scoring yourself and filling out your wheel Section 9: Leveraging Your Time & Money Page 4

221 Marketing: The Key to Cash Profits Made Easy Getting your message out and generating responses Generate quality leads cost effectively Use proven, done-for-you direct mail marketing campaigns Get sellers with equity calling you daily to buy their house How to systemize, delegate and outsource Systemize by o Creating and focusing on priority goals o Operating with a marketing plan o Blocking out regular time for marketing o Using the 6 M's of marketing to create campaigns o Using proven marketing messages and media o Using goal implementation graph (GIG) to track progress Delegate by o Identifying roles and responsibilities Whose job is it to generate leads? o Hiring Administrative assistant Marketing manager Virtual assistant Outsource to o Mailing list broker o Print and mail house Systemize using o Free recorded messages o Buying website o auto-responders Training o Section 9: Leveraging Your Time & Money Page 5

222 Prescreening & Planning Your Exits: Identifying Golden Opportunities in Minutes Handling responses Capture leads 24/7 Gather property information quickly Qualify prospects in minutes Identify the deals with the highest profit potential Plan your exits How to systemize, delegate and outsource Systemize by o Having documented call handling procedures o Using goal implementation graph (GIG) to track response o Using a property information forms and online response forms o Using call handling outlines and scripts The W.W.O.W. formula Look for equity o Blocking out regular time for taking and returning calls o Blocking out appointment time slots in advance Be prepared to set an presentation appointment o Using 2-step marketing to pre-sell or answer common questions Buying website Free recorded message line Free special reports Delegate by o Identifying roles and responsibilities Whose job is it to take and return calls? Whose job is it to process s and gather information? o Hiring Administrative assistant Buying assistant Marketing manager Virtual assistant Outsource to Section 9: Leveraging Your Time & Money Page 6

223 o Answering service Systemize using o Prospect database o Contact and document management software Automated follow up Scheduled follow up tasks Electronic organization of property file Sharable with team o Dedicated phone number for sellers Office line Office hours After hours Mobile phone Live answer Voice mail Outside contractor o Call forwarding o Online databases MLS Tax assessor site RealQuest and Realist MapQuest Training o Section 9: Leveraging Your Time & Money Page 7

224 Free & Clear Deal Structuring: Creating Cash Now, Cash Flow and Cash Later Determining price and terms that will work for you Create compelling offers that get sellers what they want Create multiple offers in minutes Guarantee a net 15% profit on every house you buy How to systemize, delegate and outsource Systemize by o Using the Free & Clear Offer Generator software o Creating cash later, cash flow and cash now offers You won t know which is most important until meeting the seller o Blocking out regular time for reviewing property sheets o Using the Selling Checklist Delegate by o Identifying roles and responsibilities Whose job is it to plan exits and structure offers? o Hiring Administrative assistant A buying or acquisitions manager Outsource to o Bonus coaching calls TUS members monthly group call TUS members Deal Structuring forum Weekly Million Dollar Coaching calls Boot camp attendee alumni benefits Coaching Captains for Million Dollar Coaching members Training o Section 9: Leveraging Your Time & Money Page 8

225 Negotiating: Mastering the Secrets of the Pros Converting leads into deals Do a value building presentation Build trust and rapport Uncover hot buttons Overcome any objection Get your offers accepted How to systemize, delegate and outsource Systemize by o Doing a pre-call in the office o Doing a pre-call in the car o Blocking out enough time between appointments o Delivering a structured presentation every time Cover key selling points without fail Overcome objections in advance Share media proof and testimonials o Using an seller appointment routine Approach Presentation Close Take 5 no s o Having appointment packages prepared and available Blank contracts and agreements Credibility kit and business cards Pens, calculator, calendar and appointment book Property information file Delegate by o Identifying roles and responsibilities Whose job is it to present offers, negotiate and close? o Hiring A buying or acquisitions manager To meet with sellers Section 9: Leveraging Your Time & Money Page 9

226 Buying or administrative assistant Processing contracts Managing and rescheduling appointments o Contracting with Title companies Closing attorneys Home inspectors Appraisers Real estate agents Systemize using o Sales Mastery best practices and resources o Telephone presentation appointments with out of the area sellers FedEx Fax o Contact and document management software Managing follow up calls, tasks and appointments o Closing Checklist Mortgage verification Title search Raising funds Inspections Training o Section 9: Leveraging Your Time & Money Page 10

227 Funding & Raising Cash: Buying Better than No Money Down Financing your real estate deals and business operation Avoid using your own cash or credit Create 0% owner financing Raise private and hard money Collect extra cash when buying How to systemize, delegate and outsource Systemize by o Pulling out extra cash when buying Build up a 6 or 12 month reserve account o Creating and focusing on goals for raising cash Include goals in the marketing plan Take one prospect to lunch each week o Blocking out regular time for raising cash o Using the 6 M's of marketing to create campaigns o Using goal implementation graph (GIG) to track progress o Using a structured presentation o Flapping your lips to everyone Delegate by o Identifying roles and responsibilities Whose job is it to raise funds to close deals? Whose job is it to find and follow up on private investors? o Hiring Buying or acquisitions manager Buying assistant Administrative assistant Marketing manager Systemize using o Buying web site Private lender web page Downloadable presentation or information kit Interest opt-in list and form Section 9: Leveraging Your Time & Money Page 11

228 Training o Section 9: Leveraging Your Time & Money Page 12

229 Selling or Occupying Quickly: Creating Multiple Paydays Converting captured equity into cash profits Occupy houses in 60 days or less Offer buyers one of the best deals on the market Sell on wraparound financing Generate predictable monthly cash flow How to systemize, delegate and outsource Systemize by o Blocking out regular time for working your exits o Using the 6 M's of marketing to create campaigns o Becoming a big fish in a small pond Delegate by o Identifying roles and responsibilities Whose job is it to get houses ready? Whose job is it to manage marketing systems? Whose job is it to talk to and negotiate with buyers? o Hiring Selling manager Selling or administrative assistant Marketing manager Property manager Real estate agent Outsource by o Mailing list broker o Print and mail house o Staging company o Answering service o Mortgage broker Systemize using o Classified ads o Lockboxes o Staging Section 9: Leveraging Your Time & Money Page 13

230 o Selling web site Free special reports and FAQ List of homes for sale Buyer interest web form Opt-in buyer list o Free recorded messages Property for sale info Home buyer programs and benefits o Prospect database o Contact and document management software Automated follow up Scheduled follow up tasks o Dedicated phone number for buyers Office line Mobile phone Outside contractor o Call forwarding Training o Section 9: Leveraging Your Time & Money Page 14

231 Million Dollar Coaching Time Blocking Goal Setting Marketing Plan & GIG Level 3 Business Management Business Effectiveness Wheel FREE $97 BONUS COACHING CALL! o Hiring Tips with Willie Hooks o Related Resources Marketing Mastery for Real Estate Entrepreneurs 4 day boot camp and ongoing support program Business Mastery for Real Estate Entrepreneurs Accelerated Level III Business Development Home Training system Sales Mastery for Real Estate Entrepreneurs Home Training System Secrets to the approach Secrets to the presentation Secrets to the close Marketing Mastery Training Collection Volume 5: Profits without You! Systemize, Delegate & Outsource Includes: o Creating & Operating a Multi-Million Dollar Business for Accelerated Growth How to Make More Money Working Less o Automated Marketing Systems that work 24/7 Handling More Leads with the Internet and Phone Services o Selling Houses on Autopilot Handling Buyers through Delegation, Outsourcing and Systems Marketing Mastery Training System FREE $97 BONUS TRAINING! How to Increase Productivity 400% within 60 Days o o Password: confident Sales Team Live Done For You marketing Printing, mailing and list acquisition Section 9: Leveraging Your Time & Money Page 15

232 Pre-Call Outline Marketing Mastery Training System -August 2006 How to Increase Your Productivity 400% within 60 Days With Richard Roop and Dan Doran A presentation for both entrepreneurs and their assistants A busy executive needs quality help to create, build and grow a successful business. Who is the executive? You are the real estate entrepreneur. You re the founder and CEO of a multi-million dollar real estate investment company -- whether you ve already acquired millions dollars in real estate already or not. You first need a personal assistant so you can Cut out 80% of the grunt work you re doing now, without decreasing your profitable results Buy and sell houses when you still have a full-time job or business Take calls from sellers live and get more deals Delegate anything and everything you can which is not M.O.R.E. first Focus on doing only the $100 to $500 an hour activities Spend the limited number of spare hours you on M.O.R.E: Marketing o For buyers, sellers and private investors Offers o With meeting with and presenting offers to buyers, sellers and private investors Raising Cash o Collecting cash when buying, borrowing against equity properties you own, getting your houses occupied fast and cashing out your existing buyers with new loans Exit o Create and execute your plan to get your houses flipped, fixed, funded and occupied Delegate anything and everything you can which is not M.O.R.E. first You want to get others to do what you don t want to do or what you are not best at. You want to concentrate and spend more time doing what you love most in your business: Create your crap list Create a list of the little details than need to be handled Create a list of actionable items for buying and selling Select those task which could be assigned to someone else What you want to delegate becomes a new job description Find some who d be good and would love to take all that over Delegate as much as possible you do MORE Section 9: Leveraging Your Time & Money Page 16

233 HOW can you convert more leads into appointments that end up as super profitable deals? Be able to take calls live Be able to return calls within hours Have an assistant who can research and complete a property file quickly Have time to construct multiple offers and exits plans Be able to meet with sellers the same day or within 24 hours WHY you should hire an assistant to take over your crap list: Because it s crap to you and a challenge or delight for others Your time is more valuable doing MORE The crap still needs attention If you don t do it, the crap will pile up high You ll be able to handle more leads and maximize the value of each You ll be more calm and collected, not stressed and frustrated You ll sleep better at night You ll be able to go on more appointments perhaps potential deal that has equity You pay your assistant well but they ll help you net even more profits It is the only way to truly grow beyond common barriers of capacity They ll may do things that you want done but you may never get to o Like proper bookkeeping o Timely collections o Saving money on regular purchases o Filing and organizing o Managing equipment and supplies o Take calls from anyone else than someone who can make you om HOW do you to find the right person for the position? Crystallize your thinking about what exactly you want hand how it would look Decide on existing skills or experience your require Decide on specific traits and characteristics you want in that person Realize you are not looking for someone like yourself Hire your weakness WHERE do you find them? o Steal from other companies o Distribute flyers at your REIA club o Place an ad in the local, weekly paper or daily paper o Network and put the word out o Send a postcard to your contact list WHAT are the top 3 or 4 (not 17) attributes/characteristics you should be seeking in an assistant? Organized o Computer savvy and experienced o Flexible, like variety and challenges o Good communicator o??? WHEN do you bring an assistant on board? Section 9: Leveraging Your Time & Money Page 17

234 New investors ASAP, it is an investment that will pay for itself fast Active investors within 60 days Seasoned pros yesterday You never what to be doing everything yourself quickly fix that WHAT are the pros and cons of employees vs. temps vs. independent contractors? Your can direct what employees do, where they do it and when they do it No payroll, tax withholding or desk for independent contractors Temps can be a good start and then turn into full-time employee WHERE can have your assistant work? Their home or office, or your home or office? Best to have them near you in the same building You can start by outsourcing to service companies o Live answering service o Mailing houses o Bookkeepers o Payroll services o Home stagers o Process servers o Computer maintenance and networking You can hire independent contractors o You pay for a result o You typically cannot require them to have a workstation at your office o You typically cannot dictate their hours, whether full or part time o You should have a written contract o You are still the boss You can employ your assistant o If you run a corporation or LLC, you should be taking a salary o If you don t have a corporation or LLC, have your assistant work on it o You do not have to have a corporation or LLC go buy houses o Let your assistant figure out how to setup payroll for them, you and others o Let your assistant research guidelines you might have to follow as an employer o Create a plan and atmosphere for them staying with you long-term o Have them document the job o Have them work at replacing themselves, so they can take on new responsibilities HOW much should you pay? o Check local salaries and wages o If they help you grow, there wage should grow o Offer bonuses for each house bought ($25 to start) o Offer bonuses for each house occupied o Offer bonuses for each house cashed out WHAT other incentives can you offer to attract and keep good people? o Consider doing a quarterly profit and loss report and share a % of profit with staff o Staff share based on % of hours work related to on employee hours o Remember their anniversary they will o Offer birthdays off with pay o Offer paid federal holidays o Entrepreneurs usually do not offer health insurance o Offer one week paid vacation year one, 2 weeks after year 2 o Recognize good work with words, certificates and gifts o Let them know they (and their families) are appreciated o Supply popcorn, sodas, coffee and drinking water at office o Allow them to use company car for errands, etc. Section 9: Leveraging Your Time & Money Page 18

235 o Reimburse documented mileage for company errands if not in company car HOW to hire now and the setup the position as you go o Create the position around what your assistant is best at and prefers to do o Consider taking on another part-time person for gaps HOW do you train, manage and support your assistant when you have no time now? HOW do you avoid the cost of hiring the wrong person or poorly managing them? o Do be in a hurry hire slow but fire fast o Let them know they are on a 90 day trial period o Interview a number of candidates o Trust your gut o Time block time to train each day then each week o You can only expect what you inspect WHAT are details, roles, tasks and responsibilities your assistant can take on? See Office Manager Duties list HOW can your assistant help you handle your buyers and sellers? See Sales Manager Duties list See Acquisitions Manager Duties list WHO do you hire next and what would they be doing See Sales Manager Duties list See Acquisitions Manager Duties list Section 9: Leveraging Your Time & Money Page 19

236 Action Notes: Customer Service: (719) Ext. 105 Fax: (719) Sales & Coaching Support: Section 9: Leveraging Your Time & Money Page 20

237 The Ultimate Strategy for Buying & Selling Houses Creating a Free & Clear Real Estate Money Machine with Richard Roop and Dan Doran Section 10 How to Sell with Wraparound Financing: Creating Reliable Equity and Income Spreads Session 10: How to Sell on Wraparound Financing 1

238 Section 10 The Ultimate Strategy Creating a Free & Clear Real Estate Money Machine How to Sell with Wraparound Financing: Creating Reliable Equity and Income Spreads This training module covers: What is wraparound owner financing? What are some benefits of wraparound owner financing? What is an unsecured real estate loan? What is a secured real estate loan? How do you collateralize or secure a wraparound loan with real estate? What is The Ultimate Strategy? How does wraparound financing work? What s the difference of selling on a wrap when buying subject to verses buying with The Ultimate Strategy? What are the advantages of selling on a wrap verses holding? What are the disadvantages of selling on a wrap verses holding? What are the risks to the seller? How can the seller mitigate these risks? What are the risks or concerns to the buyer with wraparound financing? How can you satisfy a buyer s concern about these risks? When do you use a wraparound mortgage and put the buyer on title? When do you use a land contract putting the buyer s deed in escrow? How do you structure an option for the right to buy back the property? How do you use a substitution of collateral clause when buying? How do you substitution of collateral if needed? EXAMPLE of selling on a wrap using The Ultimate Strategy Sample Wraparound Documents Session 10: How to Sell on Wraparound Financing 2

239 What is wraparound owner financing? Wraparound owner financing is a seller financing arrangement in which the seller uses part of the buyer's payments to make the payments on an existing loan (called the underlying mortgage). The buyer owns the property subject to the underlying mortgage, but does not assume it. Typically, the seller receives an interest rate spread and benefits from paying a lower interest rate on the underlying mortgage and then receiving a higher rate of interest from the buyer. This interest rate spread can create a positive cash flow to the seller or can be used to more rapidly reduce the principal on the underlying mortgage. What are some benefits of wraparound owner financing? You can sell to a buyer without them qualifying for a bank loan You can sell faster in slow markets and reduce holding costs You can sell for top dollar and make more profit You can finance buyers despite recent changes in the lending industries You can generate a higher monthly income on the properties you buy You can eliminate your landlord costs and risks of renting properties You can collect higher interest than you re paying on underlying mortgage You can pay down your underlying debt faster then debt you re collecting on What is an unsecured real estate loan? It s a promissory note accepted without any real estate being used as collateral in which the lender can seize if the borrowers defaulted on the repayment plan. It s possible to get a seller to take back a small unsecured note when you buy You d never take back an unsecured not when selling What is a secured real estate loan? A secured real estate loan includes a note and a mortgage to the lender The note is the written promise to pay the lender on the loan The mortgage is a security instrument to protect the lender The security instrument could be a recorded lien on county records The specific security instrument recorded varies from state to state: o Mortgage Session 10: How to Sell on Wraparound Financing 3

240 o o o o o Deed of trust Trust deed Wraparound mortgage All inclusive deed of trust All inclusive trust deed (AIDT) The security instrument could also be an agreement This agreement places the borrower s deed in escrow The lender could escrow or hold the deed but it is typically a third party The deed is recorded only after the loan is paid off in full The deed is usually recorded at the time the borrower gets a new bank loan or resells the property The type of agreement used for placing a deed in escrow varies from state to state but essentially work the same way: o o o o o o o o Contract for deed Agreement for deed Bond for deed Bond for title Land contract Installment sale contract Installment land contract or ILC Etc. How do you collateralize or secure a wraparound loan with real estate? Use the recorded security instrument most common in your state: o o Wraparound mortgage All inclusive deed of trust Or use a deed in escrow agreement commonly used in your state: o o Contract for deed Agreement for deed Session 10: How to Sell on Wraparound Financing 4

241 o o Installment land contract Etc. For the purpose of this training module: We will refer to just 2 terms for securing wraparound financing o o Mortgage for a recorded lien Land contract for a deed in escrow We will use the singular term of underlying mortgage even though it may be o o o A deed of trust Several mortgages Several deeds of trust We will assume the underlying mortgage o o Does not have a due on sale clause, or Includes a provision which allows the seller to sell on a wrap as long as seller continues to make payments directly to the lender Using The Ultimate Strategy (TUS), you will normally be wrapping several underlying mortgages: A small first mortgage from a hard money or private lender A larger second mortgage with the previous owner You would then technically hold a third lien position In some cases, you might wrap three underlying loans: An existing first mortgage with a bank taken subject to A small second mortgage with private investor A third mortgage with the previous owner You would then be in fourth position What is The Ultimate Strategy? It is a real estate investing model Session 10: How to Sell on Wraparound Financing 5

242 Investing models differ by o o o What you buy How you fund it and How you sell it The Ultimate Strategy mainly targets single family houses that have a lot of equity but can be applied to any real estate with a good amount of equity You raise cash using The Ultimate Strategy by borrowing against the equity on the day you buy using o o A hard money loan or, better yet, a A private investor loan You fund your deals using The Ultimate Strategy by o o Pulling all the cash needed to do the deal (or more) Then structuring 0% financing on the seller s equity The seller carry back loan is behind or subordinate to the first collateral loan By creating an offer at 0% financing with the seller you can pay more for the property when stretched out over many years You can pay more because during that term you profit from o o The positive cash flow each month and/or The rapid equity pay down on the seller s mortgage One exit is to hold the property many years as a rental The other exit is find a buyer immediately and sell with owner financing Two types of owner financing used with The Ultimate Strategy to sell include: o o A rent-to-own or lease option program (essentially the same thing), or Wraparound owner financing You can gradually pay off your underlying mortgages with the property s income You can pay off your underlying mortgages in full over a long period of time or with a balloon payment in several years when your buyer gets a permanent bank loan There s no hurry to get a buyer refinanced when your paying 0% on a seller s equity The Ultimate Strategy is a complete investing model that works at any time, on any property in any market climate, anywhere in the nation The Ultimate Strategy gets you cash now, cash flow and cash later A key to using The Ultimate Strategy is having the ability of selling on wraparound financing Session 10: How to Sell on Wraparound Financing 6

243 How does wraparound financing work? Seller sells the house collecting a down payment from a buyer Seller acts as the lender and finances the balance owed from buyer Seller no longer owns the house Seller is now a note holder in second (or third) position Seller may or may not remain on deed in county records o o If using a mortgage, the buyer goes on title If using a land contract, the seller remains on title The original underlying mortgage is not paid off but is wrapped Seller remains liable for on original mortgage and continues to pay the underlying mortgage payment Buyer does not assume the underlying debt The instrument used for a wrap spells out the seller s obligation to keep the underlying mortgage current. Therefore, both seller and buyer sign the agreement Buyer signs a note to seller that wraps the original note Buyer makes payments to seller each month Seller normally charges a higher interest than on the underlying mortgage Seller must have an assumable mortgage to avoid a due on sale clause If there is a due on sale clause, seller must disclose that to buyer Buyer typically pays the costs of closing the wraparound loan The risks of wraparound financing must be disclosed to buyer Seller must be willing to take on the risks of a buyer defaulting Buyer can deduct all mortgage interest paid on a yearly basis to seller Seller can deduct all interest paid on an underlying mortgage Seller is obligated to send buyer, each year, an IRS Form 1098, reflecting the mortgage interest buyer paid to the seller Adequate homeowner insurance must be maintained by buyer The insurance policy includes both the seller and underlying lender as beneficiaries Session 10: How to Sell on Wraparound Financing 7

244 What s the difference of selling on a wrap when buying subject to verses buying with The Ultimate Strategy? Buying subject to mean taking over an underlying mortgage with the seller s permission but without asking the lender. You take ownership without paying off the lender and you simply agree to make those payments directly to the lender You must disclose the risks involved to the seller when buying subject to There will be no due on sale provision to contend with relating to an underlying mortgage when you create 0% financing on a free and clear house A couple of states have laws which prohibit buying subject to and then selling on a wrap Insurance is a bit convoluted when buying subject to and then selling on a wrap Targeting free and clear houses using The Ultimate Strategy sometimes attracts some sellers who actually do have a first mortgage The Ultimate Strategy deal structuring formulas allow you raise enough cash to pay off a small first mortgage plus recover the added expenses of doing so Buying houses subject to and creating 0% financing on a large amount seller s equity will be covered in the next training module for owners of The Ultimate Strategy Real Estate Training System. Up-to-date instructions for buying houses subject to as a specific real estate investing model will also be covered in a future Marketing Mastery Training Call. What are the advantages of selling on a wrap verses holding? You can get a higher note payment than market rent Your buyer pays annual property taxes, insurance and homeowner association dues You will no longer be responsible for maintenance or repairs You will reduce or eliminate the costs of vacant rental You can get a larger down payment verses o o A non-refundable purchase deposit or option fee from a tenant buyer A refundable security deposit from a tenant You will lock-in a resell price at today s market value which can offer some protection against a downward trending market What are the disadvantages of selling on a wrap verses holding? Seller does not get depreciation since the property has been sold Seller does the benefit of appreciation unless the house is repossessed Session 10: How to Sell on Wraparound Financing 8

245 Seller may be taxed as a real estate dealer Seller may not be able to get capital gains tax treatment What are the risks to the seller? Seller may have to foreclose if buyer defaults Seller would incur the legal costs of foreclosing Seller would still be making underlying payments during foreclosure process Foreclosure process taking a long time if buyer files bankruptcy Seller may have to repair the property to remarket Seller may get a property back that has gone down in value Profits could be taxed as ordinary income instead of an installment sale Buyer could want clear title to refinance or sell sooner than you like Seller may have to pay for taxes or insurance out-of-pocket to protect the collateral and then charge those amounts to the buyer if buyer failed to make those payments How can the seller mitigate these risks? Investigate and understand how long it could take to get the property back o o Varies from state to state Varies whether you use a mortgage or a land contract Use a land contract instead of a recording buyer s deed o o o You will not need to foreclose to get the deed back Some states you may need to foreclose if the buyer fights you on it In some states it is easier to get a land contract buyer out than a tenant Collect a down payment large enough to cover the costs of repossession o o 10% or more is a good rule 5% could be OK if you can get the property back quickly in you state Sell to buyers with better credit o They have better history and may want to protect their credit rating Sell to buyers with a more stable job history Session 10: How to Sell on Wraparound Financing 9

246 o o The longer time on the job the less likely they will want to move away You can garnish wages as a collection tool if awarded a judgment Sell to buyers who own other assets o Dead broke buyers have fewer options if they get into a financial bind Get a co-signer Project potential appreciation or depreciation when buying o o Buy projecting a lower resell price if you believe you may have to take the houses back at a lower future value Using the lower resell price when constructing offers to buy can protect you and ensure that you buy it right Rent to the buyer first for at least one year o o You offer to sell with owner financing could be contingent on your buyer making 6 or more on time rental payments as a tenant buyer Holding the property at least a year before selling on a wrap may get you better income tax treatment Take title in an entity that holds investments, not a dealer entity o o Buy and sell properties you intent to flip in one entity such as an S-Corp that can offset the income by incurring most of the expenses Hold property as investments in a different entity such as an LLC Escrow or save part of your income from each deal and use it if and when needed Include a prepayment penalty in your buyer s note o o 6 months of mortgage interest or highest amount allowed by law For 5 years or longest period allowed by law Get an option to buy the house back when the buyer want to sell Include a substitution of collateral clause in your underlying mortgage Set up an escrow account for taxes and insurance with the buyer o o Having them pay you 1/12 of the project annual costs each month Some states require you do this for the taxes when using a land contract Have a local real estate attorney prepare or review your agreements o o Especially when you first begin doing these types of transaction The cost will be reduced or eliminated once the agreements you normally use are approved Session 10: How to Sell on Wraparound Financing 10

