Here are some statistics for your review (these numbers come from Money magazine May 2010 issue).

Questi0n:

“Would you ever consider walking away from your home loan?”

• 42% said they never would
• 38% said only if they had to
• 16% said Yes
• 4% said they already have walked away.

This shows a potential 1 in 5 walking away due to today’s markets.  That is a full 20% willing or have already walked away AND a potential additional 38% to come.  That makes an almost 3 in 5 people walking away.

Some other statistics you may be afraid to hear which was also published in the same article.

• 26% of homeowners who defaulted said they could afford to maintain the payments.

Now another scary tactic if your credit score is vital for you is that if you maintain your payments it will be until 2015 before your home values may be equal to your current loan balance.  This means only a 5 or so year wait (on average across the nation) before you will start seeing some equity again.

Thus, if you are the average homeowner, consider keeping your loan current and bare through these hard times.  Real estate is cyclic and good times are just ahead of us.  If you can get a loan modification then the light at the end of the tunnel will be a lot closer than not.

Kevin Dunlap at Trident Investments Group has been in real estate since 2002 and has owned multiple types of real estate.  Creative forms of real estate investing is his forte and has helped many people get on the path of home ownership over the years.

Let’s start by saying that what I do in real estate is rare and my Search Engine Optimization (SEO) is at an all time high.

What I do…

For 6 years I have running a lease option (aka rent to own) business in Las Vegas, NV. Although I have partners/competitors in this business I tend to be the one who moves the most homes. Usually at least twice what the other four partners do, combined. Fifteen homes lease optioned this year alone and we don’t use the MLS. Only private advertising.

I also run and operate a bank bulk REO business. Somehow people are finding me online or being referred to me. Tonight alone I got three phone calls of people who are anxiously wanting to buy over $500,000,000 in real estate and that is from each source who has multiple sources. Since I don’t make public who my inventory sources are this requires me to be in complete control of the operation.

I also run an affiliation with credit repair and building corporate credit.

Lastly, I have just started a Driver Watch program which is similar to the “How’s My Driving?” decals you see on commercial vehicles but is geared toward parents of teens, children of the elderly, sponsors of AA DUI offenders, and many other potential sets of clients.

In all of these I am th sole contact source.

This week alone…

So far this week I have had five lease option clients showing seven homes. Putting one under contract and one pending. And that is only the past three days.

I have also coordinated four conference calls and will be doing two more tomorrow morning which were initiated at 7:00 PM tonight as I did not know these potential bulk reo buyers before then.

I am also coordinating a person who just lost 9 homes to foreclosure in getting his new corporation set up so he can buy a home either through his personal or newly established corporate credit.

Two Days left…

On Saturday I fly out to San Francisco to start a seven day retreat on building personal and business goals. Also, to make one more balanced and well rounded.

When you get a call at 4:00 pm to show a home at 5:00 pm to do a contract by 6:00 pm and they are moving into the home within 2 days and you just pocketed $3000 and this is happening almost daily now, how do you turn off your cell phone and computer for 8 days?

I know what i will be learning will be invaluable, so how do you turn off years of building a business (some of it is being forwarded — the lease option business — to someone who is a Realtor but doesn’t know really how to do what I do).

Would anyone else be worried about the missed business? I mean the REO could bring in $100,000s of dollars even if only getting 0.25% of a sale. And finally getting legit buyers and sellers after over a year of ruling people out.

Any support matters …

How would you handle this scenario?

Kevin A. Dunlap

Manager Trident Investments Group (http://www.tridentinvestmentsllc.com)

Current REO listings — http://www.tridentinvestmentsllc.com/reos/inventory.html

President of Driver Watch (http://www.driverwatchusa.com)

Email: Kevin@Driverwatchusa.com or Kevin@tridentinvestmentsllc.com

(702) 591-1784

To gather more information I will need an NCND signed between you and myself and the buyer. An LOI will be required to move forward with the purchase. Cash Buyers only and NO TRANSACTIONAL Funding is allowed. The buyer has to be the real buyer.

To see my complete list of REOs go to our REO section of our main page which can be found at: http://www.tridentinvestmentsllc.com/reos/inventory.html

Or give me a call at 702-591-1784.

CA Commercial & Residential
Package – Mar 2010 – Package 43

• A multitude of different commercial deals. 109 in total.
• Cherry Picking is allowed.
• Tape includes land, homes, apartments, restaurants, etc.
• Most properties are in CA. A few in the other western
  states (including Hawaii).
• NPN and REO on same tape.
• Total UPB of $380M.
• Add 3 points for brokerage fees
• I can provide address with NCND from intermediary or LOI from
  buyer.
• My contact is direct to source.

CA Commercial & Residential
Package – Mar 2010 – Package 44

• Single Family Residences in CA, AZ, and NV.
• Valued at $600M.
• Take down price at 55 Cents + 3.
• All yours for the price of
  $330M.
• Add 3 points for brokerage fees
• I have limited information on this one. Seller Rep is
  requiring NCND and MFA to move forward.
• To my knowledge there is no cherry picking.

