Criteria For Equities - Part II

Part IInnIn part one we were working on a deal. We were going over the four important criteria. The first criterion was to have a good low monthly payment. The second was making sure the property you are purchasing is in excellent condition.

Third, you will kind of want people to be moving into the area, not moving out of the area. You will want a change to have some growth there.

And four, under no circumstances take that loan personally! In case something dramatic does happen, at least it is not going to affect your personal credit or jeopardize your personal empire. In this case, you definitely want to make sure that the sellers go before your attorney to sign the closing package, which is heavily recommended. What it boils down to is everyone should try to get away from the tabletop closings. They are creating problems for folks because they screw them up and they make false promises or they don't get any evidence that they didn't. If you do it in front of the attorney, everybody knows that it is done right and let them handle the documentation. You won't lose a single deal, you've got the attorney preparing the paperwork for you, you've got a great witness if you ever needed it, you have the right forms done, and it won't cost you anything. Well it does cost you a few bucks but it is a whole lot cheaper than what it will cost you if you don't make that practice. So, I want low payment, excellent condition, a chance for growth - I want a monthly cash flow in other words, and subject to only that, no personal guarantee on them.

Also, you shouldn’t really need to put any money into it except for maybe an attorney's fee and maybe a title search. And your sellers need to make the next two or three payments for you.

In addition, make sure you have plenty of time to find a tenant/buyer in there. Now the downside on property that is less expensive is that it's not going to bring out the buying force, so you’ll have to live with that.

And that means you probably ought to be a little bit more careful about the pre-screening process of putting tenant/buyers in the house. n