Single Family Homes - The No Risk Investment! - Part 12 REAL ESTATE PURCHASE CONTRACT AND RECEIPT FOR DEPOSIT
The follow terms & conditions are hereby incorporated into and made part of this offer.
6. Buyer and Seller shall deliver signed instructions to the escrow holder with _
two__ days from Seller’s
acceptance which shall provide for closing within
30
days from Sellers acceptance. Escrow fees to be paid
as follow:
___1/2 by Buyer, ½ by Seller__________________________________
7. Title is to be free of liens, encumbrances, easements, restrictions, rights and conditions of record or
known to Seller, other than the following. (1) Current property taxes. (2) Covenants, conditions, restrictions,
and public utility easements of record, if any, provided the same do not adversely affect the continued use of
the property for the purposes for which it is presently being used, unless reasonable disapproved by Buyer
in writing within _
10_days of receipt of the current preliminary title report furnished at _Seller’s expense and
(3) ______
na__________________
Seller shall furnish Buyer at _
Seller’s___ expense a standard_ --------_
Land Title Association policy
issued by_____________________, showing title vested in Buyer subject only to the above. If Seller (1) is
unwilling or unable to eliminate any title matter disapproved by Buyer as above, Seller may terminate this
agreement, or (2) fails to deliver title as above, Buyer may terminate this agreement, in either case, the
deposit shall be returned to Buyer.
8. Property Taxes, premiums on insurance acceptable to Buyer, rents, interest, and _
other impounds
shall be pro-rated as of (a) the date of recordation of deed, or b)____
na___________________________.
Any bond or assessment which is a lien shall be paid ( ) assumed (X ) by
Buyer.
Seller_ shallpay cost
of transfer taxes if any.
9. Possession shall be delivered to Buyer on close of escrow, or (b) not later than _
na__ days after close of
escrow or (C)____
na_______________________________________________________.
10. Unless otherwise designated in the escrow instructions of Buyer, title shall vest as follows:
____________________
Erpp Family Trust_______________________________________ .
11. If Buyer fails to complete said purchase as here provided by reason of any default of Buyer, Seller shall
be released from his obligation to sell the property to Buyer and may proceed against Buyer upon any claim
or remedy which he may have in law or equity; provided, however that by placing their initials here
Buyer____, Seller_____, agree that Seller shall retain the deposit as his liquidated damages. If the
described property is a dwelling with no more than four units, one of which the Buyer intends to occupy as
his residence, Seller shall retain as liquidated damages the deposit actually paid, or an amount there from,
not more than 3% of the purchase price and promptly return any excess to Buyers.
12. If the only controversy or claim between the parties arises out of or relates to the disposition of the
Buyer’s deposit, such controversy or claim shall at the election of the parties be decided by arbitration. Such
arbitration shall be determined in accordance with the Rule of the American Arbitration Association, and
judgment upon the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction there
of. The provisions of Code of Civil Procedure shall be applicable to such arbitration.
13. In any action or proceeding arising out of this agreement, the prevailing party shall be entitled to
reasonable attorney’s fees and costs.
14. Time is of the essence. All modifications or extensions shall be in writing signed by the parties.
15. This constitutes an offer to purchase the described property. Unless acceptance is signed by seller
and the signed copy delivered to Buyer by__
5:00 P.M._ on _
4/2/2018__, this offer shall be
deemed revoked and deposit shall be returned.
16. Other
Buyer(s) Date of Offer: _
June 33____, 2022
____
Wyatt Erpp_________ Address:__
12 Box Canyon Drive___
___________________________ _
Benson, Arizona_____
The undersigned Seller(s) accepts and agrees to sell the property on the above terms and
conditions:
Date of Acceptance:_
June 33, 2022
____
Snidely Whiplash________________________ Address: _
890 Nasty Road West_
Low Down, AZ 10101_____
Page 2 of 2 pages
* * *
Real estate purchase contracts come in many different forms and the
one used above is just an example and a guide. The general ideas is to
define who pays what and who gets what, when and how.
There is space in contract forms to write in any special additions that
you may want or you can add addendum pages to the contract. There are
many clauses that you can use to create a desirable agreement.
Here are a few that you will use most often:
This agreement is subject to the buyer acquiring suitable financing within
30 days from the signing of this agreement by both parties.
This clause gives you an out if you are unable to get a loan at a
reasonable rate of interest.
This agreement is subject to an inspection of the property by a qualified
home inspector and the approval of the resulting inspection report by the
buyer.
This could be considered a “weasel clause”. It is a clause that would
allow the buyer to void the agreement for a minor reason. Of course, it is
always a good idea to have the house inspected.