247 How do you structure an option for the right to buy back the property? How do you use a substitution of collateral clause when buying? How do you substitute collateral if needed? These topics are covered later in this training session, but first What are the risks or concerns to the buyer with wraparound financing? An underlying lender can foreclose if the seller does not make the payments Buyer cannot sell or refinance without paying a prepayment penalty Buyer cannot sell without first giving the seller the option to buy the house back If the buyer s deed is in escrow then o o Buyer cannot get a mortgage to borrow against the property without paying off the wrap loan Seller could have a IRS tax lien or judgment attached to the property How can you satisfy a buyer s concern about these risks? You can offer proof that underlying payments are being made upon demand You can provide buyer with an authorization to release loan information You can have a neutral party service the incoming and outgoing payments You can offer to waive the prepayment penalty upon successfully moving the underlying mortgage to other properties You can offer loan cash to buyer in the future at predetermined rate and terms through a modification of the note You can have property titled in a land trust when buying or before selling You can offer a wraparound mortgage instead of a land contract for a well qualified or lower risk buyer You can offer to record a land contract if buyer s deed is in escrow When do you use a wraparound mortgage (or all inclusive deed of trust) and put the buyer on title? When you have more money down or you are somehow more protected in the event of foreclosure Session 10: How to Sell on Wraparound Financing 11

248 When your buyer insists on being on the deed and you still want to do the deal When it s easier to get that house back verses a land contract When do you use a land contract putting the buyer s deed in escrow? When it s easier to get that house back verses taking back a mortgage When you want the ability to borrow against your equity later o A pro seller land contract allows you to When your buyer has a tax lien or judgments that could attach to the property once they take title When you want to avoid recording any documents of your transaction on public record o Helpful if your buyer suddenly disappeared on you which can happen Session 10: How to Sell on Wraparound Financing 12

249 How do you structure an option for the right to buy back the property? This is covered in Module 12 of The Ultimate Strategy real estate training system on Understanding the Paperwork. Agree on a purchase price EXAMPLE: o o o Seller s purchase price will be 90% of the as is market value of the property at the time of seller exercises the option. Market value will as determined by an independent appraisal made or ordered by the seller at seller s expense. If buyer disagrees on this appraised value, the buyer must order two more independent appraisals within 7 days of contesting the value at buyer s expense and the average of these three appraisals with establish the market value. Agree on the terms of their equity EXAMPLE: o o o Buyer agrees to receive their equity, if any, in the form of a balloon note and mortgage secured by the property. The note will be due 36 months after closing with no penalty for prepayment Should the buyer want immediate cash for their equity at closing, seller may offer to pay the buyer cash at closing for the note (part or all) at a discount that is acceptable to both seller and buyer. Agree on how much time you have to exercise your option once notified and how the buyer will notify seller of their desire to sell EXAMPLE: o o Seller will have 60 day exclusive option to buy the house back upon written notice of buyer s desire to sell being delivered by certified mail to the seller. If seller does not exercise the option then buyer may sell to another buyer. Include and explain benefits to the buyer if you buy the house back o o If seller exercises this option, seller will waive any prepayment penalty. Seller will satisfy buyer s outstanding loan balance with the net proceeds of the sale. Remember, you will have the right but not the obligation to buy the house back You may decide you prefer to be cashed out instead if o o o Your balloon payment to the underlying mortgage is coming due You can pay off the underlying mortgage early at a discount You can move the underlying mortgage obligation to other properties How do you use a substitution of collateral clause when buying? Session 10: How to Sell on Wraparound Financing 13

250 When you create a low or 0% interest rate note and mortgage with a seller for their equity, you may need the right to move the mortgage to avoid paying it off earlier than the agreed upon maturity date. Stretching out the repayment many years out might have been required to give the seller the price they wanted so it might not make sense to pay them off early. Your purchase agreement to buy the house will spell out the terms of the owner carry back note. This gives the closing agent instructions on how to create the note. Among those details include: o "Buyer has the right to substitute collateral of equal or greater value on the mortgage or trust deed executed in favor of the seller at any time, with the seller having the right of approval, such approval not being unreasonably withheld." That clause should then be included on the note. How do you substitute collateral if needed? Contact the note holder and let them know you need to get a release. If desired, offer to pay off the note in cash at a discount Otherwise, let them know you will be moving their mortgage to another property. Identify a property and get the note holder s approval Best to use a closing agent to create and prepare all the documents required Create a new note written without any changes to the original term except for changing o o The note amount to the remaining principal balance as of the date you expect them to receive the new note and The property address Include a provision in the note that references details of the original note being cancelled by this new note o This note pays off in full and a previous note dated 2/17/2003 secured by 1234 Main Street. Create a new mortgage written without any changes in terms except for changing o o The amount owed to the new principal balance and The property being used as collateral Create a payoff statement for the note holder to sign spelling out what they have agreed to receive as a pay off on the original note o This is usually just details of the new note and mortgage but could involve Session 10: How to Sell on Wraparound Financing 14

251 Some cash also or Multiple notes on multiple properties. Create a mortgage release or release of deed of trust for them to sign. Give exact instructions to note holder on what to sign, where to sign and how to mark the original note paid in full. Once the note holder has the new note in hand (or in escrow) they can cancel the original note and sign the release The new mortgage is typically recorded for the note holder who ll just receive a photocopy until the original is mail back by the county recorder. This process is covered more in Module 12 of The Ultimate Strategy real estate training system on Understanding the Paperwork. Session 10: How to Sell on Wraparound Financing 15

252 EXAMPLE of selling on a wrap using The Ultimate Strategy Covered on the training audio as time permits You buy a $200,000 house for $175,000 from a seller with a debt free house Seller agrees to take $10,000 down and $175,000 due in 5 years Seller agrees to take $600 a month in principal only payments You borrow o o o $10,000 for your buy and hold costs $10,000 for repairs $10,000 for the down to the seller. You get the $30,000 from a private investor at o o o o 9% interest No points Due in 5 years $225 interest only payments Your investor gets a first mortgage position Seller takes back a $165,000 on second mortgage o o No payment No interest You sell for $200,000 on wraparound financing using a land contract Your buyer pays $20,000 down plus closing costs and owes you $180,000 The $20,000 down is extra cash as the entire deal was funded by your private lender You collect 7% interest only payments from you buyer of $1,050 a month Your buyer pays taxes and insurance and you have no ownership costs You now owe $30,000 plus $165,000 or a total of $195,000 Session 10: How to Sell on Wraparound Financing 16

253 Your buyer owes you $180,000 You are overleveraged by $15,000 but o o You ll pay down the $165,000 rapidly You can move the sellers debt around for 5 years if needed You pay down the seller $600 each month You pay $225 each month in interest to private lender You collect $1,050 in interest only from buyer You collect a positive cash flow each month of $225 After 5 years o o o You owe the seller a $129,000 balloon You owe your private lender a $30,000 balloon You buyer owes you a $180,000 balloon o Your backend equity is $21,000 You collected o o o $20,000 when bought $13,500 in cash flow and $21,000 on the back end o A profit of $54,500 Less transaction costs not covered by the $20,000 borrowed upfront If you offered seller $10,000 more (or $185,000) you d still do nicely Session 10: How to Sell on Wraparound Financing 17

254 Sample Wraparound Documents For illustrative purposes only Refer to Module 12 of The Ultimate Strategy real estate training system for actual suggested documents to use Session 10: How to Sell on Wraparound Financing 18

255 WRAP AROUND MORTGAGE SECURITY AGREEMENT THIS MORTGAGE is made and entered into this day of, 20, by and between, whose address is, (hereinafter referred to as "Mortgagor") and, whose address is, (hereinafter referred to as "Mortgagee"). THIS IS A WRAP AROUND MORTGAGE SUBJECT TO THAT CERTAIN MORTGAGE HERETOFORE EXECUTED IN FAVOR OF, DATED THE DAY OF, 20, AND RECORDED IN OFFICIAL RECORDS BOOK, PAGE, ON THE DAY OF, 20, IN THE ORIGINAL PRINCIPAL AMOUNT OF Dollars ($ ). Mortgagor agrees to comply with all the terms and conditions of the above described mortgage, including, but not limited to, those concerning taxes and insurance, other than with respect to the payment of principal or interest due under said mortgage. If Mortgagor herein shall fail to comply with all the terms, provisions and conditions of said mortgage so as to result in a default there under (other than with respect to payments of principal or interest due), that failure on the part of Mortgagor herein shall constitute a default under this Mortgage and shall entitle Mortgagee herein, at its option, to exercise any and all rights and remedies given the Mortgagee in the event of a default under this Mortgage. Mortgagor and Mortgagee hereby covenant and agree not to enter into any agreement with the holder of the above described Mortgage, modifying or amending any of the provisions dealing with payment of principal or interest under said Mortgage without the prior written consent of the other. If the Mortgagee hereunder shall default in making any required payment of principal or interest under the above described mortgage, the Mortgagor shall have the right to advance funds necessary to cure that default and all funds so advanced by Mortgagor shall be credited against the next installment of principal and interest due under the Note secured by this Mortgage. WITNESSETH, that in consideration of the premises and in order to secure the payment of both the principal and interest and any other sums payable on the note (as hereinafter defined) or this Mortgage and the performance and observance of all of the provisions hereof and of said note, Mortgagor hereby grants, sells, warrants, conveys, assigns, transfers, mortgages, and sets over unto Mortgagee, all of Mortgagor's estate, right, title and interest in, to and under all that certain real property situate in the County of, State of, more particularly described in Exhibit "A", attached hereto and made a part hereof, together with all buildings, structures and improvements of every nature whatsoever, now or hereafter located on said real property and all fixtures, appliances, apparatus, equipment, furnishings, heating and air conditioning equipment, machinery and articles of personal property and replacement thereof (other than those owned by lessees of said real property) now or hereafter affixed to, attached to, placed upon, or used in any way in connection with the complete and comfortable use, occupancy, or operation of the said real property, all licenses and permits used or required in connection with the use of said real property, all leases of said real property now or hereafter entered into and all right, title and interest of Mortgagor there under, including, without limitation, cash or securities deposited there under pursuant to said leases, and all rents, issues, proceeds, and profits from said real property and together with all proceeds of the conversion, voluntary or involuntary, of any of the foregoing into cash or liquidated claims, including, without limitation, proceeds of insurance and condemnation awards. The foregoing real property and tangible and intangible personal property are hereinafter referred to collectively as the "Mortgaged Property". Mortgagor hereby grants to Mortgagee a security interest in the foregoing described tangible and intangible personal property, to have and to hold the same, together with all and singular the tenements, Hereditaments and appurtenances thereunto belonging to or in any way appertaining thereto and the reversion and reversions thereof and all the estate, right, title, interest, homestead, dower and right of dower, separate estate, possession, claim and demand whatsoever, as well in law as in equity, of Mortgagor and unto the same, and every part thereof, with the appurtenances of Mortgagor in and to the same, and every part and parcel thereof unto Mortgagee in fee simple. Mortgagor hereby covenants with the Mortgagee that Mortgagor has a good and marketable title to an indefeasible fee estate in the real property comprising the Mortgaged Property; that said Mortgaged Property is subject to no lien, charge or encumbrance except such as Mortgagee has agreed to accept in writing and Mortgagor covenants that this Mortgage is and Session 10: How to Sell on Wraparound Financing 19

256 will remain a valid and enforceable mortgage on the Mortgaged Property subject only to the exceptions herein provided. Mortgagor has full power and lawful authority to mortgage the Mortgaged Property in the manner and form herein done or intended hereafter to be done. Mortgagor will preserve such title and will forever warrant and defend the same to Mortgagee and will forever warrant and defend the validity and priority of the lien hereof against the claims of all persons and parties whomsoever. Mortgagor will, at Mortgagor's cost, promptly and fully perform, execute, and acknowledge and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignment, transfers and assurances as shall from time to time be required by Mortgagee in order to preserve the priority of the lien of this Mortgage or to facilitate the performance of the terms hereof. If Mortgagor shall well and truly pay to Mortgagee Mortgagor's indebtedness, as evidenced by that certain promissory note (the Note) of even date herewith, or any renewal or replacement of such Note, executed by Mortgagor and payable to the order of Mortgagee, with interest and upon the terms as provided therein, and together with all other sums advanced by Mortgagee to or on behalf of Mortgagor pursuant to the Note or this Mortgage, the final maturity date of the Note and this Mortgage, as specified in the Note, and shall perform all other covenants and conditions of the Note, all of the terms of which Note are incorporated herein by reference as though set forth fully herein, and of any renewal, extension or modification thereof and of this Mortgage, then this Mortgage and the estate hereby created shall cease and terminate. Mortgagor covenants and agrees with Mortgagee as further set out below: 1. Payment. To pay all sums, including interest secured hereby, when due, payable by virtue of the Note and any renewal, extension or modification thereof, to be payable in lawful money of the United States of America at Mortgagee's aforesaid address, or at such other place as Mortgagee may hereafter designate in writing. 2. Taxes. a. To pay when due, and without requiring any notice from Mortgagee, all taxes, water rates, assessments of any type or nature and other charges levied or assessed against the Mortgaged Property or this Mortgage and produce proof thereof upon demand. To immediately pay and discharge any claim, lien or encumbrance against the Mortgaged Property which may be or become superior to this Mortgage and to permit no default or delinquency on any other lien, encumbrance or charge against the Mortgaged Property. b. If required by Mortgagee, to make monthly deposits with Mortgagee, together with and in addition to interest and principal, of a sum equal to one twelfth of the yearly taxes and assessments which may be levied against the Mortgaged Property, and one twelfth of the yearly premiums for insurance thereon. The amount of such taxes, assessments and premiums, when unknown, shall be estimated by Mortgagee. Such deposits shall be used by Mortgagee to pay such taxes, assessments and premiums when due. Any insufficiency of such account to pay such charges when due shall be paid by Mortgagor to Mortgagee on demand. If, by reason of any default by Mortgagor under any provision of this Mortgage, Mortgagee declares all sums secured hereby to be due and payable, Mortgagee may then apply any funds in said account against the entire indebtedness secured hereby. The enforceability of the covenants relating to taxes, assessments and insurance premiums herein otherwise provided shall not be affected except insofar as those obligations have been met by compliance with this paragraph. Mortgagee may from time to time at its option waive, and after any such waiver reinstate, any or all provisions hereof requiring such deposits, by notice to Mortgagor in writing. While any such waiver is in effect, Mortgagor shall pay taxes, assessments and insurance premiums as herein elsewhere provided. c. To pay promptly all taxes and assessments assessed or levied under and by virtue of any state, federal, or municipal law or regulation hereafter passed, against Mortgagee upon this Mortgage or the debt hereby secured, or upon its interest under this Mortgage; provided, however, that the total amount so paid for any such taxes pursuant to this paragraph together with the interest payable on said indebtedness shall not exceed the highest rate of interest permitted by law and provided that in the event of the passage of any such law or regulation imposing a tax or assessment against Mortgagee, upon this Mortgage or the debt secured hereby, that the entire indebtedness secured by this Mortgage shall thereupon become immediately due and payable at the option of Mortgagee. 3. Insurance. To keep the Mortgaged Property insured against loss or damage by fire, and all perils insured against by an extended coverage endorsement, and such other risks and perils as Mortgagee in its discretion may require. The policy or policies of such insurance shall be in a form of general use in the locality in which the Mortgaged Property is situated, be in such amount as Mortgagee may reasonably require, be issued by a company or companies approved by Mortgagee, and shall contain a standard mortgagee clause with loss payable to Mortgagee. Whenever required by Mortgagee, such policies shall be delivered immediately to and held by Mortgagee. Any and all amounts received by Mortgagee under any of such policies may be applied by Mortgagee on the indebtedness secured hereby in such manner as Mortgagee may, in its sole discretion, Session 10: How to Sell on Wraparound Financing 20

257 elect or, at the option of Mortgagee, the entire amount so received or any part thereof may be released. Neither the application nor the release of any such amounts shall cure or waive any default. Upon exercise of the power of sale given in this Mortgage or other acquisition of the Mortgaged Property or any part thereof by Mortgagee, such policies shall become the absolute property of Mortgagee. 4. Alterations; Modifications. To first obtain the written consent of Mortgagee, such consent to be granted or withheld at the sole discretion of Mortgagee, before a. removing or demolishing any building now or hereafter erected on the premises b. altering the arrangement, design or structural character thereof, c. making any repairs which involve the removal of structural parts or the exposure of the interior of such building to the elements, d. cutting or removing or permitting the cutting and removal of any trees or timber on the Mortgaged Property, e. removing or exchanging any tangible personal property which is part of the Mortgaged Property, or f. entering into or modifying any leases of the Mortgaged Property. 5. Waste; Repairs. To maintain the Mortgaged Property in good condition and repair, including, but not limited to, the making of such repairs as Mortgagee may from time to time determine to be necessary for the preservation of the Mortgaged Property and to not commit or permit any waste thereof. Mortgagee shall have the right to inspect the Mortgaged Property on reasonable notice to Mortgagor. 6. Applicable Laws. To comply with all laws, ordinances, regulations, covenants, conditions and restrictions applicable to the Mortgaged Property, and not to cause or permit any violation thereof. 7. Advancements. a. If Mortgagor fails to pay any claim, lien or encumbrance which is superior to this Mortgage, or when due, any tax or assessment or insurance premium, or to keep the Mortgaged Property in repair, or shall commit or permit waste, or if there be commenced any action or proceeding affecting the Mortgaged Property or the title thereto, or the interest of Mortgagee therein, including, but not limited to, eminent domain and bankruptcy or reorganization proceedings, then Mortgagee, at its option, may pay said claim, lien encumbrance, tax, assessment or premium, with right of subrogation there under, may make such repairs and take such steps as it deems advisable to prevent or cure such waste, and may appear in any such action or proceeding and retain counsel therein, and take such action therein as Mortgagee deems advisable, and for any of such purposes Mortgagee may advance such sums of money, including all costs, reasonable attorney's fees and other items of expense as it deems necessary. Mortgagee shall be the sole judge of the legality, validity and priority of any such claim, lien, encumbrance, tax, assessment and premium and of the amount necessary to be paid in satisfaction thereof. Mortgagee shall not be held accountable for any delay in making any such payment, which delay may result in any additional interest, costs, charges, expenses or otherwise. b. Mortgagor will pay to Mortgagee, immediately and without demand, all sums of money advanced by Mortgagee to protect the security hereof pursuant to this Mortgage, including all costs, reasonable attorney's fees and other items of expense, together with interest on each such advancement at the highest rate of interest per annum allowed by law and all such sums and interest thereon shall be secured hereby. 8. Appraisement. All sums of money secured hereby shall be payable without any relief whatever from any valuation or appraisement laws. 9. Default. a. If default be made in payment of any installment of principal or interest of the Note or any part thereof when due, or in payment, when due, or any other sum hereby, or in performance of any of Mortgagor's obligations, covenants or agreements hereunder, or in any other indebtedness encumbering the real estate herein, regardless of whether said encumbrance is superior to that created by this mortgage deed, all of the indebtedness secured hereby shall become and be immediately due and payable at the option of Mortgagee, without notice or demand both of which are hereby expressly waived in either law or equity, in which event Mortgagee may avail itself of all rights and remedies, at law or in equity, and this Mortgage may be foreclosed with all rights and remedies afforded by law and Mortgagor shall pay all costs, charges and Session 10: How to Sell on Wraparound Financing 21

258 expenses thereof, including a reasonable attorney's fee. The indebtedness secured hereby shall bear interest at the highest rate of interest per annum allowed by law from and after the date of any such default of Mortgagor. If the Note provides for installment payments, the Mortgagee may, at its option, collect a late charge as may be provided for in the Note, to reimburse the Mortgagee for expenses in collecting and servicing such installment payments. b. i. Mortgagee is authorized at any time, without notice, in its sole discretion, to enter upon and take possession of the Mortgaged Property or any part thereof, to perform any acts Mortgagee deems necessary or proper to conserve the security and to collect and receive all rents, issues and profits thereof, including those past due as well as those accruing thereafter; and ii. Mortgagee shall be entitled, as a matter of strict right, without notice and ex parte, and without regard to the value or occupancy of the security, or the solvency of the Mortgagor, or the adequacy of the Mortgaged Property as security for the Note, to have a receiver appointed to enter upon and take possession of the Mortgaged Property, collect the rents and profits there from and apply the same as the court may direct, such receiver to have all the rights and powers permitted under law; and iii. In either such case, Mortgagee or the receiver may also take possession of, and for these purposes use, any and all personal property which is a part of the Mortgaged Property and used by Mortgagor in the rental or leasing thereof or any part thereof. The expense (including receiver's fees, counsel fees, costs and agent's compensation) incurred pursuant to the power herein contained shall be secured hereby. Mortgagee shall (after payment of all costs and expenses incurred) apply such rents, issues and profits received by it on the indebtedness secured hereby in such order as Mortgagee determines. The right to enter and take possession of the Mortgaged Property, to manage and operate the same, and to collect the rents, issues and profits thereof, whether by a receiver or otherwise, shall be cumulative to any other right or remedy hereunder or afforded by law, and may be exercised concurrently therewith or independently thereof. Mortgagee shall be liable to account only for such rents, issues and profits as actually received by Mortgagee; and iv. If the indebtedness secured hereby is now or hereafter secured by chattel mortgages, security interests, financing statements, pledges, contracts of guaranty, assignment of leases, or other securities, or if the Mortgage Property hereby encumbered consists of more than one parcel of real property, Mortgagee may, at its option, exhaust any one or more of said securities and security hereunder, or such parcels of the security hereunder, either concurrently or independently, and in such order as it may determine. c. Default shall include, but not be limited to non payment of any respective installment within ten (10) days from the due date set out therein, or payment dates on three different occasions for any installments which are in excess of five (5) days subsequent to the due date therefore set out therein. 10. Consent to Transfer. In the event the Mortgagor, without the prior written consent of the Mortgagee, a. shall sell, convey, transfer (or shall contract to sell, convey or transfer) the Mortgaged Property or any part thereof or any legal or beneficial interest therein, or b. be divested of title or any interest in the Mortgaged Property in any manner or way, whether voluntary or involuntary, or c. should lease the entire fee simple interest of the Mortgaged Property (and not simply the improvements and buildings located thereon) not in the ordinary course of business, or d. should permit the Mortgaged Property to be further encumbered; the entire balance of the indebtedness evidenced by the Note shall be accelerated and become immediately due and payable, at the option of the Mortgagee, upon thirty (30) days written notice to the Mortgagor. In the event Mortgagee elects to accelerate the entire balance of the indebtedness, Mortgagee shall have no obligation to allege or show any impairment of its security and may pursue any legal or equitable remedies for default without allegation or showing. It is specifically understood by the parties that as a condition of granting its approval required by this paragraph, the Mortgagee may adjust the interest rate stated in the Note. 11. Future Advances. This Mortgage shall secure not only existing indebtedness, but also such future advances, whether such advances are obligatory or to be made at the option of Mortgagee, or otherwise, as are made within twenty (20) years from the date hereof, to the same extent as if such future advances were made on the date of the execution of this Mortgage, but such secured indebtedness shall not exceed at any time the maximum principal amount of two times the amount of the Note, plus interest thereon, and any disbursements made for the payment of taxes, levies, or insurance, on the Mortgaged Property, with interest on such disbursements. Any such future advances, whether obligatory or to be made at the option of Session 10: How to Sell on Wraparound Financing 22

259 the Mortgagee, or otherwise, may be made either prior to or after the due date of the Note or any other notes secured by this Mortgage. This Mortgage is given for the specific purpose of securing any and all indebtedness by the Mortgagor to Mortgagee (but in no event shall the secured indebtedness exceed at any time the maximum principal amount set forth in this paragraph) in whatever manner this indebtedness may be evidenced or represented, until this Mortgage is satisfied of record. All covenants and agreements contained in this Mortgage shall be applicable to all further advances made by Mortgagee to Mortgagor under this future advance clause. 12. No Waiver. No delay by Mortgagee in exercising any right or remedy hereunder or otherwise afforded by law, shall operate as a waiver or preclude the exercise thereof during the continuance of any default hereunder. No waiver by Mortgagee of any default shall constitute a waiver of or consent to subsequent defaults. No failure of Mortgagee to exercise any option herein given to accelerate maturity of the debt hereby secured, no forbearance by Mortgagee before or after the exercise of such option and no withdrawal or abandonment of foreclosure proceedings by Mortgagee shall be taken or construed as a waiver of its right to exercise such option or to accelerate the maturity of the debt hereby secured by reason of any past, present or future default on the part of Mortgagor, and, in like manner, the procurement of insurance or the payment of taxes or other liens or charges by Mortgagee shall not be taken or construed as a waiver of its right to accelerate the maturity of the debt hereby secured. 13. Releases, Extension, etc. Without affecting the liability of Mortgagor or any other person (except any person expressly released in writing) for payment of any indebtedness secured hereby or for performance of any obligation contained herein, and without affecting the rights of Mortgagee with respect to any security not expressly released in writing, Mortgagee may, at any time and from time to time, either before or after the maturity of said note, and without notice or consent, release any person liable for payment of all or any part of the indebtedness or for performance of any obligation; make any agreement extending the time or otherwise altering the terms of payment of all or any part of the indebtedness, or modifying or waiving any obligation, on subordinating, modifying or otherwise dealing with the lien or charge hereof; exercise or refrain from exercising or waive any right Mortgagee may have; accept additional security of any kind; and release or otherwise deal with any property, real or personal, securing the indebtedness, including all or any part of the Mortgaged Property. 14. Superiority. Any agreement hereafter made by Mortgagor and Mortgagee pursuant to this Mortgage shall be superior to the rights of the holder of any intervening lien or encumbrance. 15. Waiver of Homestead Exemption. Mortgagor hereby waives all right of homestead exemption, if any, in the Mortgaged Property. 16. Condemnation. In the event of condemnation proceedings of the Mortgaged Property, the award or compensation payable there under is hereby assigned to and shall be paid to Mortgagee. Mortgagee shall be under no obligation to question the amount of any such award or compensation and may accept the same in the amount in which the same shall be paid. In any such condemnation proceedings, Mortgagee may be represented by counsel selected by Mortgagee. The proceeds of any award or compensation so received shall, at the option of Mortgagee, either be applied to the prepayment of the Note and at the rate of interest provided therein, regardless of the rate of interest payable on the award by the condemning authority, or at the option of Mortgagee, such award shall be paid over to Mortgagor for restoration of the Mortgaged Property. 17. Construction Agreement. If Mortgagee, pursuant to a construction loan made by Mortgagee with Mortgagor, agrees to make construction loan advances up to the principal amount of the Note, then Mortgagor hereby covenants that it will comply with all of the terms, provisions and covenants of said construction loan agreement, will diligently construct the improvements to be built pursuant to the terms thereof, which are incorporated herein by reference as though set forth fully herein, and will permit no defaults to occur there under; and if a default shall occur there under, it shall constitute a default under this Mortgage and Note. 18. Notices. Any written notice, demand or request that is required to be made hereunder, or under the Note, or under any other instrument of security for the Note, shall be served in person, or by certified mail, return receipt requested, addressed to the party to be served at the address set forth in the first paragraph hereof. The addresses stated herein may be changed as to the applicable party by providing the other party with notice of such address change in the manner provided in this paragraph; provided, however, so long as the Mortgagor is the owner of all or any part of the Mortgaged Property the address of the Borrower must be located within the continental United States of America. In the event that written notice, demand or request is made as provided in this paragraph, then in the event that such notice is returned to the sender by the United States postal system because of insufficient address or because the party has moved or otherwise, other than for insufficient postage, such writing shall be deemed to have been received by the party to whom it was addressed on the date that such writing was initially placed in the United States postal system by the sender. Session 10: How to Sell on Wraparound Financing 23

