Complete Guide to Real Estate Contracts and Closing Table

1. The Complete Guide to Getting Started Day 1 Finding & Analyzing Deals Day 2 Choosing A Profit Strategy Day 3 Putting It All Together

2. Day 2Choosing A Profit Strategy Contracts From Contract to Closing Table Managing Exit Strategies • Wholesale • Rehabbing • Rentals Business Entities

3. Contracts Day 2 – Choosing A Profit Strategy GOALS • At the end of this session, you will be able to: • Define Types of Contracts • Identify essential elements of a written contract • Explain how to complete a contract • Summarize the ways to present an offer

4. Contracts Day 2 – Choosing A Profit Strategy Types of Contracts Purchase & Sale – Standard Contract Installment Contract–Title does not pass until conditions are met Option Contract – Set for a fixed period, consideration, specified price Listing Agreement – Between seller and broker

5. Contracts Day 2 – Choosing A Profit Strategy Essential Elements • Competent parties • Offer and acceptance • Consideration • Legality of object • In writing and signed

6. Contracts Day 2 – Choosing A Profit Strategy Important Points • Buyer’s Name • Seller’s Name • Property Address/Legal Description • Sale Price/Deposit • Time for Acceptance • Financing • Assignability

7. Contracts Day 2 – Choosing A Profit Strategy Important Points • Closing Date • Inspection • Title • Escrow • Seller’s Disclosure • Addendums • Escape Clauses

8. Contracts Day 2 – Choosing A Profit Strategy Ways to Present An Offer • Verbal – “would you” • Letter of Intent – non binding • Written Contract – binding

9. Contracts Day 2 – Choosing A Profit Strategy A-B-C Offer All Cash [Wholesale Offer] 100% Seller Finance [Retail] Creative Option Solution [Lease Option, Combo]

10. Contracts Day 1 - Finding & Analyzing Deals SESSION REVIEW • What we covered this session: • Types of Contracts • Essential elements of a written contract • How to complete a contract • Ways to present an offer

11. Day 2Choosing A Profit Strategy Contracts From Contract to Closing Table Managing Exit Strategies • Wholesale • Rehabbing • Rentals Business Entities

12. Contract to Closing Table Day 2 – Choosing A Profit Strategy GOALS • At the end of this session, you will be able to: • Define Key Closing Terms • Name the Team Members • Define Key Action Items • List Closing Documents • Read A Settlement Statement

13. Contract to Closing Table Day 2 – Choosing A Profit Strategy Key Terms • Closing Statement • A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made and all cash paid out in the transaction. • Deed • A written instrument that, when executed and delivered, conveys title to or an interest in real estate.

14. Contract to Closing Table Day 2 – Choosing A Profit Strategy Key Terms • Escrow • The closing of a transaction through a third party called an escrow agent, or escrowee, who receives certain funds and documents to be delivered upon the performance of certain conditions outlined in the escrow instructions. • Prorations • Expenses, either prepaid or paid in arrears, that are divided or distributed between buyer and seller at the closing.

15. Contract to Closing Table Day 2 – Choosing A Profit Strategy Key Terms • Survey • A pictorial depiction of land and the improvements on it and shows boundary lines with measurements and bearings, buildings, easements, etc. • Title Evidence • Proof of ownership of property; commonly a certificate of title, an abstract of title with lawyer's opinion, title insurance or a Torrens registration certificate.

16. Contract to Closing Table Day 2 – Choosing A Profit Strategy Key Terms • Title Insurance • A form of insurance contract which guarantees to indemnify an owner or mortgagee of property for damages suffered as a result of undiscovered title defects which arise later. • Title Search • The act of examining in detail the public records relating to ownership of a parcel of land to ensure that the current owner has clear title, free of any liens, claims, mortgage or competing and adverse interests.

17. Contract to Closing Table Day 2 – Choosing A Profit Strategy Parties Involved • Real Estate Brokers • Attorney • Escrow Agent • Loan Officer • Appraiser • Insurance Agents • Lenders

18. Contract to Closing Table Day 2 – Choosing A Profit Strategy Key Action Items • Choose Closing Date/Agent • Order/Examine Title • Notify Seller of Defects • Accept/Reject Title • Obtain Survey • Inspections • Review Leases • Obtain Insurance

19. Contract to Closing Table Day 2 – Choosing A Profit Strategy Closing Documents • Affidavits • Bill of Sale • Deed • Insurance Policies • Satisfaction of Liens • Mortgages • Pest Control Report

20. Contract to Closing Table Day 2 – Choosing A Profit Strategy Closing Documents • Tax Receipts • Survey • Warranties • Utility Bills • Leases • Service Contracts • Title

21. Contract to Closing Table Day 2 – Choosing A Profit Strategy Settlement Statement • Buyer debits and expenses • Seller debits and expenses • Credits due to buyer • Credits due seller • Net balances

22. Contracts Day 1 - Finding & Analyzing Deals SESSION REVIEW • What we covered this session: • Key Closing Terms • Team Members • Key Action Items • Closing Documents • How to Read A Settlement Statement

23. Day 2Choosing A Profit Strategy Contracts From Contract to Closing Table Managing Exit Strategies • Wholesale • Rehabbing • Rentals Business Entities

24. Managing Exit Strategies Day 2 – Choosing A Profit Strategy GOALS • At the end of this session, you will: • Be able to compare exit strategies & decide best option • Understand how to manage • - Wholesales • - Rehabs • - Rentals

25. Managing Exit Strategies Day 1 - Finding & Analyzing Deals Determine Exit Strategy • Quick Turn (Wholesale) • How much profit for you? The rehabber? • Rehab • Risk vs. Profit • Rental