The seller warrants that the grounds and improvements will be maintained,
that the roof and fascia are watertight and in good repair, and all
appliances, heating, air conditioning, plumbing, sewer or septic, and
electrical systems shall be in good working order at close of escrow.
The seller agrees to permit the inspection thereof by agents of the buyer,
prior to close of escrow and to pay for any repairs called for by said
inspections. The seller agrees to use licensed persons to make said
repairs. The buyer reserves the right of accepting the cash equivalent in
lieu of the repairs.
The older the home the more important it is to be sure it is in good
repair when you assume ownership. It may be that you have a person who is
capable of doing good repair work at a cost below what an inspection might
estimate. In that case you would want the cash or an equal amount deducted
from the purchase price.
Buyer shall execute a promissory note in favor of the seller in the principal
amount of $___________________, payable at $_____________________
per _____________, together with ______________ interest per annum. The
note shall be secured by a trust deed on the property. The note and trust
deed shall be sold to an investor at the close of escrow for
$________________.
If you have a seller who must have as much cash out of the deal as
possible you can structure the deal with a small cash down payment, a new
first loan and a seller carry-back note for the remainder of the seller’s equity.
As part of the deal you can arrange for a note buyer to purchase the 2nd note
for cash at the close of escrow. This gives the seller his cash, although the
note buyer will insist on a discounted purchase price for the note. This can
all be arranged before hand with the note buyer, so the seller will know
exactly how much cash to expect and the note can be written to meet the
note buyer’s requirements.
If the note was not going to be sold you could just drop the last
sentence in the clause and use it to set the terms of any carry-back note you
need in the deal. Payments are usually monthly, but they don’t have to be.
They could be quarterly or even annual payments.
You can ask the seller if they would prefer quarterly or annual
payments so that they would get a larger lump of cash and wouldn’t be
tempted to fritter away the smaller monthly payments? Not many will
accept, but it worth asking.
It is always in your best interest to have the longer period between
payments. That allows you to use the money for other interest bearing
investments during those periods.
The rule is - Whenever you owe money you want to take as long as
possible to pay. Whenever you are owed money you want to get it as soon
as possible.
Buyer to execute in favor of the seller a straight Promissory Note due in full
on _________________, 20_____ together with __________% interest per
annum simple.
Here’s another note. It has no payments and simple interest. It would
be paid in full on a specified date. The payment would include the simple
interest that had accrued during the term of the note. This type of note is in
the buyer’s best interest, but here again it is not something many sellers will
accept because most need cash now. Keep it in mind for those times when it
might be appropriate.
The maker reserves the right to extend the due date of the note for an
additional year with the payment of $________________ to the holder of the
note 30 days prior to the due date.
This is a clause you could use if you have a note that is paid in full
(balloon) on a specific date with no payments, like the one above.
The property shall be the sole security for the note, and there is no
personal liability on the part of the maker.
If you have unexpected financial problems and default on the note the
maker can foreclose on the house, but can’t seek to claim any of your other
assets as compensation for the default. It is important to avoid personal
liability whenever possible.
The maker of the note reserves the right to miss one such periodic
payment per loan year and failure to make such periodic payment shall not
be default of the said note.
Remember “when you owe money you want to take as long as
possible to pay”? Here’s a way to do that. This clause really means that you
only have to make eleven payments per year on your standard note.
The maker of the note reserves the right of first refusal if the note is ever
offered for sale and/or trade, and expressly reserves the right to match any
offer acceptable to the note holder.
If you give the seller a note for part of a home’s purchase price and at
a later date the seller decides to sell the note you have the right to buy it if
you wish. If you are able to buy the note it is the same as getting a discount
on the amount you owe, because all notes are commonly sold at a discount
to the remaining balance.
The mortgage escrow/impound account shall be transferred to the
purchaser at closing without additional cost to the purchaser, as a part of
the purchase price.
A part of a homeowner’s mortgage payment is collected for taxes and
insurance. These extra funds are held in an escrow account and there is
often a surplus that will be used for payments later in the year. You are
asking for all of the funds in that account. A standard procedure in escrow
would be to prorate the funds between buyer and seller. By using this clause
you can be credited with a funds currently in the account.
This agreement is subject to existing financing and closing shall not occur
before the purchaser is able to secure a tenant that is acceptable to the
purchaser, and at a rental rate of $________ per ________, or at such other
rental rate that might be acceptable to the purchaser.
A good idea, but you are often dealing with sellers who need a quick
deal and will not agree to that. Use it when you can.
The purchaser reserves the right to pay the seller’s real estate brokerage
fee and to receive credit for same against the purchase price.