260 19. Financial Statements. At the option of Mortgagee, Mortgagor shall provide Mortgagee with periodic certified statements of the operations and the financial condition of Mortgagor. 20. Non transferability. The loan represented by this Mortgage and the Note are personal to the Mortgagor and the Mortgagee made the loan to the Mortgagor based on the credit of the Mortgagor and the Mortgagee's judgment of the ability of the Mortgagor to repay all sums due under this Mortgage; therefore, this Mortgage may not be assumed by any subsequent holder of an interest in the Mortgaged Property. If all or any part of the Mortgaged Property, or any interest therein, is sold, conveyed, transferred (including a transfer by agreement for deed, land trust or land contract) or further encumbered by Mortgagor without Mortgagee's prior written consent, excluding the grant of any leasehold interest in the Mortgaged Property not containing an option to purchase, which lease is made in the ordinary course of Mortgagor's business, then Mortgagee may declare all sums secured by this Mortgage immediately due and payable. 21. Creation of Additional Encumbrances. Mortgagor covenants and agrees with Mortgagee to first obtain the written consent of Mortgagee, such consent to be granted or withheld at the sole discretion of Mortgagee, before entering into, agreeing or otherwise modifying any mortgage or encumbrance on the Property the effect of which shall be to increase or otherwise augment the principal indebtedness on the property in an amount in excess of the amount which is or would currently be due if all payments had been made according to the standard terms and conditions of the obligation creating said principal indebtedness. 22. Representations and Warranties of Mortgagor. Mortgagor represents and warrants that, if a corporation, it is duly organized and validly existing, in good standing under the laws of the State of its incorporation, has stock outstanding which has been duly and validly issued, and is qualified to do business and is in good standing in the State in which the Mortgaged Property is situate, with full power and authority to consummate the loan contemplated hereby; and, if a partnership, it is duly formed and validly existing, and is fully qualified to do business in the State in which the mortgaged property is situate, with full power and authority to consummate the loan contemplated hereby. 23. Invalidity. In the event any one or more of the provisions contained in this Mortgage or in the Note shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall, at the option of the Mortgagee, not affect any other provisions of this Mortgage, but this Mortgage shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein or therein. The total interest payable pursuant to the Note or this Mortgage shall not in any one year exceed the highest rate of interest permitted by law. 24. Binding Effect. The covenants and agreements herein contained shall bind and the benefits and advantages shall inure to the respective heirs, executors, administrators, successors, and assigns of Mortgagee. Wherever used, the singular number shall include the plural, the plural the singular, and the use of any gender shall be applicable to all genders. All covenants, agreements and undertakings shall be joint and several. In the event additional numbered covenants or paragraphs are for convenience inserted in this Mortgage, such additional covenants shall be read and given effect as though following this covenant in consecutive order. 25. Governing Law. This agreement and all transactions contemplated hereby, shall be governed by, construed and enforced in accordance with the laws of the State of. The parties herein waive trial by jury and agree to submit to the personal jurisdiction and venue of a court of subject matter jurisdiction located in County, State of. In the event that litigation results from or arises out of this Agreement or the performance thereof, the parties agree to reimburse the prevailing party's reasonable attorney's fees, court costs, and all other expenses, whether or not taxable by the court as costs, in addition to any other relief to which the prevailing party may be entitled. In such event, no action shall be entertained by said court or any court of competent jurisdiction if filed more than one year subsequent to the date the cause(s) of action actually accrued regardless of whether damages were otherwise as of said time calculable. 26. Contractual Procedures. Unless specifically disallowed by law, should litigation arise hereunder, service of process therefore may be obtained through certified mail, return receipt requested; the parties hereto waiving any and all rights they may have to object to the method by which service was perfected. IN WITNESS WHEREOF, Mortgagor has duly executed and delivered this Mortgage and has intended the same to be and become effective as of the day and year first above written. Signed, sealed and delivered in the presence of: MORTGAGOR: Witness Session 10: How to Sell on Wraparound Financing 24

261 Witness STATE OF COUNTY OF The foregoing instrument was executed and acknowledged before me this day of, 20, by. WITNESS my hand and official seal in the State and County aforesaid, this day of, 20. (SEAL) Notary Public State of My Commission Expires: This instrument was prepared by: Session 10: How to Sell on Wraparound Financing 25

262 EXHIBIT "A" Legal Description Street address of property Session 10: How to Sell on Wraparound Financing 26

263 ALL-INCLUSIVE DEED OF TRUST WITH ASSIGNMENT OF RENTS (LONG FORM) This ALL-INCLUSIVE DEED OF TRUST, made, 20, between herein called TRUSTOR, whose address is, FIRST AMERICAN TITLE INSURANCE COMPANY, a California corporation, herein called TRUSTEE, and, herein called BENEFICIARY, WITNESSETH: That Trustor grants to Trustee in trust, with power of sale, that property in the, County of, State of California, described as: together with the rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits for the purpose of securing (1) payment of the sum of $ with interest thereon according to the terms of an all-inclusive promissory note of even date herewith (hereinafter "the Secured Note") made by Trustor, payable to order of Beneficiary, and extensions or renewals thereof, and (2) the performance of each agreement of Trustor incorporated by reference or contained herein. A. Senior Deed(s) of Trust: This is an All-Inclusive Deed of Trust, securing the Secured Note and is subject and subordinate to the following instruments: (1) A Deed of Trust recorded,, as Instrument No., in Book, Page, of Official Records of County, California, in the original principal sum of Dollars ($ ) in favor of as Payee, securing a note in the original amount of $. (2) A Deed of Trust recorded, as Instrument No., in Book, Page, of Official Records of County, California, in the original principal sum of Dollars ($ ) in favor of as Payee, securing a note in the original amount of $. The Promissory Note(s) secured by said Deed(s) of Trust is (are) hereinafter referred to as the "Senior Note(s)." B. To protect the security of the All-Inclusive Deed of Trust, Trustor agrees: 1) To keep said property in good condition and repair; not to remove or demolish any building thereon; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefore, to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereon; not to commit, suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general. 2) To provide, maintain and deliver to Beneficiary fire, vandalism and malicious mischief insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. The provisions hereof are subject to the mutual agreements of the parties as below set forth. 3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this All-Inclusive Deed of Trust. 4) To pay: (a) at least ten days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; (b) when due, subject to the mutual agreements of the parties as below set forth, all Session 10: How to Sell on Wraparound Financing 27

264 encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto; (c) all allowable expenses of this Trust. Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay allowable expenses. 5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from date of expenditure at the amount allowed by law in effect at the date hereof. C. It is mutually agreed: 1) That any award of damages in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. 2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. 3) That at any time or from time to time, without liability therefore and without notice, upon written request of Beneficiary and presentation of this All-Inclusive Deed of Trust and the Secured Note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting any easement thereon; or join in any extension agreement or any agreement subordinating the lien or charge hereof. 4) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this All-Inclusive Deed of Trust and the Secured Note to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The Grantee in such reconveyance may be described as "the person or persons legally entitled thereto." 5) That as additional security, Trustor hereby gives to/and confers upon Beneficiary the right, power and authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default, Beneficiary may at any time without notice, either in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own name sue for or otherwise collect such rents, issues and profits, including those past due and unpaid, and apply the same, less allowable expenses of operation, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 6) That upon default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this All-Inclusive Deed of Trust, the Secured Note and all documents evidencing expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. However, all costs, fees and expenses set forth in this paragraph shall not be applicable to or charged by the Trustor or his successor in interest. (7) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or Session 10: How to Sell on Wraparound Financing 28

265 counties where said property is situated, shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this All-Inclusive Deed of Trust is recorded and the name and address of the new Trustee. 8) That this All-Inclusive Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby, whether or not named as Beneficiary herein. In this All-Inclusive Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. 9) That Trustee accepts this Trust when this All-Inclusive Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee. D. The Parties Further Agree: 1) By Beneficiary's acceptance of this All-Inclusive Deed of Trust, Beneficiary agrees that, provided Trustor is not in default on the Secured Note, Beneficiary shall pay all installments of principal and interest which become due under the terms of the Senior Note(s). In the event Trustor shall be in default on the Secured Note, Beneficiary's obligation under the Senior Note(s) is deferred until the default under the Secured Note is cured. Should the Beneficiary default in any of the installments as to the payment on the Senior Note(s) at a time when Trustor is not in default in the performance of the obligations of the Trustor under the Secured Note or this All-Inclusive Deed of Trust, the Trustor may make said payments directly to the holder of such Senior Note(s); any and all payments so made shall be credited to the Secured Note against the next succeeding installments of principal and interest. Nothing contained herein shall be construed to create a third party beneficiary relationship between the Beneficiary and any other person. 2) Notwithstanding any covenants contained in the Senior Note(s) or Deed(s) of Trust securing same, Beneficiary shall have no further duty under this All-Inclusive Deed of Trust when: (i) the lien of this All-Inclusive Deed of Trust has been extinguished by foreclosure sale or (ii) this All-Inclusive Deed of Trust has been duly reconveyed after payment in full of the Secured Note and subsequent to the payment by the Beneficiary herein of Trustor's portion of the Senior Note(s) which the Beneficiary herein is required to pay to the holder of said Senior Note(s). Should Trustor be in default under the terms of the Secured Note and if Beneficiary consequently incurs any penalties, charges, or other expenses on account of the Senior Note(s) during the period of such default, the amount of such penalties, charges and expenses shall be immediately added to the principal amount of the Secured Note and shall be immediately payable by Trustor to Beneficiary. If at any time the total of: the unpaid balance of the Secured Note, the accrued interest thereon, all other sums due under the terms thereof and all sums advanced by Beneficiary pursuant to the terms of this All-Inclusive Deed of Trust, is equal to or less than the unpaid principal balance of the Senior Note(s) and accrued interest thereon, the Secured Note, at the option of Beneficiary, shall be cancelled and said property shall be reconveyed from the lien of this All-Inclusive Deed of Trust. 3) Trustor and Beneficiary agree that in the event the proceeds of any condemnation award or settlement in lieu thereof, or the proceeds of any casualty insurance covering destructible improvements located upon said property, are applied by the holder of the Senior Note(s) in reduction of the unpaid principal amount thereof, the unpaid principal balance of the Note secured hereby shall be reduced by an equivalent amount and be deemed applied to the last sums due under the Secured Note. 4) At such time as the Secured Note becomes fully due and payable, the unpaid indebtedness of principal and interest owning thereon shall be reduced by the then unpaid balance of principal and interest due on the Senior Note(s). 5) Any demand hereunder delivered by Beneficiary to Trustee for the foreclosure of the lien of this All-Inclusive Deed of Trust may be not more than the sum of the following amounts: (i) The equity of Beneficiary in the note secured hereby being the difference between the then-unpaid balance of principal and interest accrued and unpaid on the Secured Note on the date of such foreclosure sale and the then unpaid balance of principal and interest so accrued and unpaid on the Senior Note(s) as of the date of such foreclosure sale; plus (ii) The aggregate of all amounts theretofore paid by Beneficiary pursuant to the terms of this All-Inclusive Deed of Trust prior to the date of such foreclosure sale, for taxes and assessments, insurance premiums, delinquency charges, foreclosure costs, and any other sums advanced by Beneficiary pursuant to the terms of this All-Inclusive Deed of Trust, to the extent the same were not previously repaid by Trustor to Beneficiary; plus (iii) The costs of foreclosure together with attorneys' fees and costs incurred by Beneficiary in enforcing this All-Inclusive Deed of Trust or the Note secured hereby as permitted by law. 6) Notwithstanding any provision to the contrary herein contained, Beneficiary for himself, his successors and his assigns, agrees that, in the event of a foreclosure of this All-Inclusive Deed of Trust, he will, at the trustee's sale, offset his bid by an amount not exceeding the amount representing the total amount then due under the note secured hereby plus any advances or other disbursements which Beneficiary and his successors or assigns, may, by law, be permitted to include as an offset to his bid, less the then actual total balance due upon any notes or obligations secured by any and all deeds of trust having priority over this All-Inclusive Deed of Trust and covering the above described real property or any portion thereof. The Trustee may rely on any statements received from Beneficiary as to the unpaid total balance, advances or disbursements, Session 10: How to Sell on Wraparound Financing 29

266 and such statements shall be deemed binding and conclusive as between Beneficiary and Trustor, on the one hand, and Trustee, on the other hand, to the extent of such reliance. 7) Trustor covenants and agrees that Trustor shall perform and observe all obligations to be performed and observed by Trustor under the Deed(s) of Trust securing the Senior note(s). The undersigned Trustor requests that a copy of any notice of default and of any notice of sale hereunder be mailed to him at his address hereinbefore set forth. Signature of Trustor Signature of Trustor Signature of Beneficiary Signature of Beneficiary } STATE OF CALIFORNIA }ss COUNTY OF } On before me,, personally appeared personally known to me ( or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature STATE OF CALIFORNIA COUNTY OF } } }ss On before me,, personally appeared personally known to me ( or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Session 10: How to Sell on Wraparound Financing 30

267 WITNESS my hand and official seal. Signature (This area for official notarial seal) Session 10: How to Sell on Wraparound Financing 31

268 Wrap Around Mortgage Rider This Rider is executed this day of, 20 and is incorporated into that certain mortgage dated (the "Mortgage") executed by (the "Mortgagor") in favor of (the "Mortgagee") securing a promissory note in the amount of $ (the "Note"). Mortgagor and Mortgagee agree as follows: 1. The Mortgage is subordinate and inferior to that certain mortgage dated (the "Primary Mortgage"), in favor of and recorded in Official Records Book, Page of the Public Records of County, State of, securing a note of even date (the "Primary Note") in the original principal amount of $, with a current outstanding balance of $. The Primary Note is prepayable without premium or penalty. Mortgagee warrants and represents that there exists no default or any event that would constitute an event of default under the terms of the Primary Note or Primary Mortgage. 2. Mortgagor will pay directly to Mortgagee the installments of principal and interest required by the terms of the Note and will not make any payment directly to the owner and holder of the Primary Mortgage and Primary Note or request any release, partial release, amendment, or other modification of the Primary Note or Primary Mortgage without the prior written consent of Mortgagee. 3. Upon receipt of such payment and from the proceeds thereof, Mortgagee shall pay each installment of principal and interest on the Primary Note at least days before it becomes due and payable and shall submit evidence of such payment to Mortgagor before such date. In the event that Mortgagor makes a prepayment under the Note, Mortgagee shall make a corresponding prepayment on the Primary Note. Upon satisfaction of the Note and Mortgage by Mortgagor, Mortgagee shall immediately pay the entire outstanding balance due on the Primary Note and Primary Mortgage and cause a satisfaction of the Primary Mortgage to be delivered to Mortgagor. 4. In the event Mortgagee fails to make such payments on the Primary Note and Primary Mortgage when due and payable and furnish evidence of such payment to Mortgagor as provided in the preceding paragraph, Mortgagor may, at Mortgagor's option, elect to make such payments on the Primary Note and deduct such amounts from the amount of the installment due on the Note. 5. If an event of default occurs in the Primary Mortgage, Mortgagee agrees that upon receipt by Mortgagee of any notice of default given by the holder of the Primary Note pursuant thereto or pursuant to the Primary Mortgage securing same, Mortgagee shall immediately send to Mortgagor a copy of same, or in the event Mortgagee becomes aware of any event of default, Mortgagee shall immediately notify Mortgagor thereof, and Mortgagor may, at Mortgagor's option, perform any act required in any form or manner deemed expedient to cure such event of default. 6. Mortgagee shall have the right at any time to prepay the Primary Note. 7. Mortgagee shall not, without securing the prior written consent and approval of Mortgagor: A. Alter, modify, renew, rearrange, restructure, or refinance the Primary Note, provided however that Mortgagee may enter into agreements to extend the maturity date of the Primary Note and Primary Mortgage or to reduce the interest payable under the Primary Note; B. Take any action, or authorize any action to be taken, that would have the effect of increasing the total amount of the indebtedness evidenced by the Primary Note or secured by the Primary Mortgage; or C. Request or accept any extension, postponement, indulgence, or forgiveness of the Primary Note, unless Mortgagee shall grant Mortgagor a corresponding extension, postponement, indulgence, or forgiveness under the Note. 8. Any proceeds of insurance policies required to be kept in force hereunder shall be payable to Mortgagee and the mortgagee of the Primary Mortgage "as their interests may appear", and such policies shall be kept by Mortgagee and Mortgagee agrees that his or her interest in such policies or the proceeds thereof are inferior and subordinate to the interest of Session 10: How to Sell on Wraparound Financing 32

269 the mortgagee of the Primary Mortgage. To the extent the proceeds of such insurance policies are paid to the mortgagee of the Primary Mortgage, Mortgagor shall be entitled to a credit on the Note equal to the amount of such payment of proceeds. 9. Any reference contained herein as to the right of Mortgagor to pay any sum owing on the Primary Note shall not constitute an assumption of personal liability for any such payment, and shall not in any way modify the obligation of Mortgagee to the mortgagee of such Primary Mortgage. Witnesses: Print Name: Print Name: Mortgagor: Mortgagee: Print Name: Print Name: Session 10: How to Sell on Wraparound Financing 33

270 AFFIDAVIT FOR WRAP-AROUND MORTGAGE State of } County of }ss: being duly sworn, deposes and says: That is the owner and holder of the following described mortgage and is familiar with the facts set forth therein: Mortgage made by to, dated. which mortgage is a Wrap-Around Mortgage, to be recorded simultaneously with the submission of this affidavit in the office of the Register/Clerk of County, has been given to secure the principal amount of $. That there is an existing mortgage made by to in the original principal sum of $, dated,and recorded in the office of the Register/County Clerk of County in Reel/Liber at page, on which mortgage tax was paid in the sum of $, under Serial No., on which the original principal sum has been reduced to the sum of $ (hereinafter referred to as the "Prior Mortgage"). That there is presently owing on said Wrap-Around Mortgage the sum of $, which sum represents the unpaid principal balance of $ due on the Prior Mortgage and the sum of $ disbursed under the Wrap-Around Mortgage (hereinafter referred to as "the advance") and that there has been no further advance or readvance made on said Wrap-Around Mortgage. That said Wrap-Around Mortgage is herewith tendered for recording, together with the payment of mortgage tax in the sum of $, and that said Wrap-Around Mortgage does not create or secure any new or further indebtedness or obligation other that the principal indebtedness of the advance, on which mortgage tax is paid herewith. WHEREFORE, deponent respectfully requests that the Wrap-Around Mortgage tendered herewith for recording be declared exempt from taxation as to the prior mortgage pursuant to the provisions of Section 255 of Article 11 of the Tax taw of the State of New York. Sworn to before me this day of, 20 Notary Public Session 10: How to Sell on Wraparound Financing 34

271 The Ultimate Strategy for Buying & Selling Houses Creating a Free & Clear Real Estate Money Machine with Richard Roop and Dan Doran Session 11 Paying off the Seller and Buying Subject To: Advanced Strategies for Buying High Equity Houses Session 11: Paying Off the Seller and Buying Subject To Page 1

272 Session 11 Paying off the Seller and Buying Subject To: Advanced Strategies for Buying High Equity Houses Training Session Agenda: How do you pay off the seller? What if the house is worth less in 5 or 7 years? What is buying a house subject to an existing loan? What are the benefits of subject to? What are the drawbacks of subject to? How do you overcome seller objections? What if the lender calls the loan? Who takes the tax write offs? How is insurance handled? How do you make the payments? Get an authorization to release undated How do you adjust offers when taking over an existing loan? How to adjust you offer when buying subject to How do you adjust your offers when paying interest? How do you pay off the seller? Structure terms with your buyer shorter than the seller o Finance your buyer for 48 or 52 months if you have 60 months Make payments to seller each month o o Small cash flows won t be missed Large cash flows can be split Get your buyer cashed out o Even 80% LTV taking 2 nd mortgage for remaining Substitute other collateral o Get this right when buying Refinance the property o o A good time to use your credit if needed Bring in a credit partner Raise private money Renegotiate the note o o o o Start paying interest Even at bank rates or private money rates Start making payments if none were required before Make a partial principal pay down as incentive Extend the term or balloon date Build financial stability over the years Session 11: Paying Off the Seller and Buying Subject To Page 2

273 o o o o Don t use your credit to buy Build up cash reserves Establish available lines of credit Build equity in you properties you can tap into if needed What if the house is worth less in 5 or 7 years? Unlikely buy in concerned Buy better o Use 0% appreciation in the Offer Generator o Ask for longer term than Offer Generator suggest Shoot for linger 10 or 12 year repayment plans Sell on a wrap o Value only come into play if you get the house back Pay down your debt with net positive cash flow o Pay both principal and interest on hard/private money o Pay off your home but create an unused HELOC o Make payments to seller each month Get your buyer cashed out Substitute other collateral o Private lender note o Seller note Refinance the property Use private money Renegotiate or extend the seller s note o Pay interest o Make payments o Make a partial principal pay down o Extend the term o Pay off at a discount What is buying a house subject to an existing loan? It s a way to fund part or all of a real estate deal. Buying subject to is taking ownership in a property with an existing loan in place. You are not officially assuming the mortgage but you are agreeing to take on the responsibility of making the monthly payments and paying if off in full at some point. You will own a house with the previous owner s debt obligation attached. They still owe the money and always will. They signed the note. You did not. Session 11: Paying Off the Seller and Buying Subject To Page 3

274 What are the benefits of subject to? You can pay more for a house if you do not have to raise the cash for pay off You need less private or hard money to fund the closing Your interest rate will (typically) be less then private or hard money There s no bank qualifying or lending limits You get principal reduction -- unlike interest only loans You get rapid principal reduction on older loans You can close faster A lot of investors are unaware or afraid of it What are the drawbacks of subject to? There is less cash flow is available to offer the seller Most loans have a due on sale (DOS) clause o o A provision in a security instrument such as a mortgage or deed of trust the give the lender the right to accelerate the payoff of the debt upon sale or transfer of interest in a property It give a lender control Seller may be concerned about the DOS clause Seller may be concerned about placing their credit in your hands A buyer may be concerned about DOS clause Title companies may object o The loan should be an exception to insuring clear title Closing agents may object o o See line 203 on the standard HUD-1 form: Existing Loans Taken Subject To. Use an Indemnity Agreement holding them harmless Payments are not 100% principal reduction like free and clear deals You are morally obligated to keep your agreements with the seller How do you overcome seller objections? Build trust and rapport Know their hot buttons Give them the reasons why to do it o No fix up o No marketing o Higher price o Fast sale o Debt relief o Stop a foreclosure o Peace of mind o Etc. Session 11: Paying Off the Seller and Buying Subject To Page 4

275 What if the lender calls the loan? Note becomes a non-performing asset Banks ability to lend is reduced Lender can no longer accept monthly payments Lender needs permission from FHA on guaranteed loans Can t happen on a VA loan sold on a land contract Continue making the payments Get you buyer cash out Bring in private money Refinance the property o Good reason not to be using you credit to buy o Use a credit partner Who takes the tax write offs? The new owner gets tax benefits of owning Whoever pays interest can deduct the interest Don t claim paid to financial institution as IRS will look for the report How is insurance handled? The owner needs a policy named as loss payee Get a new policy when buying You can assign a policy only if covers investment property Add the lenders to the policy as mortgagees Add borrower to policy as additional insured Get a power of attorney (POA) from borrower at closing Use a land trust i.e. Smith Family Trust Get a new policy when buying No need for double coverage Explain your transactions to you insurance agent Decide how a refund will be handled If escrow, have agent bill the escrow when renewing How do you make the payments? Get an authorization to release undated Get copy of note and mortgage Get current mortgage statement Verify account status Session 11: Paying Off the Seller and Buying Subject To Page 5

