AutoClose REI: Our Purchase Power……

This is how easy we have made buying real estate when it comes to making offers to ON/OFF Market properties allowing us to get a property under contract and close more deals.

Our Purchase Power:

Offering 70% of the asking price upfront and the remaining 30% overtime from the projected rent. Typically offering $1000/MO. To seller and if we can get a clear estimate of the rent projections, we could possibly pay them more then $1000 up to $2000/Mo.

Allowing us to purchase the property at 100% ahead of what others are offering when they busy making LOWBALL OFFERS….we are buying 100% of the asking price allowing us to always get the contract.

Contracts, Terms and Conditions Required:

Purchase and Sale Agreement
The Promissory Note
The Mortgage or Deed of Trust
The Deed

Additional Considerations and Clauses:

Rental Income Allocation Agreement
Property Management Clause
Fix and Flip Clause
Insurance and Taxes
Default and Forfeiture Clause

This type of real estate transaction, where the seller provides financing for a portion of the purchase, is known as "owner financing" or "seller financing." To structure a deal where you pay 70% upfront and the remaining 30% over time from the projected rental income, you will need several key legal contracts and documents. It is highly recommended that you consult with a qualified real estate attorney to draft and review all of these documents to ensure they are legally sound and protect your interests.

Here are the essential contracts and documents you'll need:

1. The Purchase and Sale Agreement (PSA)

This is the foundational contract for the entire transaction. It outlines the core terms of the deal, including:

Purchase Price: The full, agreed-upon asking price of the property.
Down Payment: Acknowledges the 70% of the asking price that you will pay upfront.
Contingencies: Standard clauses like inspection, appraisal, and title review.
Financing Clause: This is where you specify the owner financing arrangement. Instead of a traditional mortgage contingency, this section will state that the remaining balance will be financed by the seller.
Closing Date: The date the deal will officially close and you will take possession of the property.

2. The Promissory Note

This is the legal document that creates your obligation to repay the remaining 30% of the purchase price. It's essentially an IOU. This is where you'll define the specific terms of the loan from the seller, including:

Loan Amount: The remaining 30% of the purchase price.
Interest Rate: The interest rate, if any, on the loan.
Payment Schedule: This is the most crucial part for your specific deal structure. The promissory note must clearly state that payments will be made over time from the projected rental income. This will need to be carefully defined, perhaps as a percentage of gross rental income or a set dollar amount per month.
Payment Frequency: How often the payments will be made (e.g., monthly).
Default Clause: What happens if you fail to make payments as agreed.
Balloon Payment: It's common for owner financing deals to have a large lump-sum payment (a balloon payment) at the end of the loan term. This may be a good way to structure the deal to ensure the loan is fully paid off within a set period.

3. The Mortgage or Deed of Trust

This document "secures" the promissory note. It gives the seller a lien on the property, which means that if you default on the payments outlined in the promissory note, the seller has the legal right to foreclose on the property and take it back.

Mortgage: In some states, this is the legal instrument used to secure the loan.
Deed of Trust: In other states, a deed of trust is used instead. In this arrangement, a neutral third party (a trustee) holds the property's title until the loan is paid in full.

4. The Deed

The deed is the legal document that officially transfers ownership of the property from the seller to you. The type of deed (e.g., Warranty Deed, Quitclaim Deed) will depend on your state and the terms of the sale. In this structure, the deed will be transferred to you at closing, but it will be subject to the seller's lien (the mortgage or deed of trust).

Additional Considerations and Clauses

Rental Income Allocation Agreement: Given your specific structure, you may need a separate, detailed agreement that outlines how the rental income will be managed and how the seller's portion will be paid. This could be a separate addendum to the main contracts.

Property Management Clause: If the seller is relying on projected rental income, they may want a clause in the agreement that requires you to use a professional property management company or meet certain standards for marketing and leasing the property.

Fix-and-Flip Clause (if applicable): If this is a fix-and-flip property, the agreement needs to be clear about your plans to renovate and sell the property. The seller may want a clause that requires you to pay off the loan when the property is sold.

Insurance and Taxes: The contracts must clearly state who is responsible for paying property taxes and insurance premiums. Typically, as the buyer, you will be responsible for these, and the seller may require proof of payment.

Default and Forfeiture Clause: This clause needs to be airtight. It should clearly define what constitutes a default (e.g., missing a payment, failing to pay taxes) and the seller's recourse, which is typically foreclosure.

Remember, this is a complex transaction, and the laws and standard practices can vary significantly from state to state. Hiring a local real estate attorney to draft and review all documents is the best way to protect yourself and ensure the deal is structured correctly.

Crazy Insane!!!!!!!!

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