$10,000 A MONTH TECHNIQUE
Here’s a Technique Born from a Recession That Can Make You an Easy $10,000 a Month.
In case you haven’t heard we’re in a recession. Over 25% of all the homes in America are over financed, some over 150% financed. This has resulted in millions of houses going into foreclosure and millions more headed there. It’s also destroyed the financial status and credit of many good people.
But as usual, out of adversity comes opportunity and one of the biggest to come along in my 30 years is creating a revolution among home investors. Yours truly has created a new system, recorded it and built new agreements to match and this technique has
become the focus of my house business and more and more students who learn of it say the same.
I must give credit to Jon and Stephanie Lannotti for bringing it to my attention and telling me about it several times before it hit me like a ton of bricks. My immediate
unanswered questions almost shut down my open mind and I almost blew it.
I’ll answer yours for you here so don’t shut down early. Hang in there.
The technique is called ACTS, Assignment of Contracts and Terms.
That means we get paid for assigning contracts, not buying houses we would have thrown away prior to ACTS and every time we do we make a $5,000-$10,000 fee. Some are doing 6-8 a month and you’ll see why in a minute. Don’t confuse this with wholeselling junkers. Here we’re dealing with beautiful homes in great areas and our only buyers are owner occupants.
Let’s start with the problem then your questions and my answers. When I’m done you should read this again because it will absolutely change your business model and probably double your cash now. Here goes:
- Over 50% of the FSBO’s who call us or we call are over leveraged, some 150% or more.
- Many FSBO’s want more than their house is worth knowing their asking price is high but refuse to get a grip on reality and cannot be convinced it’s overpriced.
- Some sellers are willing to create decent terms such as a lease purchase or owner financing but not good enough terms to make you want to close yourself and stay in the deal.
- Many sellers won’t sell “subject to” even when they’re hurting.
- Some investors want immediate checks but don’t want long term deals such as lease options or seller financing.
All these problems can go away with ACTS if the seller will work with you and the majority will.
Let’s start with an over leveraged example:
* ARV $200,000
* Loan $225,000
* Payment $1,450 PITI, 27 years left on mortgage.
The seller in this case has I’ve choices:
1. Live in it until the equity returns through debt reduction and appreciation which will take years. Some will, most won’t and remember they’re trying to sell now or you wouldn’t be talking with them.
2. They can walk away and let it go into foreclosure. Over five million have chosen this route and many more will. However many would rather find another solution.
3. They can hire a Realtor and try a short sale. Some will but this means they must locate a Realtor who will even list it, then find a qualified buyer, then get the banks to agree, and then risk a deficiency. The odds aren’t good.
4. Try to rent the house out to cover the payment which isn’t likely without an
option to buy and will certainly lead to a bigger mess and enormous grief for the seller. Most are aware and have no intentions of doing so.
5. Enter you, with an ACTS proposal.
What is ACTS?
Back to my example. It’s actually very simple. Here’s the offer to the seller:
I’ll lease purchase your house for the loan balance at the time it cashes out and your payment will be made until then. All responsibility for repairs will no longer be yours. I’ll need a long term lease, usually the length of the loan, so your equity has time to return and it can be sold or refinanced. My intent is to find a quality tenant buyer that you approve before leasing your house and I’ll collect a fee from them so it costs you nothing.
Many people faced with the choices above will gladly accept this plan and want you to come to their home or go see the house as many are already vacant. Some of them you’ll never meet because the paperwork is done by email. More on that in a minute.
Ok, STOP with the skepticism and questions. I told you I’d answer them.
Q: How do I get paid?
A: You collect a simple assignment fee of $5-10k from the buyer and assign them your lease after seller approves.
Q: Can I do this without a license?
A: Yes, as long as you are a principal and that’s why you must first lease purchase in a
company name and then assign. If you have a license this step isn’t necessary with full disclosure. You can get paid to find the buyer. You must check with your own attorney on this matter and I forbid you to do deals until you have. If he/she feels differently you must either not do these deals, get another opinion or get a license.
Q: Why would the buyer pay more than it’s worth?
A: Because they get a long term lease with no pressure to clean up their credit or apply for a bank loan. In fact they may never need a loan. If the buyer leases for say 27 years the debt pay down goes to the buyer. They could literally live in the house until it’s paid off and own it at the end. I’m limiting mine to ten years to protect the seller but that’s plenty of time to get the job done and very saleable. They control a beautiful home for long term with a reasonable rent and the worst that can happen is they live there a few years and move and lose their assignment fee, and most will. Why Would They Do It, Wouldn’t You? If your answer is no you’ve never lived in an apartment or with your relatives with screaming kids and little privacy feeling like a low life. I have and it’s real easy for me to see why your buyer doesn’t care about the price. They care about the cash required, the payment and a home of their own. Selling them is easy. The market is huge for buyers. Now add that to the huge sellers’ market of over leveraged houses and you can see why everyone’s so excited.