276 Get change of address signed More challenging on HELOCs if combined with other accounts Banks don t care who pays Put borrower s name and loan number on check Use a payment processing service Always pay on time How do you adjust offers when taking over an existing loan? A typical free and clear deal has 3 parts to you purchase price o Cash now to seller paid as a down payment o Cash flow paid monthly to seller in principal only payments o Cash later paid as a balloon payment Add up all 3 and you arrive at your TUS free and clear offer price The terms on any equity paid later is at 0% interest When you take over an existing loan subject to there is a 4 th part: o Cash not needed at closing The amount taken over subject to changes: o The cash needed down o The cash flow you can pay the seller each month o The cash later the seller receives in the future You have 2 choices when the seller has an existing loan: 1. Pay off the existing debt in cash This increases the cash down payment to seller o This increases the total cash needed to close o You will need to get a larger loan o It requires using private lenders with more money It costs you more in points when borrowing hard money It costs you more each month on interest on borrowed money You must reduce your offer because of the added costs The net positive cash flow you can offer the seller is reduced You will need to extend the term in years to keep the same purchase price If not current you can try for a short payoff The Offer Generator calculates all this for you making it easy! Session 11: Paying Off the Seller and Buying Subject To Page 6

277 2. Take over the existing debt subject to An existing payment has principal reduction and interest expense It may also include an escrow for taxes and insurance o The monthly cost and effect on cash flow for taxes and insurance is already taken into account in the Offer Generator so o Use just the interest and principal part of the payment when adjusting your offer Take into account the reduction in net positive cash flow if the payment you take over is larger that an interest only payment on private money You now get principal reduction on an amortized payment o Principal reduction increases your Cash Later Money you save on interest is included in this principal reduction You save money on lender points You can increase your offer by the amount of the extra Cash Later How to adjust you offer when buying subject to 1. Generate your offer as if you were giving the debt balance to the seller o Add this amount to any other amount used in Cash Down If seller owed $64,000 then assume $64,000 Cash Down If seller was to get $20,000 down, then use $84,000 as Cash Down 2. Calculate how much you benefit by taking over the loan o You save in on interest and points o The savings increases your back end equity 3. Add this benefit or cost savings to your Free & Clear MAO offer Examples: House free and clear House with $64,000 owed House with $110,000 owed 4 year plan House with $110,000 owed 8 year plan Session 11: Paying Off the Seller and Buying Subject To Page 7

278 ARV is $224,000 house To be resold for $219,500 within 3 years o Or $226,100 in 4 years Profit target is 15% or $33,600 Repairs just $500 Market rent is $1,295 Extra cash pulled out when buying is $0 Hard money is at 12% and 3 points Example #1 Free & Clear House Net cash flow is $683 o $0 down o $0 monthly MAO is $217,000 on a 4 year plan We collect our $33,600 profit essentially from 48 months of $683 cash flow We need $7,773 in hard money at to cover repairs, buy costs and hold costs o This total shown on Cruncher Sheet - cell D86 We can pay up to $156,300 all cash o $145,100 suggested Session 11: Paying Off the Seller and Buying Subject To Page 8

279 Example #2 Encumbered with $64,000 loan Option A: Pay off the $64,000 Add $64,000 to Cash Down Now borrow $75,787 instead of $7,773 (Cruncher Sheet - cell D86) Increase in loan reduces monthly cash flow from $683 to $4 We get most all our $33,600 profit on backend To pay the same $217,000 (or up to $220,200) the seller must wait 10 years o Instead of 4 If we stayed with a 4 year plan then MAO is $180,400 Now, what can pay on a 4 year plan if we take over the $64,000? Session 11: Paying Off the Seller and Buying Subject To Page 9

280 Example #2 Option B: Take over the $64,000 subject to 4 years The original note was at: o $120,000 original loan o 7% interest o 30 year amortization o Payments at $ for principal and interest 252 payments have been made o 21 year old loan Use the Loan Calculator spreadsheet to create a amortization schedule and determine number of payments made, if needed. Use the Subject To Adjustment Tool Download and use Subject To Adjustment Tool spreadsheet Version 1 1. Enter the terms of the original note: Enter PV, I, N, FV Pmt is calculated 2. Determine the remaining outstanding balance Enter the 252 payments already paid Balance outstanding is about $64,000 Session 11: Paying Off the Seller and Buying Subject To Page 10

281 3. Determine the balance due after 4 years Enter 48 for number of payments we will make Balance outstanding after 4 years is $40, Determine the cost of borrowing to paid off the loan: Enter loan points if any Enter your lender rate 5. Use the final results to adjust your offer: Offer seller less monthly cash if your cash flow is reduced You can offer seller more monthly cash if the cash flow is increased Offer seller a higher price by adding the cost savings (benefit) to you Result: We collect $ less cash flow each month We collect $6, less cash flow over 4 years We collect $25,433 more on the backend Net benefit of buying subject to = $18, o Add this amount to the 4 year balloon to seller o This increases your offer price Payoff the $64,000 = $180,400 MAO Subject to $64,000 = $180,400 + $18,600 or $198,000 as the new MAO Session 11: Paying Off the Seller and Buying Subject To Page 11

282 MAO Recap: $156,300 all cash $180,400 if paying off loan $198,000 if subject to 4 years $217,000 if free and clear 4 years Session 11: Paying Off the Seller and Buying Subject To Page 12

283 Example #3 Encumbered with $110,000 loan Option A: Pay off the $110,000 Raise Cash Down to $110,000 The increase in borrowing creates negative net monthly cash flow of $484 If we stayed with a 4 year plan then MAO is $154,100 Now, what can pay on a 4 year plan if we take the $110,000 over? Session 11: Paying Off the Seller and Buying Subject To Page 13

284 Example #3 Option B: Take over the $110,000 subject to 4 years The original note was $125,000 at 7% on a 30 year amortization Payment is $ for principal and interest 106 payments were made Use the Subject To Adjustment Tool 1. Enter the terms of the original note: Enter PV, I, N, FV Pmt is calculated 2. Determine the remaining outstanding balance Enter 106 for payments already paid Balance outstanding is $110, Determine the balance due after 4 years Enter 48 for number of payments we will make Balance outstanding after 4 years is $99, Session 11: Paying Off the Seller and Buying Subject To Page 14

285 4. Determine the costs of borrowing to paid off the loan: Enter loan points if any Enter your lender rate 5. Use the final results to adjust your offer: Offer seller less monthly cash if your cash flow is reduced You can offer seller more monthly cash if cash flow is increased Offer seller a higher price by adding the cost savings (benefit) to you Result: We now collect $ more cash flow each month We still have a negative cash flow o $484 negative + $306 more = $178 negative o $178 x 48 = $8,544 negative recaptured on back end We collect $14, more cash flow over 4 years We collect $13, more on the backend from principal reduction Net benefit of buying subject to = $28, Add this amount to the 4 year balloon to seller o This increases your offer price Payoff the $110,000 = $154,100 MAO Buy subject to $110,000 = $154,100 + $28,200 or $182,200 as the new MAO What if you had an 8 year plan? Session 11: Paying Off the Seller and Buying Subject To Page 15

286 Example #3 Option C: Take over the $110,000 subject to 8 years Free & Clear MAO = $157,100 Change 48 to 96 Result: Add $56,500 to $157,100 = $213,600 subject to new MAO MAO Recap: $156,300 all cash $145,100 suggested $154,100 if paying off loan $182,200 if subject to 4 years $213,600 if subject to 8 years Session 11: Paying Off the Seller and Buying Subject To Page 16

287 How do you adjust your offers when paying interest? Simple interest could accrue or you d pay interest payments All interest accrued or paid reduces you back end Calculate the added cost and reduce sellers balloon payment This reduces the total offer price Example You agree to pay $217,000 as lump sum due in 4 years at 0% Seller want 5% interest at $ interest only per month Enter $ in Offer Generator as Payments: Session 11: Paying Off the Seller and Buying Subject To Page 17

288 Use the Subject To Adjustment Tool spreadsheet to determine cost: Use 9999 as N for interest only payment: Enter 0 as number of payments made: Enter 48 as number of payments in Future Balance: Check the interest cost Cost is $43,400! Reduce your $217,000 offer to $173,600 Change PV to $173,600: Session 11: Paying Off the Seller and Buying Subject To Page 18

289 Payment goes down $ to $ Change Payments to $ in Offer Generator Push price back up by using an extended number of years: $217, ,400 = $260,400 For which number of years can you pay more than that? With no interest you can pay $276,100 over 8 years Change Subject To Adjustment Tool to 96 months: Reduce the $276,100 price the $69,440 cost to a MAO of $206,660 Recap: $217,000 in 4 years at 0% $173,600 in 4 years at 5% interest $206,660 in 8 years at 4 or 5% interest This is not perfect but it s all designed to give you a ball park to work from. These types of calculations will be included in updates to the Offer Generator Version 3c. Session 11: Paying Off the Seller and Buying Subject To Page 19

290 Action Notes: Customer Service: (719) Ext. 105 Fax: (719) Sales & Coaching Support: Session 11: Paying Off the Seller and Buying Subject To Page 20

291 The Ultimate Strategy for Buying & Selling Houses Creating a Free & Clear Real Estate Money Machine with Richard Roop and Dan Doran Session 12 Understanding the Paperwork: Building Confidence & Flexibility on Creative Deals Session 12: Understanding the Paperwork 1

292 Session 12 Understanding the Paperwork: Building Confidence and Flexibility on Creative Deals Contracting to Buy Purchase and Sales Agreement Subject To Addendum Authorization to Release Closing a Purchase Owner Financing Trust Agreement Warranty Deed Statement of Authority Bill of Sale Plus: Promissory Note Mortgage or Deed of Trust Closing a Purchase Subject to Trust Agreement Warranty Deed Statement of Authority Bill of Sale Plus: Limited Power of Attorney Due On Sale Disclosure to Seller Account Change of Address Contracting to Sell Real Estate Sales Agreement Rent To Own Addendum Promissory Note Rental Agreement Rental or Buyer Applications Closing a Sale Installment Land Contract Installment Land Contract Installment Land Contract Note Escrow Agreement Due On Sale Disclosure to Buyer Written Notice of Transfer Closing a Sale Wraparound Mortgage Warranty Deed Mortgage or Deed of Trust Promissory Note Wraparound Clause Bill of Sale Due On Sale Disclosure to Buyer Session 12: Understanding the Paperwork 2

293 Understanding the Paperwork Contracting to Buy Get these documents signed when you visit with a seller. Purchase and Sales Agreement o Includes: o All the terms of buying with seller financing o Terms of the new private or hard money loan for closing agent o Terms of seller carry back note o Seller and Buyer closing costs o Condition of the property o Personal property included o Closing date o Any contingencies Subject To Addendum o Use when taking an existing first mortgage over subject to o Includes a due on sale disclosure Authorization to Release o Use when taking an existing first mortgage over subject to o Get on for each loan taken subject to o Leave lender information and date blank Closing a Purchase Owner Financing If you use a land trust, you or your closing agent will create it using: Trust Agreement o Signed by you or your company as beneficiary o Signed by the trustee o Seller does not sign or get a copy Warranty Deed o Funds the trust o Titles property to the trust o Signed by seller Statement of Authority o Used when new owner (a trust) is not an individual person o Recorded with warranty deed Bill of Sale o Transfers ownership of personal property and mobile homes o Signed by seller Then for each new loan (your lender and the seller) your closing agent will prepare: Promissory Note o Signed by you or your trustee o Mortgage or Deed of Trust o Signed by you or your trustee Session 12: Understanding the Paperwork 3

294 Closing a Purchase Subject to You may close these transactions in house but best to use an attorney or title company: Trust Agreement Warranty Deed Statement of Authority Bill of Sale Plus: Limited Power of Attorney o One signed by each seller o Allows you to handle many issues after seller is gone Due On Sale Disclosure to Seller o Signed by sellers o Will be no surprise since include in sales agreement Account Change of Address o Signed by sellers o Allows you to receive loan statements and notices Contracting to Sell For selling on a wrap or on a rent to own until closed on a wrap. Real Estate Sales Agreement o To close on an Installment Land Contract now after a rent to own program Rent To Own Addendum o If buyer rents until they have enough down to close Promissory Note o Use when buyer agrees to pay additional non-refundable purchase deposits in the future Rental Agreement o Do not include any verbiage related to tenants plan to buy Rental or Buyer Applications o Required for you to qualify you buyer and to have a tenants personal information on file Session 12: Understanding the Paperwork 4

295 Closing a Sale Installment Land Contract This is the preferred way to sell to a buyer on owner financing without of putting them on title. Installment Land Contract o The security instrument for the loan, like a mortgage, and it is not recorded o Will be held by escrow agent Installment Land Contract Note o Includes all the loan and repayment terms o Will be held by escrow agent Escrow Agreement o Spells out how escrowed documents are handled or released by escrow agent in the event of a full pay off and close out or default by either buyer or seller. Due On Sale Disclosure to Buyer o Disclosures risks to buyer if an underlying loan has a due on sale clause Written Notice of Transfer o May be requited by you county to county treasurer knows who owns the property Closing a Sale Wraparound Mortgage An alternative to closing on an ILC. Since buyer goes on title, a foreclosure process will be required to get the title back in the event of default. Warranty Deed Mortgage or Deed of Trust Promissory Note Wraparound Clause Bill of Sale Due On Sale Disclosure to Buyer o If required Session 12: Understanding the Paperwork 5

296 Sample Buying Documents Filled Out Contracting to Buy Purchase and Sales Agreement Subject To Addendum Authorization to Release Closing a Purchase Owner Financing Trust Agreement Warranty Deed Statement of Authority Closing a Purchase Subject to Limited Power of Attorney Due On Sale Disclosure to Seller Account Change of Address Session 12: Understanding the Paperwork 6

297 Purchase and Sales Agreement This agreement dated 2/15/2008 on the property known by the street address 1234 Main Street, Anytown, CO is by and between Incredible Investments, LLC (BUYER) and Sam A. Seller and Susie B. Seller (SELLER), which terms may be singular or plural and will include the heirs, successors, personal representatives and assigns of Seller and Buyer, hereby agree that Seller will sell and Buyer will buy the following property, upon the following terms and conditions if completed or marked. In any conflict of terms or conditions, that which is added will supersede that which is printed or marked. The Property is in Teller County, Sate of Colorado and is legally described as follows (if lengthy, attach legal description): Lot 123, Block 2, Ranch Estates Subdivision Filing No. 2, Teller County, Colorado It is understood that the Property will be conveyed by General Warranty Deed (unless otherwise required) subject to taxes, existing zoning (unless otherwise specified in paragraph 16), covenants, restrictions and easements of record. 1. Total Purchase Price to be paid by Buyer is payable as follows: A. Purchase deposit (binder or earnest money) which will remain as a binder until closing, unless sooner forfeited or returned, according to the provisions in this Agreement $ B. Additional purchase deposits due prior to closing outline in Paragraph 18 $ C. Balance due at closing (not including Buyer's closing costs, prepaid items or prorations) in U.S. cash or locally drawn certified or cashiers check Approximate Exact $ D. Proceeds from a new loan to be executed by Buyer to any lender other than Seller $ 9, E. Purchase money loan to Seller on terms set forth in Paragraph 2B $ 207, F. Other financing, trades or Buyer credits outlined in Paragraph 18 $ G. Approximate total of existing mortgage balance(s) encumbering the Property taken subject to $ H. Total Purchase Price: Approximate Exact $ 217, Financing: A. New Financing: A new loan not to exceed $ 30, will be evidenced by a promissory note (substantially conforming with FNMA standards) from Buyer, secured by a valid purchase money first second third position mortgage or deed of trust on the Property and delivered by Buyer to lender dated the date of closing. MATURITY DATE: If not paid sooner, the balance of principal shall be due on or 36 months after closing. PAYMENTS of $ will be due on the 1st day of each month with the first payment commencing on 4/1/2008 amortized on the basis of principal only interest only other:. CHARGES include a late charge of 10% if the payment is not received within 10 days of the due date, and lender disbursements under the mortgage or deed of trust shall be at 18.00% per annum. PREPAYMENT: Buyer will have the right to prepay without penalty except 6 months minimum interest. ESCROW of funds for taxes and insurance does not apply unless by required law. TRANSFER: The mortgage or deed of trust will be due on transfer and will not be assumable except the note will include the provision Borrower has the right to sell the property on wraparound financing whereas Borrower continues to pay Seller directly and remain fully responsible for repayment the note. COLLATERAL SUBSTITUTION: The note will include the provision Borrower has the right to substitute other real property with equal or greater equity to secure the remaining balance due of this note. Session 12: Understanding the Paperwork 7

298 If buyer does not obtain the required new financing but otherwise complies with the terms hereof, the purchase deposit less sales and loan processing costs incurred, will be returned to the Buyer. The application for the mortgage amount in paragraph 1D will be made with a lender selected by Buyer. Unless such mortgage loan is approved without continued contingencies other than those elsewhere covered in this agreement within 7 days of closing, Buyer will have the right to terminate this agreement, and Buyer will return to Seller all the title evidence and surveys received from Seller. B. Seller Financing: The balance due to Seller in paragraph 1.E will be evidenced by promissory note (substantially conforming with FNMA standards) from Buyer, secured by a valid purchase money first second third position mortgage or deed of trust on the Property and delivered by Buyer to Seller dated the date of closing. MATURITY DATE: If not paid sooner, the balance of principal shall be due on or 72 months after closing. PAYMENTS of $ will be due on the 10th day of each month with the first payment commencing on 4/10/2008 amortized on the basis of principal only interest only other:. CHARGES include a late charge of 10% if the payment is not received within 10 days of the due date, and lender disbursements under the mortgage or deed of trust shall be at 18.00% per annum. PREPAYMENT: Buyer will have the right to prepay without penalty except none. TRANSFER: The mortgage or deed of trust will be due on transfer and will not be assumable except the note will include the provision Borrower has the right to sell the property on wraparound financing whereas Borrower continues to pay Seller directly and remain fully responsible for repayment the note. COLLATERAL SUBSTITUTION: The note will include the provision Borrower has the right to substitute other real property with equal or greater equity to secure the remaining balance due of this note. C. Existing Financing: The amount in paragraph 1.G, if any, includes the outstanding balance(s) owed on an existing first loan payable to with approximate balance due of $ with monthly payments of $ and a second loan payable to with approximate balance due of $ with monthly payments of $. If the existing balances at time of closing are less then the estimated amounts shown above, purchase price will be reduced by the difference. If balances are higher than shown then seller s proceeds will be reduced accordingly. 3. Closing Costs paid by Buyer: Customary One half real estate closing fee Buyer recording fees All costs related to closing purchase money loan to seller and/or loan in Paragraph 2 Lender title insurance policy on financing described in Paragraph 2 Other: 4. Closing Costs paid by Seller: Customary One half real estate closing fee Owner s Title Policy for buyer Seller recording or release fees Prorated interest on existing encumbernaces up to the date of possession Other: All other charges required by lender which Buyer is prohibited from paying by law or regulation. All utilities, mortgage payments or condominium and association fees will be current at Seller's expense at the time of closing unless otherwise specified. 5. Payment of Expenses: If Buyer fails to perform, all loan and sale processing and closing costs incurred, whether the same were to be paid by Seller or Buyer will be the responsibility of the Buyer, with costs deducted from binder deposit. This will include, but not be limited to the transaction not being closed because the property does not appraise for an amount sufficient to enable the lender to make the required loan. If Seller fails to perform, all loan, sales processing and closing costs incurred whether same were to be paid by Seller or Buyer will be the responsibility of Seller; and Buyer will be entitled to the return of the binder deposit. This will include, but not be limited to the transaction not being closed because Seller is unable to complete the transaction, or because Seller elects not to pay for the excess amount in paragraphs 9 or 11, or because the zoning is not as required in paragraph 16, or because Seller cannot deliver marketable title. 6. Prorations: All taxes, rentals, condominium or association fees, monthly mortgage insurance premiums and interest on loans will be prorated as of the date of closing. Session 12: Understanding the Paperwork 8

299 7. Title Evidence: Within 7 days after acceptance after date of satisfaction of all conditions in paragraph 19, Buyer Seller will acquire and deliver a title insurance commitment for an owner's policy in the amount of the purchase price to Buyer or Buyer s closing attorney. Any expense of curing title including but not limited to legal fees, discharge of liens and recording fees will be paid by Seller. 8. Survey: Within 7 days after acceptance after date of satisfaction of all conditions in paragraph 19, Seller will deliver to Buyer or closing attorney a staked survey improvement location certificate (ILC) Dated within 3 months of closing showing all improvements now existing, certified to Buyer, lender and title insurer, or A copy of a previously made showing all improvements now existing, or No survey or ILC is required 9. Wood destroying Organism Report: "Wood Destroying Organism" means any arthropod or plant life which damages a structure. Buyer may have property inspected by a Certified Pest Control Firm to determine whether there is any visible active wood destroying organism infestation or visible existing structural damage from wood destroying organisms to the improvements. If Buyer is informed of either or both of the foregoing, Seller will have seven (7) days from receipt of written notice thereof within which to have all such wood destroying organism damages whether visible or not inspected and estimated by a licensed building or general contractor. Seller will pay costs of treatment and repairs of all structural damage up to one percent (1 %) of the purchase price. If such costs exceed the amount agreed to be paid by Seller and Seller declines to treat and repair, Buyer will have the option of (a) terminating this Agreement or, (b) proceeding with the transaction, in which event Seller will bear costs equal to one percent (1 %) of the purchase price. 10. Title Examination and Time for Closing: A. If title evidence and survey or ILC, as specified above, show Seller is vested with a marketable title, or an option to purchase subject to the usual exceptions contained in title insurance commitments (such as exceptions for survey, current taxes, zoning ordinances, covenants, restrictions and easements of record), the transaction will be closed and the deed and other closing papers delivered on or before 2/21/2008 (date) or days after the date of acceptance, or days after date of satisfaction of all conditions in paragraph 19 unless extended by other conditions of this Agreement or this agreement is canceled by the Buyer. B. If title evidence or survey reveal any defects which render the title unmarketable, Buyer will have 7 days from receipt of title commitment and survey or ILC to notify Seller of such title defects and Seller agrees to use reasonable diligence to cure such defects at Seller's expense and will have 30 days to do so, in which event this transaction will be closed within 10 days after delivery to Buyer of evidence that such defects have been cured. Seller agrees to pay for and discharge all due or delinquent taxes, liens and other encumbrances, unless otherwise agreed. If Seller is unable to convey to Buyer a marketable title, Buyer will have the right to terminate this agreement at the same time returning to Seller all title evidence and surveys received from Seller, or Buyer will have the right to accept such title as Seller may be able to convey, and to close this transaction upon the terms stated herein, which election will be exercised within 10 days from notice of Seller's inability to cure. 11. Loss or Damage: If the property is damaged by fire or other casualty prior to closing, and cost of restoration does not exceed 3% of the assessed valuation of the improvements located on the Property, cost of restoration will be an obligation of the Seller and closing will proceed pursuant to the terms of this Agreement with cost thereof escrowing at closing. In the event cost of restoration exceeds 3% of the assessed valuation of the improvements and Seller declines to repair or restore, Buyer will have the option of either taking the Property as is, together with either the said 3% or any insurance proceeds payable by virtue of such loss or damage, or of canceling this Agreement. 12. Condition: Seller agrees to deliver the Property in its PRESENT AS IS CONDITION except as otherwise specified herein. Seller does hereby certify and represent that Seller has legal authority and capacity to convey the property with all improvements. Seller further certifies and represents that Seller knows of no latent defects to the property and knows of no facts materially affecting the value of the property EXCEPT the following: Hot tub is winterized and operation is unknown, gargage door opener inop Buyer has inspected the property and HAS NOT RELIED UPON ANY REPRESENTATIONS MADE BY ANY REAL ESTATE AGENT in describing the property, and Buyer accepts the property in its PRESENT AS IS CONDITION, except as otherwise specified herein. Buyer or Buyer s representative has the right to a final on-site inspection prior to closing. Session 12: Understanding the Paperwork 9

300 LEAD PAINT DISCLOSURE: Seller is not aware of any lead-based paint hazards on the property, nor has any reports in his possession regarding lead-based paint hazards on the property. Seller is aware of lead-paint hazards. Seller will leave home in clean, neat move-in condition removing all trash, debris and personal property no included. Seller to make the following repairs or improvements prior to closing: Install new dishwasher part 13. Occupancy: Seller represents that there are no parties in occupancy other than Seller. Buyer will be given occupancy at closing unless otherwise specified herein. Buyer understands that property is available for rent or rented and the tenant may continue in possession following closing unless otherwise agreed in writing. Deposits will be transferred to Buyer at closing. Seller will deliver copies of an existing leases or rental agreements within days of this fully executed agreement. If the terms of any such agreement are unacceptable to the Buyer, Buyer has the right to terminate this agreement prior to the closing date. 14. Personal Property: Included in the purchase price are all fixed equipment including ceiling fans, drapery hardware, attached lighting fixtures, mailbox, fence, plants, and shrubbery as now installed on the property, and these additional items: refrigerator range/oven dishwasher washer dryer window coverings microwave hot tub/spa removable fencing or dog pen 2 storage shed(s) carport cable/satellite/internet equipment firewood existing propane; and Items specifically excluded from this agreement: Washer and dryer 15. Default and Attorney's Fees: If Buyer defaults on this agreement all deposits will be retained by the Seller as full settlement of any claim, whereupon Buyer and Seller will be relieved of all obligations under this agreement. If Seller defaults under this Agreement, the Buyer may seek specific performance or elect to receive the return of the Buyer's deposit(s) without thereby waiving any action for damages resulting from Seller's breach. In connection with any litigation arising out of this Agreement, the prevailing party will be entitled to recover all costs including a reasonable attorney's fee, with the jurisdiction being that of the property. 16. Zoning and Restrictions: Unless the Property is zoned and can be legally used for, or if there is notice of proposed zoning changes, deed or other restrictions that could prevent such use at time of closing, Buyer will have the right to terminate this Agreement. Buyer will have 10 days from acceptance to verify the existing zoning and current proposed changes, and deliver written notice of objections to Seller or be deemed to have waived objections under this paragraph. 17. Acceptance Deadline: The offer of Buyer shall terminate if Seller has not indicated his acceptance of the Agreement by signing and delivering same or telegraphing acceptance to Buyer (or submitting agent) before (time) on (date). 18. Additional Terms and Conditions: A. Buyer s offer is subject to verification of mortgage(s), property value, taxes, inspection and marketable title. B. Closing may be extended up to 14 days with notice to Buyer if Seller s new apartment is not ready. Closing shall be performed by ABC Title Company, Ms. Carol Closer Closing location 345 Industrial Way, Anytown, CO Phone/Fax (719) , (719) fax Overnight delivery of closing documents required, delivered to Buyer Seller Session 12: Understanding the Paperwork 10