26. Managing Exit Strategies Day 1 - Finding & Analyzing Deals Summary of Strategies

27. Day 2Choosing A Profit Strategy Contracts From Contract to Closing Table Managing Exit Strategies • Wholesale • Rehabbing • Rentals Business Entities

28. Managing Exit Strategies Day 2 – Choosing A Profit Strategy Wholesaling GOALS • At the end of this session, you will be able to: • Describe how to assign a contract • Explain a simultaneous close • Summarize the wholesale process

29. Managing Exit Strategies Day 1 - Finding & Analyzing Deals Wholesaling Process 1. Seller and Buyer sign contract 2. Buyer submits deposit (escrow) 3. Buyer assigns contract to New Buyer 4. New Buyer replaces Original Buyer’s deposit

30. Managing Exit Strategies Day 1 - Finding & Analyzing Deals Wholesaling Process 5. New Buyer takes over existing contract terms 6. New Buyer obtains funding and closes 7. Seller and Original Buyer get paid

31. Managing Exit Strategies Day 1 - Finding & Analyzing Deals Wholesaling • Example • Seller and Buyer agree on contract for property • Purchase price = $100,000 • Contract is assignable • Original Buyer assigns contract rights to New Buyer • Cost = $5,000 from New Buyer

32. Managing Exit Strategies Day 1 - Finding & Analyzing Deals Wholesaling • Example • New Buyer purchases property for $105,000 • Seller gets $100,000 • Original Buyer gets $5,000

33. Managing Exit Strategies Day 1 - Finding & Analyzing Deals Wholesaling • Important Documents • Purchase & Sale Agreement • - Seller • - Original Buyer • Assignment of Contract • - Original Buyer • - New Buyer

34. Managing Exit Strategies Day 1 - Finding & Analyzing Deals Wholesaling • Considerations • Purchase 60-70% of market value • Escape clauses • Release from liability

35. Managing Exit Strategies Day 1 - Finding & Analyzing Deals Wholesaling • Protecting Yourself • Make sure property is under contract • Always get a copy of original contract • Ensure you are working with original buyer • Wholesaler should make less than rehabber

36. Managing Exit Strategies Day 1 - Finding & Analyzing Deals Wholesaling • Protecting Yourself • Lender approval? • FHA: 90-day rule • Avoid multiple title transfers • Avoid double and triple assignments

37. Managing Exit Strategies Day 1 - Finding & Analyzing Deals Wholesaling • Simultaneous Close • Two closings take place • Contract is not assignable • Must take title to property • Title seasoning

38. Managing Exit Strategies Day 1 - Finding & Analyzing Deals Wholesaling • Creative Assignments!!! • Include assignment fee in second closing • Use creative financing techniques (trusts) • Seller can become the hard money lender • Take possession of property  Then Sell!

39. Managing Exit Strategies Day 1 - Finding & Analyzing Deals Wholesaling • Finding Buyers • Newspaper • - “We Buy Houses” • - “Place Ads seeking buyers • Flyers • Real Estate Auctions • Real Estate Investor Associations

40. Managing Exit Strategies Day 1 - Finding & Analyzing Deals Wholesaling • 7 Steps to Wholesaling • Negotiate at 60-70% of FMV • Set closing date of 30 to 90 days • Insert and/or assigns in purchase contract • Contingency clauses (Escape clauses) • Find a Buyer • Assign the contract and collect assignment • Inform seller of change

41. Managing Exit Strategies Day 2 – Choosing A Profit Strategy SESSION REVIEW • At the end of this session, you have learned how to: • Describe an assignment ofcontract • Explain a simultaneous close • Summarize the wholesale process

42. Day 2Choosing A Profit Strategy Contracts From Contract to Closing Table Managing Exit Strategies • Wholesale • Rehabbing • Rentals Business Entities

43. Managing Exit Strategies Day 2 – Choosing A Profit Strategy Rehabbing GOALS • At the end of this session, you will be able to: • Describe the five major rehab categories • Explain how to estimate rehab costs • Understand how to manage a rehab from start to finish

44. Managing Exit Strategies Day 2 – Choosing A Profit Strategy Where to Spend Rehab $ • 1. Electrical • 2. Plumbing/drainage • 3. Structural/foundation • 4. Roofing • 5. HVAC: Heating, Venting, A/C • * Permit required • * Use a contractor (professional)

45. Managing Exit Strategies Day 2 – Choosing A Profit Strategy Where to Spend Rehab $ • Kitchen • Bathrooms • Curb appeal

46. Managing Exit Strategies Day 2 – Choosing A Profit Strategy Understanding Rehab Pricing • Roofing: per 1010 square or 100 sq. ft. • Carpet and tile: per sq. ft. • Vinyl/wood/laminate: yard (sq. ft.  9  yds) • Electrical/plumbing: time & material ($50 – $150/hr)

47. Managing Exit Strategies Day 2 – Choosing A Profit Strategy Understanding Rehab Pricing • Kitchen cabinetry: per lineal foot (lf); $100 – $500 • Trim/baseboards: $2 – $3 per lf • HVAC (heating/air): per ton • Door/window: per unit installed

48. Managing Exit Strategies Day 2 – Choosing A Profit Strategy Understanding Rehab Pricing • Drywall: per board • Painting: per sq. ft. • Fencing: per lf • Siding: per sq. ft. or lf

49. Managing Exit Strategies Day 2 – Choosing A Profit Strategy Managing Your Rehab – Step by Step • Find the property • Make offer • Get signed contract • Important dates memo • Estimate Repairs • Set up professional inspection • Put together project overview

50. Managing Exit Strategies Day 2 – Choosing A Profit Strategy Managing Your Rehab – Step by Step • Secure financing • Prepare contractor agreements • Set up insurance • Prepare budget • Closing • Utilities • Put sign out