Q: Why would the seller allow such a long term?
A: I’ve actually answered that but it comes down to them coming to grips with the fact there is no good way out and this is the lesser of all evils. Most people we meet have intentionally decided it’s going to foreclosure sooner or later but are still looking for an answer. FYI, most are current on the payments.
Q: Does the seller know what’s going on?
A: Absolutely. They get to approve all buyers after we collect a few facts and present them. We approve them first and won’t accept obvious future problems and turn down some. Before you create a mental roadblock here you should know the seller will likely approve whomever you approve because no one’s making rent payments until they do. FYI, we keep the first rent payment collected at closing of the lease option as part of our fee in addition to the assignment fee.
Q: What if the tenant tears up the house?
A: Well first that’s less likely with people who put up several thousand to get in but if they do the seller has instructions to call us and we’ll re-lease for them as is. There’s a massive amount of buyers who are happy to do the work to get in a home. FYI, all repair responsibility passes on to the tenant buyer in my lease. The seller repairs nothing after the first 30 days.
Q: What if the tenant moves out?
A: They will! The seller simply calls us and we do it again.
Q: What paperwork is involved?
A: Very little. A letter of intent, a lease option agreement, general release from buyer and seller and whatever your attorney wants both sides to sign. That’s right, your attorney. Don’t you ever think of doing one of these deals without an attorney. Of course I have all the agreements posted on the Gold Club membership site, some brand new, all set up for you to email to the seller and your attorney. FYI, the tenant buyer pays for the attorney.
Q: Does this only work on over leveraged houses?
A: Nope! It works on any terms you create with the seller you can assign to a buyer with
seller permission and fully disclosed at original negotiation.
Here’s an example:
- A seller has a free and clear house in great condition worth $200,000 and asking $210,000 but will owner finance with $20,000 down at $1,200 a month.
- Ok, you know you ain’t buying this house, paying too much with a big down payment so normally it’s trashed.
But hold on there Buckwheat, you can’t make money from trashed deals so here comes the ACTS.
Go ahead and agree to the seller’s terms and tell him you’ll find a buyer to meet them and assign your contract with his approval. Remember, you must enter into a contract to buy if you don’t have a license.
Now you find a buyer who needs owner financing with $25,000 to put down. That means $20,000 goes to the seller and $5,000 goes to you as an assignment fee.
Voilà… a phoenix arises from the ashes and $5,000 appears in your account. I bet your competition don’t know this.
Whether it’s an over leveraged house, a free and clear house or any other terms you create, you ACTS:
- You never buy the house.
- No money or credit needed.
- No contractors or repairs.
- No banks, loans or private lenders.
- No costly entanglements.
Q: What if I don’t want to assign the contract but would rather stay in it?
A: Now you’re thinking. There are many deals you will want to stay in and sandwich lease. That means you lease with option from the seller and sublease with option to a buyer. This will usually require you to get some free equity and a low payment to seller. If a $200,000 house has a $185,000 debt and a $890 payment and seller will lease option long term for the loan balance, I may stay in. Now if I get $1,500 rent and a $10,000 non-refundable deposit I just made $11,500 in a few days and $610 a month for years. Why not stay in, especially since all repairs go to the buyer.
Q: What if the house is grossly over leveraged? Like 150%?
A: It depends. If it has a low payment and a potential large monthly spread why not stay in? Let’s see, you can make a big assignment fee and collect $500-$1,000 a month possible cash flow for years on a house you don’t own. Try that in the stock market and see if you can measure your ROI.
FYI, the more over leveraged, the easier it will be to get the seller to lease to you for the full term of the loan and don’t forget, if you stay in, it’s you that now owns the house when the loan is paid off with no rent needed. Sleep on that and ask yourself how many of these do you need to retire on the cash flow and really be rich when they pay off.
You see, that house will pay itself off in the same 25-30 years left on the mortgage, even if it’s grossly over financed.
Read this again to make sure you clearly understand. It’s a game changer and I know you have more questions so lucky for you all this is in my brand new course called Control Without Ownership and I’ve now incorporated it into my Quick Start Real Estate School. Plus, I‘ve created a webinar to cover it as well. You’ll be notified if you haven’t been already.
Tread carefully. This technique must be done right with the correct paperwork and a clear understanding of what questions to ask to get to a conclusion and how to process buyers, which is all included in my system with scripts. I must tell you the live four day training is by far the best place to get it and I’ve built an entire book of scripts.
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