301 Closing shall be consummated by Seller transferring title by warranty deed into revocable land trust for Buyer s benefit. All documents necessary for establishing the trust shall be prepared by Buyer Buyer s attorney Closing agent Trust name: Seller Family Trust Trustee: Timothy M. Trustworthy Beneficiaries: Buyer or 19. Timing: The timing of paragraphs 7, 8, 9, and l0(a) will become operable after the satisfaction of paragraph 2, if applicable, and those additional conditions lettered in Paragraph 18 or any addendums. 20. There are no other agreements, promises or understandings between these parties except as specifically set forth herein. This legal and binding agreement will be construed under Colorado state law, will not be recorded and if not understood, parties should seek competent legal advice. TIME IS OF THE ESSENCE IN THIS AGREEMENT. 21. Signed, sealed on the date herein stated Buyer - Signature Date Incredible Investments, LLC By it s President, Harold D. Homebuyer Tax ID #: Address: 500 Flintsone Blvd, Anytown, CO Phone: (719) Fax: (719) [email protected] Other: (719) cell Seller - Signature Date Seller - Signature Date Tax ID #: Tax ID #: Address: 1234 Main Street, Anytown, CO Phone: (719) Fax: Other: 22. Receipt of Binder: Seller, by the signature below, acknowledges receipt of $ in the form of Cash Personal or Company Check Cashier s check Money order(s), payable to Closing agent Seller as the purchase or binder deposit mentioned in paragraph 1A to be deposited and held pending disbursement according to terms hereof, together with all additional binder deposits escrowed by terms of this agreement. Seller Date Session 12: Understanding the Paperwork 11

302 Subject To Addendum This agreement dated 2/15/2008 on the property known by the street address 1234 Main Street, Anytown, CO is by and between Incredible Investments, LLC (BUYER) and Sam A. Seller and Susie B. Seller (SELLER), amends the Purchase and Sales Agreement of the same date. Notwithstanding anything to the contrary, the parties agree as follows: Existing Loan(s) Taken Subject To: Buyer will be taking the property subject to deed(s) of trust or mortgage(s) existing on the property. The underlying loans and will be paid on a monthly basis by Buyer, but not assumed or paid off at closing. The Buyer(s) shall pay all monthly obligations on the underlying loans as well as property taxes, assessments, homeowner's association dues (if applicable) and any other expenses related to the property commencing On the date of closing On date of possession Other: Seller is aware that the loan(s) will not be satisfied in full at closing and may continue to appear on Seller s credit file. Upon closing, the Seller will no longer own the Property may not legally depreciate said property on federal or state income tax returns nor claim any income tax deduction for the interest payments, taxes or other expenses paid by the Buyer. Both Seller and Buyer are fully aware that the mortgage(s) or deed(s) of trust securing the property, taken subject to by Buyer, may contain provisions prohibiting the transfer of any interest in the property without satisfying the principal balance remaining on the underlying loans and/or obtaining the lender's prior written consent (i.e., a "due-on-sale" clause). Both Seller and Buyer are aware that although our payments will be made on a timely basis, in the event lender(s) discover this transfer, the underlying loans may be called due and payable in full, and if not satisfied, said lender may commence legal proceedings to recover title and ownership the property. Seller will not commit any action to make any statement orally or in writing that will cause said lender to notify the lender that title has been transferred. Seller understands and accepts the risks involved and agree to proceed with this transaction in light of these risks. Buyer will establish a new hazard insurance policy to be in place upon closing naming all lenders as mortgagees. Seller will waive any remaining balance of tax, MIP and insurance escrows, if any, held by the lender(s). Buyer to take over any existing escrow balance for taxes and insurance and there will be no prorated taxes paid from the Seller to Buyer. Within 3 days of Seller accepting this agreement, Seller will provide Buyer with: An authorization to release loan information as express written permission to contact the existing lender(s) Any existing loan payment booklets A copy of the most recent loan statement A copy of existing note(s) Seller will execute a change of address form so future account statements and notices are received by Buyer. Seller will provide validation to Buyer the ability to borrow against any open lines of credit have been closed. Buyer will reinstate, make payments on or payoff the existing loan only upon successfully negotiating a short payoff with the Mortgagee(s) and/or locating an acceptable resell buyer. See Letter of Agreement and Addendum Buyer - Signature Date Seller - Signature Date Seller - Signature Date Session 12: Understanding the Paperwork 12

303 Authorization to Release Loan Information LENDER LOAN # PROPERTY 1234 Main Street, Anytown, CO I/We hereby authorize you to release to Incredible Investments, LLC (authorized party) or its assigns any and all information that they may require about my loan and mortgage/trust deed on the above referenced property. In addition, I/We authorize you to release to this authorized party or it title agent an assumption package and payoff statement. You may reproduce this document to acquire reference from more than one source. Thank You. Borrower Sam A. Seller SSN: Signature Date Borrower Susie B. Seller SSN: Signature Date Session 12: Understanding the Paperwork 13

304 Trust Agreement This Trust Agreement made this 21 day of February, 2008 by, Incredible Investments, LLC Grantor(s)/Settlor(s) and Beneficiaries, (hereinafter collectively referred to as the "Beneficiaries"), whose addresses are: 500 Flintsone Blvd, Anytown, CO And Timothy M. Trustworthy, as Trustee of the trust created hereby, (hereinafter referred to as the "Trustee", which designation shall include all successor trustees), whose address is 500 Flintsone Blvd, Anytown, CO Whereas, the Beneficiaries are about to convey or cause to be conveyed in the near future certain real property to the Trustee, and the Trustee has agreed to accept such conveyance and hold the real property as a fiduciary in trust for the Beneficiaries under the terms and conditions set forth below. Now, therefore, the parties hereby agree as follows: 1. Declaration of Trust. The trust created by the settlors herein shall be known as the: Seller Family Trust (hereinafter referred to as the "Trust"). 2. Trust Property. The corpus of the trust will be real property (hereinafter referred to as the "Trust Property") that the Beneficiaries will convey or cause to be conveyed fee simple absolute by deed. Said property is described in the attached Exhibit "A. The Trustee shall hold full legal and equitable title to said property, in trust, only for the use and purpose stated under the terms of this Agreement and any valid addendum hereto duly executed by the parties. If permissible in the state in which the real property sits, title shall be held in the name of the Trust itself, to wit Seller Family Trust, otherwise, the Trustee shall hold title in his or her name an individual, as Trustee, and not personally, of the Seller Family Trust. 3. Trust Purpose. The objects and purposes of this Trust shall be to hold full legal and equitable title to the Trust Property until its sale, disposition or liquidation, or until the trust is terminated or expires by its own terms and/or as a matter of law. The Trustee shall not undertake any activity that is not strictly necessary to the achievement of the foregoing objects and purposes, nor shall the Trustee transact business within the meaning of applicable state law, or any other law, nor shall this Agreement be deemed to be, or create or evidence the existence of a corporation, de facto or de jure, or a Massachusetts Trust, or any other type of business trust, or an association in the nature of a corporation, or a co partnership or joint venture, limited liability company, or similar limited liability association by or between the Trustee and the Beneficiaries, or by or between the Beneficiaries. 4. Consideration. The Trustee has paid no consideration for the conveyance of real property described herein. The conveyance will be accepted and held by the Trustee subject to all existing liens, encumbrances, easements, restrictions or other clouds or claims against the title thereto, whether the same are of record or otherwise. The property will be held on the trusts, terms and conditions and for the purposes hereinafter set forth, until the whole of the trust estate is conveyed, free of this trust, as hereinafter provided. 5. Rights and Duties of the Beneficiaries. The persons and/or entities named in the attached Exhibit "B" (including their heirs, assigns or successors) hereof are the Beneficiaries of this Trust, and as such, shall be entitled to all of the earnings, avails and proceeds of the Trust Property according to their interests set opposite their respective names. No Beneficiary shall have any legal or equitable right, title or interest, as realty, in or to any real estate held in trust under this Agreement, or the right to require partition of that real estate, but shall have only the rights, as personalty, set out below, and the death of a Beneficiary shall not terminate this Trust or in any manner affect the powers of the Trustee. The interests of the Beneficiaries shall consist solely of the following rights respecting the Trust Property: a. The right to direct the Trustee to convey or otherwise deal with the title to the Trust Property as hereinafter set out. b. The right to participate in the management and control the Trust Property. c. The right to receive the proceeds and avails from the rental, sale, mortgage, or other disposition of the Trust Property. 6. Powers and Duties of Trustee. The Trustee shall not copy or show this agreement to any individual or entity other than the beneficiaries or successor trustees, nor shall the Trustee reveal the identity of the beneficiaries or the trust property to any Session 12: Understanding the Paperwork 14

305 individual or entity except by way of a Court Order duly executed by a Justice or Magistrate of a Court of competent jurisdiction. The trustee shall not record this agreement or the name of any of the beneficiaries in any place of public record. The Trustee, as the sole owner of record of the Trust Property, have the following powers with respect the Trust Property, at the written direction of the Beneficiary: a. To issue notes or bonds and to secure the payment of the same by executing a deed of trust, mortgage or other security instrument conveying a lien on the whole or any part of the Trust Property; b. To borrow money, giving notes therefore, or to assume existing debts related to the property signed by him or her in the capacity as Trustee; c. To invest such part of the capital and profits therefrom and the proceeds of the sale of bonds and notes in such real estate, equities in real estate, and mortgages in real estate in the United States of America; d. To have, together with, and at the direction of the beneficiaries, the exclusive management and control of the property as if he were the absolute owner thereof, and the full power to do all things and perform all acts which in his or her judgment are necessary and proper for the protection and preservation of the Trust Property and for the interest of the Beneficiaries in the property of the Trust, subject to the restrictions, terms, and conditions set forth herein; e. To take possession of the trust property in the event it becomes vacant; f. To purchase any additional real property for the Trust at such times and on such terms as may be beneficial to the beneficiary; g. To rent or lease the whole or any part of the Trust Property for long or short terms, but not for terms exceeding the term of the Trust then remaining; h. To repair, alter, tear down, add to, or erect any building or buildings upon land belonging to the Trust; to fill, grade, drain, improve, and otherwise develop any land belonging to the Trust; to carry on, operate, or manage any building, apartment house, mobile home lot or hotel belonging to the Trust; i. To make, execute, acknowledge, and deliver all deeds, releases, mortgages, leases, contracts, options, agreements, instruments, and other obligations of whatsoever nature relating to the Trust Property, and generally to have full power to do all things and perform all acts necessary to make the instruments proper and legal (and to do so by a duly appointed attorneyin-fact); j. To collect notes, rents, obligations, dividends, and all other payments that may be due and payable to the Trust; to deposit the net proceeds thereof, as well as any other moneys from whatsoever source they may be derived, in any suitable bank or depository, and to draw the same from time to time for the purposes herein provided, paying the net proceeds therefrom to the beneficiaries; k. To pay all lawful taxes and assessments and the necessary expenses of the Trust; to employ such officers, brokers, property managers, engineers, architects, carpenters, contractors, agents, counsel, and such other persons as may seem expedient, to designate their duties and fix their compensation; to fix a reasonable compensation for their own services to the Trust, as organizers thereof. l. To represent the Trust and the Beneficiaries in all suits and legal proceedings relating to the Trust Property in any court of law or equity, or before any other bodies or tribunals; to begin suits and to prosecute them to final judgment or decree; to compromise claims or suits, and to submit the same to arbitration when, in their judgment, such course is necessary or proper. m. To arrange and pay for and keep in force in the name and for the benefit of the Trust and/or the Trustee, such insurance as the Trustee may deem advisable, in such companies, in such amounts, and against such risks as determined necessary by the Trustee. Trustee in addition to the other duties herein imposed upon him or her, shall have the obligation to: n. To keep a careful and complete record of all the beneficial interests in the Trust Property with the name and residence of the person or persons owning such beneficial interest, and such other items as they may deem of importance or as may be required by the Beneficiaries. Session 12: Understanding the Paperwork 15

306 o. To keep careful and accurate books showing the receipts and disbursements he or she has made on behalf of the Trust and also of the Trust Property and to keep books of the Trust open to the inspection of the Beneficiaries. Nothing in this agreement shall preclude the powers and authorities of a trustee as defined by state law, code or statute, unless such additional powers shall cause this agreement to be construed as a trust as defined in Section (a) of the Procedure and Administration Regulations of the Internal Revenue Code. 7. Compensation of Trustee. The Beneficiaries jointly and severally agree that the Trustee shall receive the sum of $50.00 per year for his or her services as Trustee. 8. Liability of Trustee. The Trustee and his or her successor as Trustee shall not be required to give a bond, and each Trustee shall be liable only for his own acts and then only as a result of his own gross negligence or bad faith. 9. Removal of Trustee. The Beneficiaries shall have the power to remove a Trustee from his office or appoint a successor to succeed him or her. This removal must by in writing, signed by all of the beneficiaries. Upon Seven (7) days written notice, the Trustee shall deliver all books, records, bank account information, keys, security deposits, leases and funds in his or her possession, and execute any documents necessary to convey title and/or authority over the Trust and the Trust Property to the Successor Trustee. 10. Resignation of Trustee. Any Trustee may resign his or her office with thirty (30) days written notice to Beneficiaries. The Beneficiaries shall appoint the Trustee named as successor Trustee herein (or proceed to elect a new Trustee) to take the place of the Trustee who had resigned, but the resignation shall not take effect until an affidavit signed and acknowledged before a notary public by both the resigning Trustee and the new Trustee shall have been procured in a form which is acceptable for recording in the registries of deeds of all the counties in which properties held under this instrument are situated. If the Trust property is recorded in the name of the trustee himself, the resigning trustee shall also execute a general warranty deed in the proper form and manner for recording the registry of deeds in the county in which the property is situate. Said deed and/or affidavit need not be recorded unless so requested of the new Trustee at the written direction of the Beneficiaries. In the event a new trustee is not appointed within Sixty (60) days after notice the resignation of the existing Trustee is received by the beneficiaries, this agreement shall terminate, and the resigning Trustee shall deliver all books, records, bank account information, keys, security deposits, leases and funds in his or her possession, and execute any documents necessary to convey title to the trust property to the beneficiaries as their interests may appear. Whenever a new Trustee shall have been elected or appointed to the office of Trustee and shall have assumed the duties of office, he or she shall succeed to the title of all the properties of the Trust and shall have all the powers and be subject to all the restrictions granted to or imposed upon the Trustee by this agreement, and every Trustee shall have the same powers, rights, and interests regarding the Trust Property, and shall be subject to the same restrictions and duties as the original Trustee, except as the same shall have been modified by amendment, as herein provided for. 11. Death or Incapacity of Trustee. Upon the death, termination, resignation or physical or mental incapacity of the Trustee, the following individual(s) shall immediately be appointed as successor Trustee, with the full powers and duties of the former Trustee: Sarah D. Substitute, whose address is 500 Flintsone Blvd, Anytown, CO or, if said individual is not then living or is unable or unwilling to act as trustee, then, whose address is. In the event none of said individuals are then living or are unable or unwilling to act as Trustee, then a new Trustee will be elected and appointed as per paragraph 10 herein. In the event of the death of any beneficiary, his or her right and interest hereunder, except as otherwise provided, shall pass to his or her executor or administrator and to his heirs at law. 12. Beneficiary not Bound by Trustee. The Trustee is not an agent or partner of, and shall have no power to bind the Beneficiaries personally and, in every written contract he may enter into, reference shall be made to this declaration; and any person or corporation contracting with the Trustee, as well as any beneficiary, shall look to the funds and the Trust Property for payment under such contract, or for the payment of any debt, mortgage, judgment, or decree, or for any money that may otherwise become due or payable, whether by reason or failure of the Trustee to perform the contract, or for any other reason, and neither the Trustee nor the Beneficiaries shall be liable personally therefore. 13. Dealings with Trustee. No party dealing with the Trustee in relation to the Trust Property in any manner whatsoever, and, without limiting the foregoing, no party to whom the property or any part of it or any interest in it shall be conveyed, Session 12: Understanding the Paperwork 16

307 contracted to be sold, leased or mortgaged by the Trustee, shall be obliged to see to the application of any purchase money, rent or money borrowed or otherwise advanced on the property; to see that the terms of this Trust Agreement have been complied with; to inquire into the authority, necessity or expediency of any act of the Trustee or be privileged to inquire into any of the terms of this Trust Agreement. 14. Recording of Agreement. Neither this Agreement nor any summary of the contents hereof shall be placed on record in the county in which the Trust Property is situated, or elsewhere, but if it is so recorded, that recording shall not be considered as notice of the rights of any person under this Agreement derogatory to the title or powers of the Trustee. 15. Term of Agreement. This agreement shall continue for a period of twenty years from the date of its execution. The Trustee shall contact all Beneficiaries in writing at least twelve months prior to that time. The trustee shall place the Trust Property for public sale, pay all debts due and owing with regard to the Trust Property, and remit the proceeds to the Beneficiaries according to their respective interests in the Trust. The Beneficiaries may choose to renew this agreement for a term of twenty additional years by submitting their intention in writing to the Trustee. If any portion of the Trust Property is in any manner or time period capable of being held in this Land Trust for longer period of time than is permitted under the laws of the state law governing this Agreement, or the vesting of any interest under this Land Trust could possibly occur after the end of such permitted time period, then, upon the occurrence of the foregoing, the Trustee is directed to immediately terminate the Trust and to distribute the Trust Property to the Beneficiaries as their respective interests may appear at the time of the termination of the Trust. As much as possible, the Trustee will maintain the Trust Property intact and not liquidate it, but, rather, distribute the Trust Property in kind. 16. Income Tax Returns. The Trustee shall not be obligated to file any income tax returns with respect to the Trust, except as required by law, and the Beneficiaries individually shall report and pay their share of income taxes on the earnings and avails of the Trust Property or growing out of their interest under this Trust. In the event an informational return is required by law, the Trustee agrees to execute the same after contacting all the Beneficiaries. It is the intention of the parties that this agreement does not create a trust under the definition as set forth in Section (a) of the Procedure and Administration Regulations of the Internal Revenue Code. 17. Assignment of Beneficial Interest. The interest of a Beneficiary, or any part of that interest, may be transferred only by a written assignment, executed in duplicate and delivered to the Trustee. If there is more than one beneficiary, the remaining beneficiaries must first approve of said transfer in writing. The remaining beneficiaries shall have a sixty (60) day right of first refusal to purchase said interest. Unless stated otherwise, any assignment of beneficial interest hereunder shall also include the power of direction and revocation of this trust agreement. Any beneficiary who assigns his interest in full shall forever waive his right to revoke this trust agreement. 18. Individual Liability of Trustee. The Trustee shall not be required, in dealing with the Trust Property or in otherwise acting under this Agreement, to enter into any individual contract or other individual obligation whatsoever; nor to make itself individually liable to pay or incur the payment of any damages, attorneys' fees, fines, penalties, forfeitures, costs, charges or other sums of money whatsoever. The Trustee shall have no individual liability or obligation whatsoever arising from its ownership, as Trustee, of the legal title to the Trust Property, or with respect to any act done or contract entered into or indebtedness incurred by it in dealing with the Trust Property or in otherwise acting under this Agreement, except only as far as the Trust Property and any trust funds in the actual possession of the Trustee shall be applicable to the payment and discharge of that liability or obligation. 19. Reimbursement and Indemnification of Trustee. If the Trustee shall pay or incur any liability to pay any money on account of this Trust, or incur any liability to pay any money on account of being made a party to any litigation as a result of holding title to the Trust Property or otherwise in connection with this Trust the Beneficiaries, jointly and severally, agree that on demand they will pay to the Trustee all such payments made or liabilities incurred by the Trustee, together with its expenses, including reasonable attorneys' fees, and that they will indemnify and hold the Trustee harmless of and from any and all payments made or liabilities incurred by it for any reason whatsoever as a result of this Agreement. 20. Unanimous Direction of Beneficiaries. Wherever an act, decision or direction is required by the Beneficiary or Beneficiaries herein, said designation shall be deemed to mean all of the beneficiaries acting in a unanimous agreement, unless a lesser percentage is so specified. 21. Governing Law. This agreement, and all transactions contemplated hereby, shall be governed by, construed and enforced in accordance with the laws of the State of Colorado. The parties herein waive trial by jury and agree to submit to the personal jurisdiction and venue of a court of subject matter jurisdiction located in the County in which the property sits. In the event that litigation results from or arises out of this Agreement or the performance thereof, the parties agree to reimburse the prevailing party's reasonable attorney's fees, court costs, and all other expenses, whether or not taxable by the Session 12: Understanding the Paperwork 17

308 court as costs, in addition to any other relief to which the prevailing party may be entitled. In such event, no action shall be entertained by said court or any court of competent jurisdiction if filed more than one year subsequent to the date the cause(s) of action actually accrued regardless of whether damages were otherwise as of said time calculable. 22. Binding Effect. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon any successor trustee under it, as well as upon the executors, administrators, heirs, assigns and all other successors in interest of the Beneficiaries. 24. Annual Statements. There shall be no annual meeting of the Beneficiaries, but the Trustee shall prepare an annual report of their receipts and disbursements for the fiscal year preceding, which fiscal year shall coincide with the calendar year, and a copy of the report shall be sent by mail to the Beneficiaries not later than February 28 of each year. 25. Termination of this Agreement. This Trust may be terminated on thirty (30) days written notice signed by all of beneficiaries and delivered to the Trustee. Upon the termination of this Agreement, the Trustee shall deliver all books, records, bank account information, keys, security deposits, leases and funds in his or her possession, and execute any documents necessary to convey title to the trust property to the beneficiaries as their interests may appear. 26. Entire Agreement. This Agreement contains the entire understanding between the parties and may be amended, revoked or terminated only by written agreement signed by the Trustee and all of the Beneficiaries. IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the day and year first above written. The beneficiaries: Incredible Investments, LLC By it s President, Harold D. Homebuyer STATE OF Teller) COUNTY OF Colorado) )ss: On February 21, 2008, before me, Nancy G. Notary, a notary public in and for said state personally appeared Incredible Investments, LLC By it s President, Harold D. Homebuyer, personally known to me (or proved to me based upon satisfactory evidence) to be the person(s) whose name(s) are subscribed to the within instrument and acknowledged that (s)he/they executed the same in his/her/their signature on the instrument the person(s) or entity on behalf of which they acted, executed the instrument. Witness my hand and official seal NOTARY PUBLIC My commission expires NOTARY SEAL The Trustee: Timothy M. Trustworthy as Trustee for Seller Family Trust STATE OF Teller) COUNTY OF Colorado) )ss: On February 21, 2008, before me, Nancy G. Notary, a notary public in and for said state personally appeared Timothy M. Session 12: Understanding the Paperwork 18

309 Trustworthy as Trustee for Seller Family Trust, personally known to me (or proved to me based upon satisfactory evidence) to be the person(s) whose name(s) are subscribed to the within instrument and acknowledged that (s)he/they executed the same in his/her/their signature on the instrument the person(s) or entity on behalf of which they acted, executed the instrument. Witness my hand and official seal NOTARY PUBLIC My commission expires NOTARY SEAL Session 12: Understanding the Paperwork 19

310 EXHIBIT A TRUST PROPERTY To wit: Lot 123, Block 2, Ranch Estates Subdivision Filing No. 2, Teller County, Colorado Known by street and address as: 1234 Main Street, Anytown, CO Session 12: Understanding the Paperwork 20

311 EXHIBIT B BENEFICIARIES AND THEIR INTERESTS Name and Address Interest Incredible Investments, LLC 100 % 500 Flintsone Blvd Anytown, CO Session 12: Understanding the Paperwork 21