You may be able to convince the agent to take your note for her
commission. In that case you can get the full amount of the commission
credited toward the down payment or toward the purchase price. This is
another way to take as long as possible to pay money that you owe.
Those are a few ideas that you can use in a purchase contract. They
can be written in the spaces provided on the contract form or they can be
attached to the contract on separate pages as addendums.
Always ask for more than you think you can get and then WRITE
everything into the contract.
In the sample, filled-out contract presented above you saw that a
promissory note was used as the deposit with the offer. The seller will not
always accept this. They may want a cash deposit. Try the note first and if
they won’t consider your offer without a cash deposit offer something like
$100. If they are really motivated sellers they may accept the note.
The deposit note is a good tool to use, because there may be times
when you have more than one offer pending. The note will allow you to
have a minimum amount of cash in play. Your surplus cash should always
be earning interest. Open an account in a money market fund or a mutual
fund that will allow you to write checks. This will keep your cash working
for you and still be easily accessible.
An example of a deposit note follows:
DEPOSIT NOTE
$_______________ Date:___________
Upon demand the undersigned promises to pay to (Escrow Agent)______
or order, the sum of ____________________________dollars without interest.
This note is given as a deposit in connection with, and is subject to the successful
completion of all of the terms and conditions contained in the Real Estate Purchase
Contract and Receipt for Deposit, Dated: __________, by and between
_______________________as Buyer, and
_________________________________as Seller, pertaining to the real property
known as:
In the event that this note is not paid when due and suit is instituted for the
collection thereof, the undersigned promises to pay the holder of this note a
reasonable attorney fee, to be determined by the court in which such action may be
brought.
Maker ________________________________
TEN
RENTING AND MANAGING
Congratulations, you now own property and you are ready to fire up your
cash flow machine by finding a tenant. The first thing you must understand is that
your primary focus will be in the management of, not property, but people.
Yes, as a landlord your success or failure will depend upon how well you
train people to be good tenants. We have all heard horror stories about the terrible
problems some property owners have had with tenants. Trust me when I tell you
that 99% of the time those troubles are caused by the owner/manager and not the
tenants.
If you will choose tenants carefully and are very clear in explaining what
you expect from tenants living in your homes, you will seldom have a serious
problem. One of the main features of this "no risk" plan is to buy good homes that
will attract the best tenants.
Once you have the nice home in the pleasant neighborhood you then must
take the time to find the very best tenant. I have never had to evict a tenant,
because I am always willing to wait until I find a family I believe is motivated to
pay rent on time and take care of my property.
An Important Rule: It is cheaper to have a home vacant for a few extra days
while you search for a good tenant, then it is to quickly rent to a bad tenant and
have to endure the emotional stress and financial drain of unpaid rent and an
eviction.
A newspaper ad is usually the quickest way to find a tenant. We buy a
three-day ad that will run Friday, Saturday and Sunday. That is when most people
begin looking for a home. We have found that if we have extra time to find a
tenant, as when a renter first gives us a 30-day notice, we can place a one-day ad
on Sunday. We have learned that many people save the Sunday paper and make
calls to the ads all week long.
We use a two-part plan to capture tenants. We put our property management
cell phone number in the newspaper ad. We also have a Internet page with a photo
of the home, the address, and information about the home and the neighborhood.
When a prospective tenant responds to the ad and asks for more information
we direct them to the Internet page and we give them a date and time when the
home will be open for inspection.
We have a page for each property that is currently for sale or for rent. You
can see our site at www.RealEstateRescue.info .
Each potential tenant, when he or she calls, will want to see the home at his
or her convenience. You could be driving back and forth to the home for days
showing the home before you find a suitable renter. You would soon learn that
even though the caller sounds interested when they make an appointment to see the
home many of them will not show up. You waste time waiting for people who
never appear. The truth is they are making appointments to see many homes on
that day and some will rent one before they get to you. Or they are just
irresponsible people who you would not want as tenants anyway.
Having a Web site is not a requirement, but it does give people a look at the
home and its features before they take the time to drive by. This saves you the
hassle of having to show it time and again.
Have the home open for an hour one or two evenings on the Monday or
Tuesday after the ad has appeared in the paper. Be there with copies of your rental
application and a supply of pens (most people won't have one). Let the people
look at the home and you can answer any of their questions. If you are showing a
home still occupied by a renter keep a close eye on everyone as they wander
through the house. This document and accompanying materials are designed to provide authoritative information in regard to the subject matter covered in it. It is for illustration purposes only and presented with the understanding that the author and publisher are not engaged in rendering legal, accounting or other professional opinions. If legal advice or other expert assistance is required, the services of a competent professional should be sought. |