312 [Space Above Reserved for Recording Purposes] WARRANTY DEED THIS DEED, made this 21 day of February, 2008 between Sam A. Seller and Susie B. Seller the grantor, whose address is and Seller Family Trust the grantee, whose address is c/o Timothy M. Trustworthy as Trustee, 500 Flintsone Blvd, Anytown, CO WITNESSETH, that the grantor, for and in consideration of the sum of TEN DOLLARS ($10.00), the receipt and sufficiency of which is hereby acknowledged and received, and for other good and valuable consideration, has granted bargained, sold and conveyed, and by these presents does grant, bargain sell, convey and confirm unto the grantee, their heirs and assigns forever, all the real property, together with improvements, if any, situate and being in the County of Teller, State of Colorado, described as follows: Lot 123, Block 2, Ranch Estates Subdivision Filing No. 2, Teller County, Colorado Also known as street and number 1234 Main Street, Anytown, CO TOGETHER with all and singular hereditaments and appurtenances thereunto belonging, or in anywise appertaining and the reversion and reversions, remainder and remainders, rents, issues, and profits thereof, and all the estate, right, title, interest, claim and demand whatsoever of the said grantor, either in law or equity, of, in and to the above bargained premises, with the hereditaments and appurtenances. TO HAVE AND TO HOLD the said premises above bargained and described, with the appurtenances, unto the said grantee, their heirs and assigns forever. And the said grantor, for himself, his heirs, and personal representatives, does covenant, grant bargain and agree to and with the grantee, their heirs and assigns, that at the time of the ensealing and delivery of these presents, is well seized of the premises above conveyed, has good, sure, perfect, absolute indefeasible estate if inheritance, in law, in fee simple, and has good right, full power and lawful authority to grant, bargain, sell and convey the same in manner and form aforesaid, and that the same are free and clear from all former and other grants, bargains, sales, liens, taxes, assessments, encumbrances and restrictions of any kind or nature whatsoever, except any easements, restrictions, covenants, zoning ordinances and rights-of-way of record and property taxes accruing subsequent to 2008, a lien not yet due and payable. The grantor shall and will WARRANT AND FOREVER DEFEND the above-bargained premises in the quiet and peaceable possession of the grantee, his heirs, and assigns, against all and every person or persons lawfully claiming the whole or any part thereof. The singular shall include the plural, the plural shall include the singular, and the use of any gender shall be applicable to all genders. IN WITNESS WHEREOF, the grantor has executed this deed on the date set forth above. STATE OF Teller ) COUNTY OF Colorado ) )ss: On February 21, 2008, before me, Nancy G. Notary, a notary public in and for said state personally appeared Sam A. Seller and Susie B. Seller, personally known to me (or proved to me based upon satisfactory evidence) to be the person(s) whose name(s) are subscribed to the within instrument and acknowledged that (s)he/they executed the same in his/her/their signature on the instrument the person(s) or entity on behalf of which they acted, executed the instrument. Witness my hand and official seal NOTARY PUBLIC My commission expires NOTARY SEAL Session 12: Understanding the Paperwork 22

313 [Space Above Reserved for Recording Purposes] Statement of Authority (Section , C.R.S.) 1. This Statement of Authority relates to an entity named Seller Family Trust 2. The type of entity is a: corporation nonprofit corporation limited liability company general partnership limited partnership registered limited liability partnership registered limited liability limited partnership limited partnership association government or governmental subdivision or agency trust 3. The entity is formed under the state laws of Colorado. 4. The mailing address for the entity is:500 Flintsone Blvd, Anytown, CO The name and position of each person authorized to execute instruments conveying, encumbering, or otherwise affecting title to real property on behalf of the entity is: Name: Timothy M. Trustworthy Position: Trustee 6. The authority of the foregoing person(s) to bind the entity is not limited limited as follows: 7. Other matters concerning the manner in which the entity deals with interests in real property: 8. This Statement of Authority is executed on behalf of the entity pursuant to the provisions of Section , C.R.S. 9. This Statement of Authority amends and supersedes in all respects any prior Statement of Authority executed on behalf of the entity. Executed this 21 st day of February, Timothy M. Trustworthy as Trustee for Seller Family Trust STATE OF Teller ) COUNTY OF Colorado ) )ss: On February 21, 2008, before me, Nancy G. Notary, a notary public in and for said state personally appeared Timothy M. Trustworthy as Trustee for Seller Family Trust, personally known to me (or proved to me based upon satisfactory evidence) to be the person(s) whose name(s) are subscribed to the within instrument and acknowledged that (s)he/they executed the same in his/her/their signature on the instrument the person(s) or entity on behalf of which they acted, executed the instrument. Witness my hand and official seal NOTARY PUBLIC My commission expires NOTARY SEAL Session 12: Understanding the Paperwork 23

314 [Space Above This Line For Recording Data] Limited Power of Attorney BE IT KNOWN, that Sam A. Seller has made and appointed, and by these presents does make and appoint Harold D. Homebuyer true and lawful attorney for him/her and in his/her name, place and stead, for the following specific and limited purposes only: To Execute contract, deed, closing and other necessary documents related to real property described as follows: Lot 123, Block 2, Ranch Estates Subdivision Filing No. 2, Teller County, Colorado and known by street and address as 1234 Main Street, Anytown, CO giving and granting said attorney, full power and authority to do and perform all and every act and thing whatsoever necessary to be done in and about the specific and limited premises (set out herein) as fully, to all intents and purposes, as might or could be done if personally present, with full power of substitution and revocation, hereby ratifying and confirming all that said attorney shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 21 day of February, On February 21, 2008, before me, Nancy G. Notary, a notary public in and for said state personally appeared Sam A. Seller, personally known to me (or proved to me based upon satisfactory evidence) to be the person(s) whose name(s) are subscribed to the within instrument and acknowledged that (s)he/they executed the same in his/her/their signature on the instrument the person(s) or entity on behalf of which they acted, executed the instrument. Witness my hand and official seal NOTARY PUBLIC My commission expires NOTARY SEAL Session 12: Understanding the Paperwork 24

315 Seller Disclosure Form The undersigned are the owners of property located at 1234 Main Street, Anytown, CO in the County of Teller, State of Colorado. In engaging in a transaction with Incredible Investments, LLC (hereinafter the "purchaser"), on this 21 day of February, 2008, we understand that our loan with Bank of Anywhere having a principal outstanding balance of approximately $ 33, will be paid on a monthly basis, but not assumed by the purchaser or paid off completely at this time. We understand that this loan will remain in our name and may continue to appear on our credit reports. We understand that although our payments will be made on this loan on a timely basis, the lender above mentioned, or its assigns, may discover that title to the property has been transferred and may demand payment in full of the outstanding balance of the loan. We agree that we will not commit any action to make any statement orally or in writing that will cause said lender to discover title has been transferred. We understand and accept the risks involved and agree to proceed with this transaction in light of these risks. We agree and understand that the property mentioned above will no longer be legally ours, and we agree and understand that we may not legally depreciate said property on our federal or state income tax returns, nor may we claim any income tax deduction for the interest payments, taxes or other expenses thereon. I/we have had the foregoing read to me and understand the purchaser will not assume any present mortgages, deeds of trust, or other liens or encumbrances against the property described above. Seller Date Seller Date Session 12: Understanding the Paperwork 25

316 Account Change of Address Request COMPANY ACCOUNT # REGARDING 1234 Main Street, Anytown, CO Dear Sirs/Ladies: Please change the address on our account to: c/o Timothy M. Trustworthy 500 Flintsone Blvd Anytown, CO Phone: (719) Thank you. Name SSN: Signature Date Name SSN: Signature Date Session 12: Understanding the Paperwork 26

317 Sample Selling Documents Filled Out Contracting to Sell Real Estate Sales Agreement Rent To Own Addendum Promissory Note Rental Agreement Session 12: Understanding the Paperwork 27

318 Real Estate Sales Agreement This agreement dated March 5, 2008 on the property known by the street address 1234 Main Street, Anytown, CO is by and between Billy T. Buyer and Betty G. Buyer (BUYER) and Seller Family Trust (SELLER), The Property is in Teller County, Sate of Colorado and is legally described as follows (if lengthy, attach legal description): Lot 123, Block 2, Ranch Estates Subdivision Filing No. 2, Teller County, Colorado For consideration received, the seller agrees to sell and the buyer agrees to buy the above-referenced property (with all improvements and subject to easements, covenants and restrictions of record) under the following terms and conditions: 1. PURCHASE PRICE: The total purchase price to be paid by the buyer(s) will be $ 239,500.00, which will be paid by a cash down payment at closing of $ 20, and a promissory note (substantially conforming with FNMA standards, hereinafter note ) in the principal amount of $ 219, bearing an interest rate of 6.75 % per annum and requiring monthly payments of principal and interest interest only in the amount of $1, per month amortized on a basis of interest only commencing 30 days after closing (first payment prorated) and due and payable on or before 36 months at closing ("Balloon Date"). The promissory note will require a late payment of 10 % of each payment received after the 5th day of the month. The default interest rate shall be at 18% per annum. INSURANCE & PROPERTY TAXES: Monthly payments by buyer shall be increased by 1/12 of the estimated annual property taxes ($1,300.00), hazard insurance ($1,100.00) and (if applicable) homeowner s assoc dues. Initial escrow payment will be $ per month and will adjusted as needed. 2. NON-REFUNDABLE EARNEST MONEY: Buyer has given $ 5, in the form of cashier scheck as nonrefundable earnest money to bind this agreement. The balance of $15, shall be due as follows: Up to $1,200 in earned rent credit per Rent To Own Addedum, credit for payments made against the attached $7, note payable at $300 a month and the remaining balance due in cleared funds at closing. If buyer fails to deliver required funds or close the transaction timely, seller shall retain said earnest money (and any other consideration) as liquidated damages and not a penalty and the buyer shall have no further legal recourse against the seller. 3. PERSONAL PROPERTY: The following personal property shall be included in the sale of the property in its present as is condition without warranties, express, implied or for any particular purpose of the buyer: All existing appliances and hot tub (operational condition unknown). 4. CLOSING: The closing date shall be on or before March 25, 2009, time being of the essence. Closing of this transaction shall be completed by buyer and seller executing an "Installment Land Contract," ("contract") which shall, among, other things, require buyer to make payments under the above-mentioned note. Seller shall choose closing agent and Buyer shall pay closing fee not to exceed $ Water/sewer charges will not be prorated at closing. Property taxes, hazard insurance and HOA dues (if applicable) will not be prorated at closing. All parties consent to closing by electronic signatures. 5. ESCROW OF DOCUMENTS: The parties will designate Lyle the Lawyer as escrow agent to hold the original executed Installment Land Contract, Warranty Deed, Bill of Sale and Quitclaim Deed from Buyer in escrow pending seller's and buyer's performance of the terms of the Installment Land Contract. Buyer shall pay escrow agent s fee of $ PREPARATION OF DOCUMENTS: The installment land contract, note, deeds and other related legal documents will be prepared by seller's attorney, Lyle the Lawyer, and Buyer agrees to pay legal fees for preparation not to exceed $ TITLE: Seller will not be providing buyer will evidence of title, title report or title insurance. Title to the property will not be delivered to buyer at closing, but will be held in escrow pursuant to paragraph 5 of this contract. 8. LEGAL REPRESENTATION: Buyer acknowledges that an Installment Land Contract is not an ordinary real estate transaction and that there are certain legal consequences that cannot be explained by seller or the closing agent. It is recommended and encouraged that Buyer obtain legal counsel before signing this agreement or any closing documents. 9. DISCLOSURES: Seller is not aware of any lead-based paint hazards on the property, nor has any reports in his possession regarding lead-based paint hazards on the property. Buyer waives his right to inspect the property for lead-based paint hazards and has received a copy of the EPA pamphlet "Protect Your Family from Lead in Your Home." Buyer understands that there is an underlying loan and accompanying deed of trust encumbering the property that will not be assumed by the Session 12: Understanding the Paperwork 28

319 buyer nor paid off by the seller at closing, and that said loan contains an acceleration clause. 10. ENTIRE AGREEMENT: This written contract constitutes the entire agreement and understanding of the parties and any statements made orally or in writing prior to this agreement are incorporated and merged herein. Any subsequent agreements regarding the property or modifications of this agreement are void unless reduced to writing. 11. ADDITIONAL TERMS: A. See attached Rent To Own Addendum. B. See attached Promissory Note See attached ADDITIONAL TERMS, CONDITIONS AND EXPLANATIONS Buyer - Signature Date Buyer - Signature Date Tax ID #: Tax ID #: Address: 777 Lucky Dude Ranch Cir, Outoftown, CA Phone: (714) Fax: Other: Seller - Signature Date Timothy M. Trustworthy as Trustee for Seller Family Trust Address: 500 Flintsone Blvd, Anytown, CO Phone: (719) Fax: (719) [email protected] Other: (719) cell Session 12: Understanding the Paperwork 29

320 ADDITIONAL TERMS, CONDITIONS AND EXPLANATIONS (The following is not intended as legal, tax or financial advice) INSTALLMENT LAND CONTRACT An installment land contract, also known as agreement for deed and contract for deed, is an ownercarry sale wherein the buyer makes monthly payments on an installment basis. The buyer is the equitable owner, having the right to live in the property, but does not have title in his name until the balance of the debt is paid in full. The buyer cannot use the property as collateral for a second mortgage or line of credit. TEMPORARY FINANCING The buyer must be aware that the seller is financing the sale of this agreement and will be collecting monthly payments of interest. The buyer must obtain permanent financing from another source, such as a conventional lending institution before the balloon date. If the indebtedness is not paid in full by such date, the seller has the right to commence legal proceedings to regain possession of the property and the buyer may lose all rights he has to the property and will forfeit all payments made. The buyer should understand that there is no guarantee that the property will increase in value or that institutional financing will be available for the buyer when he is ready to refinance. It is in the buyer s best interest to make immediate arrangements to review his credit report and income qualifications with a mortgage broker or lending institution to determine his eligibility for future financing. LOAN CHARGES In addition to a down payment and closing costs, the seller may require that you pay a loan origination fee. This amount will be disclosed on a Good Faith Estimate you will receive from the seller. YOUR EARNEST MONEY IS NON-REFUNDABLE The earnest money paid by the buyer binds this sales agreement, and thus prevents the seller from offering it for sale to other potential buyers. Thus, if the buyer does not complete the transaction, the seller has the legal right to keep the buyer s earnest money. CLOSING A traditional closing of a real estate transaction involves the seller passing title to the buyer by deed. In this transaction, the deed will be signed by the seller and placed into escrow. The escrow agent will hold the deed until the debt has been paid in full by the seller, which will usually happen if the buyer wants to sell the property or refinance the debt owed to the seller. Once the debt has been paid, the escrow agent will release the deed to the buyer. The escrow agent will also hold a quitclaim deed from the buyer, which will be delivered to the seller in the event of buyer s default. WHAT TO BRING TO CLOSING At closing, you must bring CASH OR CERTIFIED FUNDS and a copy of a driver s license or other official photo identification. Make all certified funds or money orders payable to yourself or the closing agent. NO WARRANTIES OF PERSONAL PROPERTY The personal property included in the sale usually means the appliances and other property not permanently attached to the house. These items should be inspected by the buyer before closing. The seller makes no guaranty or warranty about the condition or useful life of these items. Session 12: Understanding the Paperwork 30

321 TITLE INSURANCE Title insurance is customarily purchased when title passes to the buyer at a regular closing. However, since title is being held in escrow at closing, title insurance will not cover any problems that occur between the closing and the time title is delivered to the buyer (after the indebtedness is paid in full). Seller will not be providing a title report or title insurance, but will provide buyer a copy of the deed to the property showing the seller as the rightful owner. The buyer may further inspect title or obtain title insurance at his own expense. The buyer should also obtain a copy of any recorded covenants, conditions and restrictions on file with the County Clerk & Recorder s Office. SALE OF PROPERTY The buyer may sell the property at any time. The seller will deliver title to the buyer simultaneously with the payoff of the indebtedness due under the note. The buyer may not lease or assign his rights in the installment land contract to another party without the seller s consent. UNDERLYING FINANCING The buyer should understand that the seller purchased the property using conventional financing secured by a deed of trust lien recorded against the property. Said financing will be paid in full by the seller and the lien will be released before the escrow agent releases title to the buyer (after the indebtedness is paid in full). Said deed of trust may contain an acceleration clause that gives the lender the right to declare all sums due and payable under the note if the property is transferred. In the event the lender discovers the land contract sale, it may consider such a sale to be a transfer and declare all sums due and payable under the note. If not paid by the seller at such time, the lender may commence foreclosure proceedings that would put the buyer s legal position under the land contract in jeopardy. It is recommended that the buyer obtain legal counsel to review the consequences of such an event. LEGAL REPRESENTATION Although the buyer may be paying the expense of preparation of legal documents for closing, the buyer is not being represented by seller s attorney or the closing agent. It is recommended that the buyer obtain legal counsel to review all closing documents before signing. This form is intended to enhance the buyer s understanding of the transaction, but is not intended as legal, tax or financial advice. ENTIRE AGREEMENT This written contract constitutes the entire agreement and understanding of the parties and any statements made orally or in writing prior to this agreement are incorporated and merged herein. Any subsequent agreements regarding the property or modifications of this agreement are void unless reduced to writing and signed by the parties. It is recommended that the buyer ask the seller to reduce any agreement or promises made to writing to ensure that the parties are in agreement on all terms. Session 12: Understanding the Paperwork 31

322 Rent-to-Own Addendum This agreement dated March 5, 2008 on the property known by the street address 1234 Main Street, Anytown, CO is by and between Billy T. Buyer and Betty G. Buyer (BUYER) and Seller Family Trust (SELLER), amends the real estate sales agreement of the same date. Notwithstanding anything to the contrary, the parties agree as follows: A Buyer will be in breach of this agreement if buyer vacates property before closing for any reason, or if seller has to initiate eviction action for breach of Rental/Lease Agreement. B Seller agrees to rent home to buyer until closing for $ 1, (discounted rent) per month as outlined in Rental Agreement dated 3/5/2008 in exchange for Buyer's agreement to purchase the home and be responsible for repairs and maintenance. Monthly rent is subject to 10% annual increase beginning with the rental payment due 3/25/2008. C. $ 7, of the amount shown in paragraph 2 of the real estate sales agreement includes an additional non-refundable purchase deposit with payments due each month per Promissory Note beginning 4/25/2008 through 3/25/2010. D. $ 1, (total rent credit) of the amount shown in paragraph 2 of the real estate sales agreement includes a $ non-refundable purchase credit (rent credit) from each monthly rental payment made in full on or before the due date. Purchase credits are only applied against the purchase price at closing and a mortgage lender will typically not apply this amount to the amount they require a borrower put down in cash. No rent credit will accumulated beyond the total rent credit. E Unless otherwise agreed in real estate sales agreement, Seller is relying on Buyer's ability to close with cash or a new loan within 12 months. Failure to close forfeits all purchase deposits paid, however Buyer may extend the closing date 12 months by notifying Seller AND paying an additional non-refundable purchase deposit of $1, no later than 45 days in advance of closing date. Seller has agreed to finance the buyer per terms in the real estate sales agreement F The purchase price will increase 1/2 % each month on the rental payment due date beginning 3/25/2009. G All purchase deposits, purchase credits, rent credit and improvements made to the property are non-refundable. H. Additional Rent-To-Own Provisions: Buyer - Signature Date Buyer - Signature Date Seller - Signature Date Seller - Signature Date Session 12: Understanding the Paperwork 32

323 Promissory Note FOR VALUE RECEIVED, Billy T. Buyer and Betty G. Buyer whose address is: 1234 Main Street, Anytown, CO promise(s) to pay to the order of Incredible Investments, LLC the principal sum of Seventy Two Hundred and 00/100 dollars ($ 7, ) in legal tender of the United States, with interest from the date hereof at the rate of N/A % month. Should this Note be paid in full within thirty days from the date hereof or at any time during a thirty day period, interest shall be charged at a daily rate of $ N/A per day. Principal and interest shall be payable at the offices of: Incredible Investments, LLC 500 Flintsone Blvd, Anytown, CO or at such other place as the holder hereof may designate in writing. Should any installment not be paid when due, or should the Maker or Makers hereof fail to comply with any of the terms of this agreement, or if Holder deems itself insecure or if Maker defaults under these terms, the entire unpaid principal sum evidenced by this Note, with all agreed interest, shall, at the option of the Holder, and without notice to the undersigned, become due and may be collected forthwith, time being of the essence of this Agreement. It is further agreed that failure of the Holder to exercise this right of accelerating the maturity of the debt, or indulgence granted from time to time, shall in no event be considered as a waiver of such right of acceleration or stop the Holder from exercising such right. Installments, or payment if single payment Note, not paid within 5 days of due date shall incur a late fee of 15% of the installment or payment, but not less than $ The Holder shall be entitled to all costs of collection should this Note, or any part of the indebtedness evidenced hereby, be accelerated and not paid. Should this note be collected at law or by an attorney at law, an Attorney/Collection Fee of 15% of the balance due, but not less than $100.00, plus any costs and administration fees, shall be added. And each of the undersigned, whether principal, surety, guarantor, endorser, or other party, severally waives and renounces demand, protest, notice of demand, protest and non payment. PAYMENT SCHEDULE: Monthly payments of $ for 24 months due on the 25th of each month starting 4/25/2008. A N/A payment of $ N/A in interest will be waived if note is paid as agreed. OTHER PAYMENTS: Amount Due Amount Due IN WITNESS WHEREOF, the parties hereto have caused these presents to be signed in person: Borrower - Signature Date Borrower - Signature Date SS #: SS #: Session 12: Understanding the Paperwork 33

324 Rental Agreement THIS AGREEMENT dated March 5, 2008 is by and between Incredible Investments, LLC herein called "LANDLORD", and Billy T. Buyer and Betty G. Buyer, herein called "TENANT". LANDLORD hereby agrees to rent to TENANT the real property located in the City of Anytown, County of Teller, State of Colorado, described as follows: 1234 Main Street, Anytown, CO commencing on March 5, 2008 and monthly thereafter on a month-to-month basis. LANDLORD rents the described premises to TENANT on the following terms and conditions. 1. RENT TENANT agrees to pay LANDLORD as base rent the sum of $ 1, per month, due and payable monthly in advance on the 25th day of each month during the term of this agreement. Rent must be received by 5:00 PM. If the rent has not been received by 5:00 PM. on the 25th of the month, then a 3 day notice may be posted. Unless otherwise notified in writing, the monthly rental payment shall increase annually by ten percent. 2. PAYMENT OF RENT The initial payment of rent and security deposit under the terms of this RENTAL AGREEMENT MUST BE MADE IN CASH. LANDLORD must receive all initial payments of rent and security deposit prior to TENANTS taking occupancy of property. Thereafter monthly rent payments may be paid by check until the first check is dishonored and returned unpaid. Time is of the essence and no excuses will be accepted. Rent shall be made payable to Incredible Investments, LLC and be sent by mail to LANDLORD at: 500 Flintsone Blvd, Anytown, CO or hand delivered in a stamped and sealed envelope bearing landlord s name to 500 Flintsone Blvd, Anytown, CO during normal operating hours. Any rents lost in the mail will be treated as if unpaid until received by LANDLORD. 3. DISCOUNT PROGRAM As an incentive to the TENANT to pay his rent payments ON TIME or AHEAD OF TIME, and for being responsible for property maintenance and repairs, a discount in the amount of $50.00 may be deducted from the above rental sum each month. This discount will automatically be forfeited if the TENANT fails to perform as stated above. 4. APPLIANCES The house is rented without appliances. The above rental payment specifically EXCLUDES all appliances of any kind! Such appliances as are in the property, are there solely at the convenience of the LANDLORD, who assumes no responsibility for their operation. LANDLORD agrees to remove appliances at the request of TENANT. 5. ADDITIONAL RENT TENANT hereby acknowledges that late payment will cause LANDLORD to incur costs not contemplated by this RENTAL AGREEMENT, the exact amount of which will be extremely difficult to ascertain. In the event rent is not received prior to 5:00 PM. on the 25th day of the month, regardless of cause including dishonored checks, TENANT further agrees, in addition to loss of rent discount, to pay additional rent to LANDLORD equal to $5.00 per day until account is current. Neither ill health, loss of job, financial emergency or other excuses will be accepted for late payment. In the event collection of past due rent must be made by LANDORD at the property, additional rent of $30.00 will also be due for each such attempted collection. 6. RETURNED CHECKS In the event TENANT's check is dishonored and returned unpaid for any reason to LANDLORD, TENANT agrees to pay as additional rent the sum equal to $ If for any reason a check is returned or dishonored twice, all future rent payments will be cashier s check, certified check or money order. 7. USE The TENANTS agree to use the premises only as a residence for themselves ( 2 adults) and their 3 children and their 2 pets. ALL adult tenants must sign this rental agreement and submit a signed application prior to taking occupancy. Resident agrees to pay $ each month for each additional person who shall occupy the premises in any capacity. If TENANTS fail to inform LANDLORD of additional people occupying property, the $ per person additional rent will be assessed retroactive to the date commencing the RENTAL AGREEMENT. 8. PETS There shall be no pets allowed on the rented premises except as may be granted by LANDLORD, in writing. TENANT hereby agrees that if found in violation, the rents due hereunder may be raised at the LANDLORD's discretion. If pets are allowed by LANDLORD, TENANT agrees to render an additional security deposit of $ N/A.This consent constitutes a representation by the TENANT and a consent by the LANDLORD for maintenance in house at said property, of the following described pet(s): 2 small dogs. The TENANT is to be fully responsible for any damage to property of Session 12: Understanding the Paperwork 34

325 LANDLORD or of others which may result from the maintenance of the pet. TENANTS agree to pay for pest infestation service after termination of occupancy. Said monies shall be the responsibility of the TENANT and shall be deducted from the Security Deposit. LANDLORD reserves the right to revoke this consent on three day's notice to TENANT, if in the opinion of LANDLORD'S employees, the pet has been a nuisance to other residents or has not been maintained according to these rules. In the event consent is revoked, TENANT agrees to forthwith discontinue maintenance of the pet and failure to so discontinue, shall be a breach of this RENTAL AGREEMENT. Any animals on the property not registered under this RENTAL AGREEMENT will be presumed to be strays and will be disposed of according to law, at the option of LANDLORD. 9. NON-ASSIGNMENT OF RENTAL AGREEMENT Resident agrees not to Assign this agreement, not to Sublet any part of the property, nor to allow any other person to live therein other than as named in Paragraph 7 without first requesting permission from the LANDLORD and paying the appropriate surcharge. Further, that covenants contained in this RENTAL AGREEMENT, once breached, cannot afterward be performed; and that unlawful detainer proceedings may be commenced. 10. LEGAL OBLIGATIONS TENANTS hereby acknowledge that they have a legal obligation to pay their rent on time each and every month regardless of any other debts or responsibilities they may have. They agree that they will be fully liable for any back rent owed. They also acknowledge defaulting on this RENTAL AGREEMENT could result in judgment being filed against them and a lien being filed against their current and future assets and/or earnings. 11. ATTORNEY'S COST If court action is sought by either party to enforce the provisions of the RENTAL AGREEMENT, attorney's fees and costs may be awarded to the prevailing party in the court action. 12. REPAIR POLICY The TENANTS hereby acknowledge that they have been informed that the LANDLORD and/or his agents are not always available to provide support services to TENANTS. The rental discount is offered for this reason, to encourage TENANTS to take care of themselves and the property. If a problem comes up that should cost $ or less to repair, then the TENANTS are expected to deal with it themselves or lose the discount for that month. If a problem comes up that will cost more than $ to repair then the TENANTS must get in touch with LANDLORD as soon as possible, between 9AM. and 5PM. on Monday thru Friday. After normal business hours TENANTS may leave a message and someone will get back to you as soon as possible. Under no circumstances will LANDLORD be responsible for any improvements or repairs costing more than $25.00 unless the TENANTS were given written authorization to make repairs or improvements in advance. TENANT agrees to meet all Tenant s obligations as spelled out in Colorado state law, including but not limited to 1. Comply with all obligations primarily imposed upon TENANTS by applicable provisions of building codes materially affecting health and safety. 2. Keep that part of the premises that he occupies and uses as clean and safe as the condition of the premises permit. 3. Dispose from his dwelling unit all ashes, rubbish, garbage and other waste in a clean and safe manner. 4. Keep all plumbing fixtures in the dwelling unit or used by the TENANT as clean as their condition permits. 5. Use in a reasonable manner all electrical, plumbing, sanitary, heating, ventilating, air-conditioning and other facilities and appliances including elevators in the premises. 6. Not deliberately or negligently destroy, deface, damage, impair or remove any part of the premises or knowingly permit any person to do so. 7. Conduct himself and require other persons on the premises with his consent to conduct themselves in a manner that will not disturb his neighbor's peaceful enjoyment of the premises. TENANT warrants that he/she will meet above conditions in every respect, and acknowledges that failure to perform the obligations herein stipulated will be considered grounds for termination of this agreement in accordance with Statues and loss of all deposits. 13. SECURITY DEPOSIT TENANTS hereby agree to pay a security deposit of $ N/A, to be refunded upon vacating, return of the keys to the office and termination of this contract according to the terms herein agreed. This deposit will be held to cover any possible damage to the property. No interest will be paid on this money and in no case will it be applied to back or future rent. It will be held intact by LANDLORD until at least 15 working days after TENANTS have vacated the property. At that time LANDLORD will inspect the premises thoroughly and assess any damages and/or needed repairs. This deposit money minus any necessary charges for repairs, cleaning etc. will then be returned to TENANT with a written explanation for deductions, after they have vacated the property. Session 12: Understanding the Paperwork 35

326 14. CLEANING FEE TENANT hereby agrees to accept the property in its present state of cleanliness. They agree to return the property in the same condition or pay a cleaning fee if LANDLORD has the property professionally cleaned. 15. MONTH-TO-MONTH TENANCY This is a month to month RENTAL AGREEMENT only! It is not a lease or other long-term agreement. After one month's rental payment has been received, this agreement may be terminated by mutual consent of the parties; or by either party giving written notice at least 30 days prior to the end of any monthly period. Any provision of this agreement may be reasonably changed by the LANDLORD in like manner, thus THIS RENTAL ESTABLISHES A MONTH TO MONTH TENANCY ONLY. All parties agree that termination of this agreement without prior notice before 6 months will constitute breach of the tenancy as agreed on page 1, and all Security Deposits shall be forfeited in favor of the LANDLORD as full liquidated damages at LANDLORD's option following termination without notice. 16. TENANT COOPERATION TENANT agrees to cooperate with LANDLORD/Agent in showing property to perspective tenants, prior to termination of occupancy. 17. REMOVAL OF LANDLORD's PROPERTY If anyone removes any property belonging to LANDLORD without the express written consent of LANDLORD, this will constitute abandonment and surrender of the premises by TENANT and termination by them of this RENTAL AGREEMENT. LANDLORD may also take further legal action. 18. TENANT INSURANCE No rights of storage are given by this agreement. LANDLORD will not be liable for any loss of TENANT's property. TENANT hereby acknowledges this and agrees to make no such claims for any loses or damages against LANDLORD, his agents, or employees. TENANT agrees to purchase insurance at their own expense, sufficient to protect themselves and their property from fire, theft, burglary, breakage, electrical connections etc. They acknowledge that if they fail to procure such insurance it is their responsibility and they alone shall bear consequences. 19. ABANDONMENT If TENANTS leave the premises unoccupied for 15 days, without paying rent in advance for that month, or while owing any back rent from previous months, which has remained unpaid, then LANDLORD and/or his representative has the right to take immediate possession of the property and to bar the TENANT from returning. LANDLORD will also have the right to remove any property that the TENANTS have left behind and dispose of it. 20. LOCK POLICY No additional locks will be installed on any door without the written permission of LANDLORD. LANDLORD will be given duplicate keys for all locks so installed at the TENANT's expense, before they are installed. 21. CONDITION OF PREMISES The TENANTS hereby acknowledge that the said property is in good condition and that a working smoke detector has been installed. (YOU AGREE TO PERIODICALLY TEST AND MAINTAIN THE SMOKE DETECTOR). If there is anything about the condition of the property that is not good, they agree to report it to LANDLORD on the Move In/Move Out Checklist and return it within 7 days of taking possession of the property. They agree that failure to file any written notice of defects will be legally binding proof that the property is in good condition at the time of occupancy. 22. INVENTORY AND INSPECTION RECORDS LANDLORD warrants that all major systems will be functional and in good repair at time of possession, unless otherwise stipulated on Move In/Move Out Checklist. Light switches, wall plugs, doors, windows, faucets, drains, locks, toilets, sinks, heaters, etc., will either be in working order or will be repaired once the TENANTS have completed and returned Move In/Move Out Checklist. TENANTS are encouraged to report any necessary repairs no matter how slight, but they are hereby advised that LANDLORD does not normally repair or replace nonfunctional items such as paint, carpets, etc., every time a property changes possession. These items are scheduled for repair/replacement at regular intervals of tenant turnover. 23. MAINTENANCE OF LAWNS The TENANTS acknowledge that they are legally responsible for maintaining the lawns and landscaping and will be held liable for any damages caused by lack of water, abuse or neglect. 24. TENANT RESPONSIBILITY Good Housekeeping is expected of everyone. Tenant agrees to keep quarters clean and in a sanitary condition. The Session 12: Understanding the Paperwork 36

327 TENANTS agree not to permit any deteriation or destruction to occur while they are occupying the property. They agree to maintain the walls, woodwork, floors, furnishings, fixtures and appliances (if any), windows, screens, doors, fences, plumbing, air-conditioning and heating, electrical and mechanical systems as well as the general structure and appearance of the property. 25. ALTERATIONS TENANT shall make no alterations, decorations, additions or improvements in or to the premises without LANDLORD's prior written consent, and then only by contractors or mechanics approved by LANDLORD. All alterations, additions or improvements upon the premises, made by either party, shall become the property of LANDLORD and shall remain upon, and be surrendered with said premises, as a part thereof, at the end of the term hereof. The TENANTS acknowledge that they will be responsible for and pay for any damage done by rain, wind, hail, tornadoes, hurricanes, etc., if this damage is caused by leaving windows open, allowing stoppage and/or overflow of water and/or sewage pipes, broken windows or doors, torn screens, broken door and window locks, etc., or any damage caused while TENANT has occupancy. 26. VEHICLE POLICY The TENANTS agree never to park or store a motor home, camper, trailer or any sort of recreational vehicle on the premises and to park only 4 automobiles license numbers only on the paved area provided. Junk cars, cars on blocks, not running vehicles, or unlicensed automobiles are not permitted on property. Removal will be at the expense of the TENANT. TENANTS agree that any vehicle parked on unpaved areas may be towed and stored at TENANT's expense. 27. UTILITIES Resident will be responsible for on-time payment of all utilities, garbage, water and sewer charges, telephone, gas or other bills incurred during their residency and will keep utilities on if needed to protect property from damage. They specifically authorize LANDLORD to deduct amounts of unpaid bills from their deposits in the event they remain unpaid after termination of this agreement. 28. ROOF AND TERMITE ALERT TENANT agrees to notify LANDLORD immediately if roof leaks; water spots appear on ceiling or at the first sign of termite activity. 29. NON-LIABILITY The TENANTS hereby state that any work or repairs that need to be done will be farmed out to competent professionals, unless TENANTS are qualified and capable of doing the work themselves and doing it properly, in a safe manner which meets all federal, state, and local regulations. TENANTS further state that they will be legally responsible for any mishap occurring during work either they do themselves or hire others to do. LANDLORD will be held free from harm and liability along with his agents and representatives. In the event that needed repairs are beyond the TENANT's capacity, they are urged to arrange for professional help. 30. DISCLOSURE OF LANDLORD/AGENT 30. DISCLOSURE OF LANDLORD/AGENT The owner may be represented at various times by his employees or agents, who will carry identification. Incredible Investments, LLC is the manager of the property and authorized to act for and on behalf of the owner for the purpose of receiving and receipting for notices and demands and for the service of process and all other acts which LANDLORD could or would personally present. Manager's address is 500 Flintsone Blvd, Anytown, CO 80863, and the phone is (719) VALIDITY OF LEASE PROVISIONS Any provision set forth in this RENTAL AGREEMENT which is contrary to the RESIDENTIAL LANDLORD and TENANT ACT shall be treated by LANDLORD and TENANT as void and as if it were not set forth herein, but all other provisions of the RENTAL AGREEMENT shall remain in full force and effect. 32. PHONE When the TENANT gets a phone installed in the premises, LANDLORD will be given the phone number within 2 working days of installation and will be notified within 2 working days of any further changes in the phone number. 33. ACCESS TO PREMISES The LANDLORD reserves the right to enter the residence at reasonable times to inspect, make necessary repairs, supply services or show it to prospective residents, purchasers, mortgagees, workmen or contractors. Whenever practicable, a oneday notice of the LANDLORD's intent to enter shall be given to the TENANT. The LANDLORD may also display "for Session 12: Understanding the Paperwork 37

328 rent" and "for sale" signs on the building on which the rented residence is a part. 34. PEST CONTROL POLICY TENANT is responsible for any ongoing Pest Control Service, if the TENANT desires such a service. LANDLORD is not responsible for any damage done to the TENANT's person or property by such pests, or to the person or property of TENANT's family or any other persons on their premises. 35. WAIVER All rights given to LANDLORD by this agreement shall be cumulative in addition to any laws which exist or might come into being. Any exercise of any rights by LANDLORD or failure to exercise any rights shall not act as a waiver of those or any other rights. No statement or promise by LANDLORD, its agents or employees, as to tenancy, repairs, amount of rent to be paid or other terms and conditions shall be binding unless it is put in writing and made a specific part of this agreement. 36. LEGAL BINDING TENANT hereby states that they have the legal right to sign for any and all other residents and to commit them to abide by this contract. 37. TERMS In this agreement the singular number where used will include the plural, the masculine gender will include the feminine, the term owner will include LANDLORD, LESSOR; and the term RESIDENT will include TENANT, LESSEE. 38. CROSS DEFAULT If Resident has entered into any other agreements concerning Property and Tenant defaults on any provisions of those agreements, then this Agreement shall also be considered in default and, at the option of Management, this Agreement may be voided. 39. ADDITIONAL PROVISIONS A. Tenants have permission to make quality improvements to the home at their own expense and will be liable and responsible for completing any projects started. All improvements become property of the Landlord. B. Tenants to keep utilities current. Failure to do so allows Landlord to make such payments as deemed desirable to protect landlord's interests. The amount of any payments made by landlord will be taken out of the next payment received from tenant which may cause the rent to be delinquent. C. The first month s rent received pays through to April 4, A prorated rent payment of $ will be due buy that date for rent period of April 5 April 24. Then the regular full rent payment will be due by April 25 and by the 25 th of each month thereafter. 40. FULL DISCLOSURE The TENANTS signing this RENTAL AGREEMENT (CONTRACT) hereby state that all their questions about this RENTAL AGREEMENT have been answered, that they fully understand all the provisions of the agreement and the obligations and responsibilities of each party as spelled out herein. They further state that they agree to fulfill their obligations in every respect or suffer the full legal and financial consequences of their actions or lack of action in violation of this agreement. Signature by the TENANT on this RENTAL AGREEMENT is acknowledgment that he/she has received a signed copy of the RENTAL AGREEMENT. ACCEPTED & DATED: Tenant: Date Tenant: Date Landlord: Date RECEIPT: Session 12: Understanding the Paperwork 38

329 Sample ILC Selling Documents Blank Closing a Sale Installment Land Contract Installment Land Contract Installment Land Contract Note Escrow Agreement Due On Sale Disclosure to Buyer Written Notice of Transfer Session 12: Understanding the Paperwork 39

330 INSTALLMENT LAND CONTRACT THIS INSTALLMENT LAND CONTRACT made and entered into this day of, 20 by and between hereinafter called "Seller," and hereinafter called "Purchaser." 1. PROPERTY. In accordance with the terms and conditions hereinafter set forth, Seller agrees to sell and Purchaser agrees to buy the following described real estate in the County of, State of, to wit: also known by street and address as Together with all rights of way and easements appurtenant thereto, all improvements thereon and all fixtures of a permanent nature, if any, in their present condition, ordinary wear and tear excepted, and hereinafter called the "Property." 2. ESCROW. Concurrently with the execution of this contract, Purchaser and Seller have executed an escrow agreement incorporating the terms of it into this Installment Land Contract. The escrow agreement was made with, as Escrow Agent, and Seller have/has executed and delivered to said Escrow Agent a Warranty Deed to Purchaser conveying the Property in fee simple, as well as a Bill of Sale conveying all personal property to said Purchaser in their present "as is" condition without express, implied or warranties of any particular purpose. Said Deed and Bill of Sale shall be delivered to Purchaser by the Escrow Agent upon payment in full of the indebtedness hereunder or as otherwise provided herein. Purchaser has also executed and delivered to said Escrow Agent a Quitclaim Deed to seller releasing all interest in the Property. Said deed shall be delivered to Seller by the Escrow Agent upon default of the agreement is provided in said escrow agreement and as provided herein. 3. PURCHASE PRICE. Purchaser agrees to pay Seller or assigns as the full purchase price for the Property the sum of $ payable as follows: $ upon execution of the Installment Land Contract $ under the terms of a Promissory Note (the "Note") of even date herewith; together with interest on the unpaid principal balance at the rate of % per annum, amortized over years, in installments of not less than $ per month, including principal and interest, beginning on, 20 and on the 1 st day of each and every month thereafter until principal and interest have been paid in full; provided however, that the entire balance of principal and interest shall be due and payable on, 2 or upon sale or refinance of the Property, whichever first occurs. Purchase price shall include all permanently attached fixtures and personal properly existing on subject property and owned by Seller all in their present "as is" condition at the execution of this Installment Land Contract. 3. PROPERTY TAX AND INSURANCE. In addition to the payments for principal and interest under the Note, Purchaser shall pay to Seller the annual real property taxes and premiums for insurance on the Property (as provided below), which payments shall be separately accounted for by Seller and paid as they become due. Purchaser shall reimburse seller for all such property taxes and insurance premiums paid on the property upon delivery of title as described herein. 4. PREPAYMENT. In the event of any prepayment, this contract shall not be treated as in default with respect to payment so long as the unpaid balance of principal and interest (in such case accruing interest shall be treated as unpaid principal) is less than the amount that said indebtedness would have been had the periodic payments been made as first specified above. Session 12: Understanding the Paperwork 40

331 5. POSSESSION. Possession of the Property shall be delivered to Purchaser on execution of this Installment Land Contract, subject to existing leases or tenancies, if any. 6. HAZARD INSURANCE. From and after date hereof, insurance shall be kept on all buildings on the property, insuring against loss by fire with extended coverage endorsement, in an amount or not less than the actual replacement costs of all buildings or the outstanding loan balance owing under this contract, whichever is greater. 7. UNDERLYING LOANS. Seller represents that all payments due on existing encumbrances have been paid. It is understood that Purchaser does not assume the obligations relating to the existing encumbrances on the Property, and that Seller shall make all payments thereon as they become due and owing, and shall fully discharge said encumbrances prior to or simultaneously with delivery of deed to Purchaser by Escrow Agent. In case of failure of Seller to make such payments as they become due, Purchaser shall have the right to make such payments and to deduct the amount thereof from the installments due and owing Seller hereunder. At no time shall the amount owing on any present or future encumbrance exceed the unpaid principal balance owing under this contract. In addition to any other remedy available to Purchaser, if at any time the amount owing on any present or future encumbrance exceeds the unpaid principal balance owing under this contract, Purchaser may pay to the creditor of such encumbrance that part of the payment due under this contract that applies to principal and such payments to the creditor will be credited to the balance due under this contract. In the event that Seller or assigns should refinance any underlying loans which are secured by mortgages or deeds of trust on the property, the Purchaser agrees to subordinate his equitable interest in the Property and further agrees to execute any documentation necessary to facilitate said refinance. 8. ALTERATIONS TO THE PROPERTY. Purchaser shall not make any major alteration or addition to the Property without first obtaining permission of Seller, which permission shall not be unreasonably withheld. All expenses incurred in making alterations, additions or improvements to the Property shall be promptly paid by Purchaser and Purchaser shall furnish copies of said paid bills to Seller together with executed lien releases or lien waivers. Purchaser shall keep the Property in a good state of repair during the term hereof. Purchaser shall obtain all necessary permits from local government authorities to perform such repairs or additions. 9. DEFAULT. This contract shall be in default when any payment is delinquent on the Note for a period of THIRTY (30) days or if Purchaser breaches any of the other terms or conditions of this contract which remains uncorrected for a period of THIRTY (30) days. In the event of default, Seller may give written notice of such default to Purchaser demanding that Purchaser bring all sums current (or, including any delinquent payments, late charges and reasonable expenses incurred by Seller as a result of the default), within THIRTY (30) calendar days of the notice. The notice must also indicate that failure to pay the appropriate sums may result in immediate cancellation of the contract and loss of the property. Such notice shall be given by personal delivery or by first class or certified mail. In that case, Seller is entitled to immediate possession of the property; the interests of the Purchaser shall be forfeited and Seller shall retain all monies paid by Purchaser as liquidated damages and not as a penalty. In addition, Seller shall also be entitled to recover actual and consequential damages, reasonable attorney's fees and costs of collection. In the event Purchaser remains in possession of the property, Purchaser shall be deemed to be occupying the property unlawfully and be evicted under state law as a tenant at suffrance. 10. NO RECORDING. Purchaser and Seller agree that this contract shall not be recorded in public records. The recording of this agreement shall constitute a material breach of this agreement. 11. NO ASSIGNMENT. This agreement is personal to Purchaser herein, and no conveyance shall be made by Purchaser of the premises herein described, or any part, or any beneficial interest thereof without first obtaining the prior written consent of the Seller. Any conveyance of the property herein described or of any beneficial interest of any type therein in violation of the terms of this paragraph shall entitle Seller to accelerate payment of the obligation secured hereby, and all sums of money secured hereby shall, at the option of Seller, become due and in default whether or not the same are so due and payable and in default by the specific terms hereof. Nothing herein contained shall be construed to constitute a novation or release of Purchaser or any subsequent owner of liability or obligation under this agreement. 12. BINDING ON HEIRS. This agreement is binding upon and inures to the benefit of both parties hereto, their heirs, personal representatives, and successors. It is also binding upon and inures to the benefit of Seller assigns. 13. ESCROW CHARGES. Purchaser agrees to pay in addition to the aforementioned monthly payments on the Note and for taxes and insurance, all servicing fees charged by Escrow Agent for the entire term of this Installment Land Contract, as those fees may from time to time be charged by the Escrow Agent. 14. MISCELLANEOUS. The use of any gender herein shall be deemed to be or include the other genders and the neuter and the use of the singular herein shall be deemed to be and include the plural (and vice-versa), wherever appropriate. Session 12: Understanding the Paperwork 41

332 15. ADDITIONAL PROVISIONS: IN WITNESS WHEREOF, I/we the undersigned Purchaser have executed this Installment Land Contract on the day and date first above written. Seller Purchaser Purchaser STATE OF ) )ss: COUNTY OF ) On, 20, before me,, a notary public in and for said state personally appeared, personally known to me (or proved to me based upon satisfactory evidence) to be the person(s) whose name(s) are subscribed to the within instrument and acknowledged that (s)he/they executed the same in his/her/their signature on the instrument the person(s) or entity on behalf of which they acted, executed the instrument. Witness my hand and official seal NOTARY PUBLIC My commission expires NOTARY SEAL Session 12: Understanding the Paperwork 42

333 INSTALLMENT LAND CONTRACT PROMISSORY NOTE $ U.S. Dollars Date: City: Property Address: WHEREAS,, as seller ( Lender ), and, as "Purchaser" ( Borrower ) have entered in to an "Installment Land Contract" of even date herewith, the parties fully understand and agree as follows: 1. BORROWER'S PROMISE TO PAY In return for a loan that I have received, I promise to pay $ (this amount is called "principal"), plus interest, to the order of the Lender. The Lender is whose address is. I understand that the Lender may transfer this Note. The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the "Note Holder." 2. INTEREST Interest will be charged on unpaid principal until the full amount of principal has been paid. I will pay interest at a yearly rate of % If this loan is in default, interest shall accrue as described in Section 6(B) of this Note. 3. PAYMENTS I will make my monthly payments in the amount of $ on the first day of each month beginning on, 20 at or at a different place if required by the Note Holder. I will make these payments every month until I have paid all of the principal and interest and any other charges described below that I may owe under this Note. My monthly payments will be applied to interest before principal. If, on, I still owe amounts under this Note, I will pay those amounts in full on that date, which is called the "maturity date." 4. BORROWER'S RIGHT TO PREPAY I have the right to make payments of principal at any time before they are due. A payment of principal only is known as a "prepayment." When I make a prepayment, I will tell the Note Holder in writing that I am doing so. I may make a full prepayment or partial prepayments without paying any prepayment charge. The Note Holder will use all of my prepayments to reduce the amount of principal that I owe under this Note. If I make a partial prepayment, there will be no changes in the due date or in the amount of my monthly payment unless the Note Holder agrees in writing to those changes. 5. LOAN CHARGES If a law, which applies to this loan and which sets maximum loan charges, is finally interpreted so that the interest or other loan charges collected or to he collected in connection with this loan exceed the permitted limits, then: (i) any such loan charge shall be reduced by the amount necessary to reduce (he charge to the permitted limit; and (ii) any sums already collected from me which exceeded permitted limits will be refunded to me. The Note Holder may choose to make this refund by reducing the principal I owe under this Note or by making a direct payment to me. If a refund reduces principal, the reduction will be treated as a partial prepayment. 6. BORROWER'S FAILURE TO PAY AS REQUIRED (A) Late Charge for Overdue Payments. If the Note Holder has not received the full amount of any monthly payment by the end of 10 calendar days after the date it is due, I will pay a late charge to the Note Holder. The amount of the charge will be $10.00 each day said payment is late beyond 10 calendar days. I will pay this late charge promptly but only once on each late payment. (B) Default. If I do not pay the full amount of each monthly payment on the date it is due, I Session 12: Understanding the Paperwork 43

334 will be in default. Once default occurs, the principal balance and late charges remaining shall accrue interest at the rate of 18% or the highest rate permitted by state law. (C) Notice at Default. This note shall be in default when any payment is delinquent for a period of thirty (30) days of which any payment is due. In the event of default, Seller may give written notice of such default to Purchaser demanding that Purchaser bring all sums current (or, including the unpaid principal and any delinquent payments, late charges and reasonable expenses incurred by Seller as a result of the default), within thirty (30) calendar days of the notice. (D) No Waiver By Note Holder. Even if, at a time when I am in default, the Note Holder does not require me to pay immediately in full as described above, the Note Holder will still have the right to do so if I am in default at a later time. (E) Payment of Note Holder's Costs and Expenses. If the Note Holder has required me to pay immediately in full as described above, the Note Holder will have the right to be paid back by me for all of its costs and expenses in enforcing this Note to the extent not prohibited by applicable law. Those expenses include, for example, reasonable attorney's fees. 7. GIVING OF NOTICES Unless applicable law requires a different method, any notice that must be given to me under this Note will be given by delivering it or by mailing it by first class mail to me at the Property Address above or at a different address if I give the Note Holder a notice of my different address. Any notice that must be given to the Note Holder under this Note will be given by mailing it by first class mail to the Note Holder at the address stated in Section 3(A) above or at a different address if I am given a notice of that different address. 8. OBLIGATIONS OF PERSONS UNDER THIS NOTE If more than one person signs this Note, each person is fully and personally obligated to keep all of the promises made in this Note, including the promise to pay the full amount owed. Any person who is a guarantor, surety or endorser of this Note is also obligated to do these things. Any person who takes over these obligations, including the obligations of a guarantor, surety or endorser of this Note, is also obligated to keep all of the promises made in this Note. The Note Holder may enforce its rights under this Note against each person individually or against all of us together. This means that any one of us may be required to pay all of the amounts owed under this Note. 9. WAIVERS I and any other person who has obligations under this Note waive the rights of presentment and notice of dishonor. "Presentment" means the right to require the Note Holder to demand payment of amounts due. "Notice of dishonor" means the right to require the Note Holder to give notice to other persons that amounts due have not been paid. 10. UNIFORM SECURED NOTE This Note is a uniform instrument with limited variations in some jurisdictions. In addition to the protections given to the Note Holder under this Note, a Mortgage, Deed of Trust, Contract for Deed or Security Deed (the "Security Instrument"), dated the same date as this Note, protects the Note Holder from possible losses which might result if I do not keep the promises which I make in this Note. That Security Instrument describes how and under what conditions I may be required to make immediate payment in full of all amounts I owe under this Note. Some of those conditions are described as follows: Transfer of the Property or a Beneficial Interest in Borrower. If all or any part of the Property or any interest in it is sold or transferred (or if a beneficial interest in Borrower is sold or transferred and Borrower is not a natural person) without Lender's prior written consent, Lender may, at its option, require immediate payment in full of all sums secured by this Security Instrument. However, this option shall not be exercised by Lender if exercise is prohibited by federal law as of the date of this Security Instrument. If Lender exercises this option, Lender shall give Borrower notice of acceleration. The notice shall provide a period of not less than thirty (30) days from the date the notice is delivered or mailed within which Borrower must pay all sums secured by this Security Instrument. If Borrower fails to pay these sums prior to the expiration of this period, Lender may invoke any remedies permitted by this Security Instrument without further notice or demand on Borrower. WITNESS THE HAND(S) AND SEAL(S) OF THE UNDERSIGNED. Borrower Borrower Session 12: Understanding the Paperwork 44

335 ESCROW AGREEMENT THIS ESCROW AGREEMENT made and entered into this day of, 20 by and between hereinafter called "First Party," and hereinafter called "Second Party," and hereinafter called the "Escrow Agent." WHEREAS, First Party entered into a certain Installment Land Contract (hereinafter "Contract") with Second Party for the sale by First Party and the purchase by Second Party of certain Real Property situate in the County of, and State of, a copy of such contract is attached hereto and incorporated herein, and WHEREAS, the proper performance of said Contract requires the appointment of an Escrow Agent to hold certain papers, NOW THEREFORE, First Party and Second Party hereby appoint Third Party as their Escrow Agent for the purpose of holding the legal documents hereinafter described upon the terms and conditions that are contained herein. 1. First Party hereby hands and delivers to said Escrow Agent a an duly executed Bill of Sale and Warranty Deed to the following described Real Property, situate in the County of, and State of, to-wit: which Deed conveys said property to Second Party in fee simple. Second party hereby hands and delivers to Escrow Agent a duly executed Quitclaim Deed to the same property. Both First and Second Party hand and deliver to Escrow Agent the original executed Installment Land Contract. 2. First Party hereby authorizes said Escrow Agent to hold such Deed until such time as the conditions, covenants and agreements contained in First Party's Contract with Second Party have been fully performed and satisfied, at which time First Party authorizes the Escrow Agent to deliver said Deed to Second Party. 3. In the event of default as described in said contract, First Party shall deliver an affidavit to Escrow Agent describing said default and attesting to actions taken by First Party required under the contract, including copies of notices and proof of delivery as required by the contract. At such time, Escrow Agent shall deliver Second Party copies of the same notices, given by personal delivery or by first class or certified mail, giving Second Party FIVE (5) days to respond. If Second Party does not respond to said notices, Escrow Agent shall deliver to First Party the original Contract, Warranty Deed and Quitclaim Deed. 4. In consideration of the Escrow Agent rendering the services mentioned herein, the Escrow Agent shall be paid by First and Second Parties, a fee of $ for opening of escrow, plus $75.00 per year. 5. First Party and Second Party agree that said Escrow Agent shall in no case or event be liable for forgeries or false presentations of these instructions, and that in the event of any controversy between the parties to said contract, or any third person with respect to the subject matter of this escrow, its terms or conditions, the Escrow Agent shall not be required to determine the same or take any action in the premises, but may await settlement of any controversy by appropriate legal proceedings, or otherwise, as may be required by the Escrow Agent, notwithstanding any of the provisions of this Escrow Agreement to the contrary. In the event of such controversy between the parties to this Escrow Agreement, the Escrow Agent shall not be held liable for interest or damage and shall not be responsible to make a determination of such controversy. IN WITNESS WHEREOF the parties have set their hands and affixed their seals the day and year first above written. First Party Session 12: Understanding the Paperwork 45

336 Second Party Second Party I hereby accept the terms of the above escrow and acknowledge receipt of the documents described herein. Escrow Agent Date Session 12: Understanding the Paperwork 46

337 Disclosure and Agreement WHEREAS,, hereinafter referred to as "Seller", and, hereinafter referred to as "Purchaser" have entered in to an "Installment Land Contract" of even date herewith, the parties fully understand an agree as follows: 1. Both Seller and Purchase are fully aware that the mortgage(s) securing the property located at contain provisions prohibiting the transfer of any interest in the property without satisfying the principal balance remaining on the underlying loans and/or obtaining the lender's prior written consent (i.e., a "due-on-sale" clause), and that this transaction may violate said mortgage. Seller and Purchaser agree not to divulge the details of this transaction to said lender(s) or to commit any act or omission that could cause said lender(s) to exercise its rights under the "due-on-sale" clause of the aforementioned mortgages. 2. Seller and Purchaser execute this disclosure form after being fully informed as to the legal and financial implications of the due-on-sale clause and the potential violation thereof that the Installment Land Contract may cause. Specifically, the parties agree and understand that if said due on sale clause is enforced by the holders of said mortgages, the entire balance due under said deeds of trust will have to be paid off. In this event, Seller and Purchaser agree to take all reasonable steps to satisfy said lender, including both parties taking steps to obtain financing and/or Purchaser submitting an application to formally assume liability for said obligations. Date Seller Seller Purchaser Purchaser Session 12: Understanding the Paperwork 47

338 WRITTEN NOTICE OF TRANSFER BY LAND CONTRACT TO THE TREASURER'S OFFICE OF THE COUNTY OF, STATE OF NOTICE IS HEREBY GIVEN of the following transfer by INSTALLMENT LAND CONTRACT: 1. The names and addresses of the sellers are: 2. The name and address of the purchasers are: 3. The legal description for the property is: 4. The date upon which the Installment Land Contract was executed and delivered is: 5. The date or conditions upon which the Deed For Real Property will be delivered to the purchaser is: Date Seller Purchaser Purchaser Session 12: Understanding the Paperwork 48

339 General Disclaimer This program is designed to provide information in regard to the subject matter covered. While all attempts have been made to verify information provided, the authors do not assume any responsibility for errors, omissions or contrary interpretation of the subject matter. The information in this program is not intended to be legal advice, nor a substitute for obtaining legal advice from competent, independent legal counsel. It also is not designed or intended to be relied upon as authoritative financial, investment or professional advice. The authors are NOT engaged in rendering legal, accounting, or other professional services. If legal or expert assistance is required, the services of a competent professional should be sought. The author wants to stress that information contained herein may be subject to varying state and/or local laws or regulations. All users are advised to retain competent counsel to determine what state and/or local laws or regulations may apply to the user s particular business. Neither RoopDoran.com, RichardRoop.com, Inc., nor the authors warrant the accuracy, reliability or timeliness of any information covered in this program and shall not be held liable for any losses caused by reliance on the accuracy, reliability or timeliness of such information. The user of this program assumes responsibility for the use of these materials and information. Adherence to all applicable laws and regulations, both federal and state and local, governing professional licensing, business practices, advertising and all other aspects of doing business in the United States or any other jurisdiction is the sole responsibility of the user. The authors assume no responsibility or liability whatsoever on the behalf of any user of this program. Session 12: Understanding the Paperwork 49

340 Action Notes: Customer Service: (719) Ext. 105 Fax: (719) Sales & Coaching Support: Session 12: Understanding the Paperwork 50

341 The Ultimate Strategy for Buying & Selling Houses Creating a Free & Clear Real Estate Money Machine with Richard Roop and Dan Doran Module 13 Advanced Wealth Building: Wealth Building Part 2 of 2 Session 13: Advanced Wealth Building Page 1 of 14

342 Module 13 Advanced Wealth Building: Wealth Building Part 2 of 2 What you ll discover in this module: How to fund your deals using 0% private money How to accelerate you wealth building and equity growth How to let your buyers cash you out without paying off your 0% owner financing How to increase the cash flow on your properties How to pay off all your credit card debt How to pay off your personal residence, AND How to own 12 houses free and clear in 5 years or less Session 13: Advanced Wealth Building Page 2 of 14

343 Introduction The Ultimate Strategy for buying and selling houses allows you to buy houses with 0% seller carry back financing for up to 15 years. Sellers agree to take back 0% financing for many years because they like the sales price that comes with it. If they can wait for all their money down the road then they get our highest offer price. They get our lowest price if they insist on all their cash. And if they want just some cash now, the price we can offer settles somewhere in between. The Ultimate Strategy can be used to generate cash now, cash flow and cash later. By targeting houses with equity you can meet your cash flow needs by pulling part of your profits out in advance on the day you buy or by creating real positive cash flow on houses you hold. You might want to seriously consider generating a lot more cash later as soon as your present cash flow needs are meet. This is the essence of wealth building and is certainly an advanced topic. Most real estate investors need more cash now. However, your cash now needs can quickly be met when you focus on buying and selling houses using The Ultimate Strategy. Then you can actively pursue the ultimate dream shared by most real estate investors owning a portfolio of debt free houses that generate enough passive income so you can live your preferred lifestyle and become financially free. But that will never happen unless you have a plan and work your plan. So once your cash needs are handled, here s what to do: 1. Buy a free and clear house creating long term 0% financing. 2. Borrow just enough private money at closing to buy, fix and hold. 3. Don t pull out extra cash when you re buying. 4. Give all the net positive cash flow to the seller. 5. Sell the house to a buyer who cashes you out now or within 3 years 6. Use the cash from closing to buy houses or pay off interest bearing debt. 7. Move the 0% seller financing to other properties you buy or own. 8. Make extra principal payments if moving the mortgage increases your cash flow 9. Repeat the process for 5 years while doing other deals This plan is not designed to get you cash now or cash flow. All your profits are systematically reinvested to rapidly pay off your portfolio of houses. Your cash flow is breakeven. But think of how good it will feel to be collecting all the income on 12 debt free houses! Session 13: Advanced Wealth Building Page 3 of 14

344 To illustrate: 1. Buy a free and clear house creating 0% financing You buy a house that will be worth $200,000 after $2,500 in fix up. Your cost to buy, fix and hold is $10,000. You offer the seller $200,000 with $5,000 down if they finance the balance of $195,000 at $850 a month principal only payments with a 5 year balloon. 2. Borrow just enough private money to buy, fix and hold You borrow $15,000 from your private investor paying 10% interest only payments of $125 a month, secured by first mortgage. The seller takes back a second mortgage of $195,000 so your total debt is $210,000. You have no money into the deal. 3. Don t pull out extra cash You can easily borrow extra cash with your first mortgage but you don t need it. 4. Give all the cash flow to the seller You can expect minimum income of $1,300 a month on this house. After paying taxes, insurance and interest on the first mortgage, the house can afford the $850 a month to the seller. 5. Sell to a buyer who cashes you out now or later Market the house to find a wraparound buyer or a tenant buyer. By selling with terms you can get full price of $200,000 within 1, 2 or even 3 years. Collect at least $5,000 down when the house is occupied. This is extra cash to you to help pay for your operational overhead and unexpected costs. The $1,300 a month you collect from your buyer will either be 1) rent or 2) an installment sale payment of taxes, insurance and 7% interest. If you re a wraparound buyer paid 10% down then you could pay off your private money first mortgage, increasing the cash flow $125 a month. 6. Use the cash to buy houses or pay off other debt When a tenant buyer with $5,000 down cashes you out, you will pay off the $15,000 first mortgage and net $180,000. Or if a wraparound buyer with 10% down refinances, you net $180,000. Take these proceeds to fund your other deals or to pay off other houses, including your personal residence. Pay off your highest interest bearing debt first. If paying off other debt increases your cash flow, use it to make additional principal payments on other debt. Session 13: Advanced Wealth Building Page 4 of 14

345 7. Move the 0% financing to other properties you buy or own You always include a substitution of collateral clause in the 0% seller carry back note when buying. In order to give clear title to your buyer you must secure the seller s note with one or more other properties and get a release. If it took two years to cash out then you would have paid the seller s note down $850 a month, reducing it from $195,000 to about $175,000. What if you could buy (or had recently bought) the exact same type of house paying $120,000 all cash using private money, or paying $160,000 subject to? Use part of the $180,000 you collected to pay off this other house and move the seller s $175,000 note onto it. Then increase your monthly payments to the seller from $850 to a $1,000 a month, accelerating your equity growth. 8. Make extra principal payments if moving the mortgage increases cash flow This is a wealth building plan you use when your cash flow needs are met from doing your other deals. The notes you create with private investors and sellers should allow you to prepay without penalty. The bank loans you take over subject to or place on your personal residence should also allow for adding additional principal to any payment. Invest the extra income you create moving mortgages around by paying extra on your highest interest bearing monthly payments. 9. Repeat the process for 5 years while doing other deals If you bought 6 free and clear houses like this each year for 3 years that would be 18 houses at a cost of $210,000 each. Assuming you bought them all on day one with none of your money down, you would create $3,780,000 in debt. At the end of 5 years, paying $850 a month, you would have reduced the debt $918,000. You also collected $5,000 down on each house when occupied and if this $90,000 was reinvested into your wealth building plan, you d owe $2,772,000 at 0%. Now if you bought and sold another 18 similar houses during the next 5 years for $120,000 each for all cash, and reinvested the $65,000 backend profit from each, you would have paid your debt down another $1,170,000. You again collected $5,000 down on each house when occupied. Reinvest this $90,000 into your wealth building plan and you d now owe $1,512,000 at 0%. Finally, if you bought and sold another 18 similar houses during the next 5 years for $160,000 subject to, and reinvested the $25,000 backend profit from each, you would have paid your debt down another $450,000. Reinvest the $90,000 from down payments and you d now only owe $972,000 at 0%. To summarize this 5 year plan: You bought 54 houses, sold 36 and end up holding 18 houses. You collected $5,000 down so you have $195,000 in equity on each one for total equity of $3,510,000. You still owe $972,000 at 0% interest. During this plan you moved this remaining debt onto 6 houses an average $162,000 on each thereby leaving 12 houses free and clear! Session 13: Advanced Wealth Building Page 5 of 14

346 Key Points: We used an average principle reduction of $850 each month on 18 houses for 5 years on the properties acquired in during the first 3 years. If we did not assume that we bought all 18 properties on day one, the debt on the 6 encumbered houses at the end of 5 years could be up to $180,000 each, instead of $162,000. The Free & Clear Offer Generator MAO is $218,700 for a 5 year plan We offer $200,000 to the seller on a 5 year plan, but you could easily offer $190,000 or less and make more. We can pay $200,000 and borrow $210,000 only because of the $10,000+ principal reduction we get each year for 5 years. You can sell for $200,000 within 5 years but you might get $210,000 or more. Rent is $1,300 but you may be able to increase them during the next 5 years. If you borrow at 7% to 9% on a first and 10 to 11% on second, you ll make more. You can pull extra cash when buying if needed but it will slow down the accelerated wealth building. You can keep the extra cash the buyer puts down if needed but it will slow down the accelerated wealth building. When using cash proceeds or extra cash flow to pay down debt, consider paying off credit cards as well. With 12 houses free and clear you should be collecting at least $12,000 a month, each and every month, without buying any more houses! If your market turned normal and you experienced 5% annual appreciation, your equity would grow over $120,000 a year. Session 13: Advanced Wealth Building Page 6 of 14

347 Assumptions: For all 54 houses Worth $200,000 after repaired Needs $2,500 in repairs Takes $10,000 for marketing, buying, holding and repairs Can be sold on terms for $200,000 with $5,000 down Can be rented for $1,300 a month, netting about $1,100 after 15% vacancy factor Or can be wrapped for $1,100 a month at 7% interest only Can be occupied within 3 months No rent credit or concessions to buyer when selling For 18 Free & Clear $5,000 down when buying $195,000 second mortgage at 0% and $850 a month principal only $15,000 private money first at 10% and $125 a month $180,000 cash backend in 24 months For 18 All Cash $120,000 purchase price $10,000 extra cash to cover buy and hold costs $130,000 private money first mortgage at 10% and $1,100 a month interest only $65,000 cash backend in 24 months For 18 Subject To $160,000 purchase price $160,000 taken subject to at $1,000 a month about 7% interest Or $160,000 combo subject to and 0% note to seller at $1,000 a month $10,000 private money second at 12% and $100 a month for buy and hold costs $25,000 cash backend in 24 months Session 13: Advanced Wealth Building Page 7 of 14

348 Free & Clear Offer Generator inputs for property example: Session 13: Advanced Wealth Building Page 8 of 14

349 Session 13: Advanced Wealth Building Page 9 of 14

350 Is it really possible for you? Can you spend 10 to 20 hours a week to buy and sell one house a month? o Work this plan part time o What if you worked full time? Can you buy more than one house a month to meet cash flow needs? o Wholesale flips and wholetailing o Short Sales o 9 Day Sales o Rehab and retail o Other cash deals o Other subject to with equity o Other free and clear Can you buy REOs and other all cash deals at 50 to 60 cent on the dollar? o Found right in the MLS o Cash is king Can you buy subject to deals at 80 cents on the dollar? o Plenty of sellers need debt relief and other help o 85% is considered full retail o If they owe more than 80%, have them pay you Can you find private lenders with $10,000 to $15,000 to invest? o Just about anyone would like to earn more on their money o These smaller loans are easy compared all cash deals Would your private lenders be happy with 10% to 12% interest? o It is a great offer on a hands free investment o Rates are low o You can pay more if needed but pay less when you can Can you spend $1,500 in marketing to make $30,000 to $70,000? o Who else wants a 20 to 1 or 50 to 1 return? o Most business would be happy with 3 to 1 Can you find tenant buyers with 2.5% down? o Go for 3 to 5% down o It extra cash anyway o Simply rent if you like Can you find qualified buyers with 10% down who ll pay 7% interest? o There are lots buyers with good income and credit who want help o You can charge less if needed to sell faster o What about 7.99% interest? o What about 8% down? Can you sell or occupy for full retail price when offering terms? o You might even get a premium o If you need to sweeten the price, buy better o Terms buyers rarely negotiate price Can you sell or occupy within 60 or 90 days? o Buy right so you can sell fast Do you deserve it? o YES! Session 13: Advanced Wealth Building Page 10 of 14

351 The government is coming out with their economic stimulus package this month. Question: which would stimulate you more a few hundred bucks from Uncle Sam or Unlimited Private Money to Fund All Your Deals at ZERO Percent Interest? That s right. All the private money you want at zero percent. Sounds hard to believe, doesn t it, but I promise you it s real. In my last article I showed you how to tap into your Inner Game to save a bundle by reducing your private money interest rate you pay from 12% down to 7%. This is a huge move as it s incredibly more profitable at 7% vs. 12%, especially if you hold long-term. But at 0% it s a whole new world. So how do you get money at ZERO? The key is to buy houses that are free and clear, that is, houses that have no mortgage. And where do you find those? Well let me ask you we ll make it a game. Quiz Time I know you didn t have time to study, so I ll make this one multiple choice. Approximately what percent of homes in this great country are free and clear without any mortgage? A. One out of 20 B. One out of 10 C. One out of 5 D. One out of 3 Before I give you the answer, see if this is a common complaint for you. I routinely get real estate entrepreneurs calling me up saying: Dan, I m getting plenty of leads, but none of them have any equity. Sound familiar? My advice is always the same. You re just fishing in the wrong pond. As a company, RoopDoran is a huge proponent of direct mail. Among the many reasons we love it is that you can target it to your ideal prospect. We target folks with equity. The more equity, the more creative ways there are for you to structure a profitable deal. And where is there tons of equity? In houses that are free and clear. And the Answer Is Session 13: Advanced Wealth Building Page 11 of 14

352 So what answer did you pick? I should have given you one more possible answer: the proverbial none of the above. You see the truth is, according to the latest from the US Census Bureau, 34% of all homes in the US are free and clear. In other words, greater than (answer D) one in three homes have no mortgage and thus have 100% equity. Think about that next time you talk to a very motivated seller who owes more than his house is worth just fishing in the wrong pond. Think about that as you drive home tonight. Of every three houses you pass, odds are one of them is jam packed with equity just waiting for you. So back to my original question: Where Do You Find Free and Clear Homes? Everywhere! I know that if this is the first time you ve been exposed to this information, it may be tough for some of you to fathom, but we ve been marketing to free and clear with great success for years. In fact, we call this The Ultimate Strategy for Buying and Selling Houses. My partner Richard Roop actually copyrighted that title and the strategy works great everywhere in the country that our clients have tried it. So now that you know free and clear homes are everywhere, here is the process for setting them up as The Ultimate Strategy for Funding 1. Buy a free and clear house with great terms 2. Make sure you include a substitution of collateral clause in the contract 3. Sell that house for cash 4. Substitute the collateral (i.e. Move the loan to another property with sufficient equity) 5. Do something really cool with all that money What do I mean by great terms? Simple. Your price, Mr. Seller. My terms. Hold onto your seat for this one. My terms will be no payments and no interest for five to ten years! Again, if this is your first dance with this idea, you may find you have two left feet. We have clients all across that county that have implemented this strategy and they couldn t believe it at first either. Let s work an example. Let s say you find a seller with a property worth $200,000. The seller is a widow and moving in with their kids and doesn t need any income or down payment, they just want to avoid the hassle of selling and you can solve that for them. Further, they want to pass the money from the house on to the kids someday and your program gives them a price in the future they can count on. So when the rest of the market is taking over 100 days to sell and then getting heavily discounted, you can pay them full retail, close in 3 days and let them move whenever they want, leave or take whatever they want, etc. Session 13: Advanced Wealth Building Page 12 of 14

353 Don t forget the great terms mentioned in step one above. You agree to pay full retail, but you offer no payments and no interest for ten years. The widow counters and you finally mutually agree to $500 per month principle only payments and the balance due in seven years. It s a great deal for the right seller especially in today s market. And it s a great deal for you as well. Let s say you can rent the place out for $1300 per month. This gives you a true positive cash flow and quick mortgage pay down with zero interest. That s why we call this The Ultimate Strategy for Buying and Selling Houses. But as good as all that is, that s nothing compared to using it as The Ultimate Strategy for Funding. Let s say you already own a property with $300,000 equity and you d like to tap into that equity for buying more deals. For clarity sake, let s call that house your old property. At the close of the property with the widow above, have your closing agent attach that seller carry back note to your old property. Now your old property has $200,000 less equity, your new property from the widow is free and clear. Next you re-sell the widow s property and you net up to $200,000 cash at 0% with $500 payments for seven years. The sellers are protected as you still agree to pay them monthly payments and a balloon in seven years. And their note and deed are secured to a property with greater equity. All is well. I know this is a lot of incredible stuff to digest in a single article, so think on this and when you get it, you ll never be the same again. Imagine This Phone Call To put this in perspective, let s say one of your private lenders called you up and made you a similar offer. He says he wants to loan you $200,000 at 0% interest with $500 payments and the note is not due for seven years. Could you imagine that? In essence, that s what you ve accomplished here. Now the question is: what to do with that money? It s a fun question to ponder. Let me get you started. Pay Off High Interest Debt First it would make great economic sense to order all your investment debt from highest to lowest interest rate and retire the highest first. So any hard money loans go first, then private money at 12% then private money at 10%, etc. Next, what equity would you like to tap into? As long as you use the money for investment purposes like buying houses all cash at a huge discount (which is getting easier and easier these days) you would be well served to do so. Anything you can think of that you used to borrow private money for, can now be funded by using The Ultimate Strategy for Funding. Pay Off Your Personal Residence Session 13: Advanced Wealth Building Page 13 of 14

354 But what if you don t own any properties yet? How about your personal residence? Take the above example and if you had sufficient equity in your own home, at the close of the widow s house you could substitute the collateral and have it moved to your house. After you re-sell the widow s house you have a huge bag of investment cash at 0%. Now the equity on your residence that was earning you nothing, can now be used to fund deals. These are deals that you would have gladly paid 10% to 12% in private money or even higher for hard money. And unlike a traditional HELOC (Home Equity Line Of Credit) from a bank, this one has no interest and better yet, it can t be cancelled. In today s tough credit market many banks are cancelling HELOCs if you happen to live in a market with declining values. But what if your house has little or no equity? Let s say your residence is worth $300,000 and you owe $200,000. Once again, you could substitute the collateral at close and now your residence has a $200,000 note on it and you only pay $500 per month principle only. This is far less than you were paying and now you have more cash flow each month. It Forces You to Do This Business Right There are lots of folks in this business that make a fine living by quick turning houses and that s great for cash now. However, if you got into this business to create long-term wealth, know that quick turning (i.e. flipping) is just a job. The interesting thing about this strategy is that it strongly encourages you to do this business right. That is, you are now encouraged to go buy as many houses as you can that have as much equity as possible so that you can substitute the collateral to free up more and more money to use to invest in great deals. Buy and hold and build tons of wealth. No better time than the great sale that s going on right now in a neighborhood near you. I just heard from a client of mine that implemented this strategy and she walked away with over $200,000 in cash. She has a lot of long term holds and had to spread it over many properties, but she was amazed to be able to raise so much investment cash with such an unbelievable interest rate (i.e. zero!). It goes without saying (which is why I have to say it) that it s only prudent that you leave a cushion of equity since you are on the hook to eventually pay this money back and invest it wisely. That means, when you substitute the collateral, you want some equity above and beyond the new note in order to protect the original seller. Once this sinks in and you try it yourself, I know you too will call it the Ultimate Strategy for Funding. I predict that within the year we will see individual real estate entrepreneurs amassing seven figure funds at 0% to take advantage of this awesome buyers market we re currently experiencing. The only question is: Will you be one of them? I hope so. Good Luck, Dan Doran the Marketing Man Session 13: Advanced Wealth Building Page 14 of 14