Nationwide Package (5 Tapes) -
Mar 2010 – Package 45

• This package is actually 5 packages of different properties.
  I have separated them from the master list so you can see them
  individually.
• I have addresses of all properties.
• Package #45.1
• — 14 homes in the mid-west.
• — A & B paper notes.
• — Single Family Homes
• — Title Ready for immediate close.
• — Value at $730,900.
• — Purchase Price of
  $182,725.
• — Price is at 25% of Value.
• Package #45.2
• — 17 homes in the mid-west and
  southern states.
• — C class notes.
• — Single family homes.
• — Title Ready for immediate close.
• — Valued at $1,113,300.
• — Purchase Price of
  $113,300
• — Price is at 10% of Value.
• Package #45.3
• — 57 Las Vegas, NV homes
• — REO Pool.
• — 2 week close.
• — Value at $6,790,050
• — Purchase Price of
  $3,900,000
• — Price is at 57.4% of value
• Package #45.4
• — CA Non-Performing Notes
• —
  Make your Best and Final Bid Offer
• — Outstanding Balance as of Feb.
  2009: $6.6M
• — Original Appraisal Value:
  $10.9M
• — First come first served.
• — Two week close.
• — Can cherry pick the notes.
• Package #45.5
• — Non-Performing Notes all over the
  US
• — 315 notes for sale.
• — BPO Value at $17.5M.
• — Outstanding Balance at $22M.
• —
  Selling at 23 Cents on the Dollar
• — Title ready to close quick.
• — Seller wanting a quick close in
  less than one week.
• I can put you into contact with the direct source.
• This source can readily put together $1B plus deals for
  the right buyers.
• Add 3 points for brokerage fees

You can see more info on our business at: http://www.tridentinvestmentsllc.com
702-591-1784

What can they afford? Affordability, is the same as if they were going to buy. What is the family’s income and how much will the local market support should be spent on housing. On average housing should be no more than 35 to 40% of a family’s net income.

<p>

What about credit? Obviously, the person(s) who had the loan in their name will have poor credit. This may be the time to use the credit of the other spouse assuming the loan was only in one person’s name. If not, then credit repair will be required. I am affiliated with a national credit repair company and you can find more info on our website at: http://www.tridentinvestmentsllc.com/credit/index.html.

For more information on lease options feel free to contact me.

Kevin Dunlap

Trident Investments Group

702-591-1784

kevin@tridentinvestmentsllc.com

Let’s first talk about Sellers.  When I first got started in this business and the main reason I got out of the Bank Bulk REO business is people who say they have product actually don’t have anything significant.  Many of them are merely intermediaries who may have a few addresses and then are pretending or posing as Seller Representatives.  Regardless of the reason that they are doing this almost never does a deal actually close.  Many times the product which they are representing has already been shopped around so many times that anyone in the business has already seen the list, thus making the list useless.

Other problems are people (often Realtors) who simply take a list of homes on the MLS which are short sales or REOs and compile a list this way.  Obviously, they will not shop it locally but someone in another state won’t realize the list is simply off the MLS until they start doing their due diligence.

Regardless of the reason, if you want to play this game you need to check the sources of the sellers.

Now let’s move to the buyers.  There are a lot of cash buyers out there who are legitimate, but there are more false buyers out there posing as real buyers.  You will need to learn how to quickly determine if a buyer is legitimate or not.  Asking for bank statements is one way (this is also called a Proof of Funds) to verify they are legitimate, but many real buyers will not provide this to a middle man in fear that the middle man will use the POF and pretend they are the buyers and falsely prove themselves as buyers.  I can attest that almost any buyer who has been in the business for more than a year will tell you horror stories where some intermediary was using the buyer’s information to try to secure product.

Why would an intermediary do this? Obviously, they won’t be able to close on the deal.  Well, closing on the deal with the false bank information is not that important to this poser.  They are actually looking for another buyer and will attempt some form of simultaneous closing.  Rarely will this be effective and usually is just a waste of time and reputation.

Another false buyer is a buyer who is attempting to buy with no money of their own.  They will attempt to use a transactional funding company who will provide the buyer a Proof of Funds letter.  In most cases when the seller begins the verification of funds process they will find out that the buyer is using this third party and then reject the offer or order and may even blacklist the buyer from any future business.

The reason banks don’t like transactional funding, in my opinion, is that the transactional funding company will say yes to anyone who asks them to, but when push comes to shove and the closing is about to take place they will often reject the deal, regardless if the would-be buyer wants to move forward.  Thus, like any loan process, the lender will decide on the deal.  The banks are not in the Bulk Bank REO business for buyers to get a loan.  They want cash buyers.

Here is what to look for when you are attempting to put a deal together with a buyer and a seller.

1.) Be as close to both parties as you can be.  The more people involved, (i.e., a daisy chain of middlemen/women) the less likely it will close.

2.) If you are not direct to either party, ensure that your contact is direct to either party.

3.) Sellers may be an actual bank, a private seller, or a hedge fund.  Make sure they can put together real product.

4.) For buyers, verify upfront that they will have to show proof of funds to the seller before any product will be released.  Those funds will also be verified.  If the buyer is using any type of transactional funding, you will blacklist them forever.

5.) Never ask for a Master Fee Agreement until a deal has actually started.  You may get some type of Non-Compete/Circumvent & Non-Disclosure agreement (NCND) between all middle people.  After the NCND is signed then put the buyer into direct contact with the Seller or Seller Rep.

6.) NEVER be greedy.  There is plenty of money to go around even if it is only a fraction of a percent.  The biggest issue in this game are the intermediaries.  More deals have gone south due to greed or laziness of the middlemen.  Let the big boys play and don’t get in the way.

7.) The best way to keep everyone legitimate is to use an attorney or a Vetting Company.  This is a middleman that simply verifies that each party is real.  They will get the POF from the buyer and verify the funds are there.  They will also get a Letter of Authorization (to represent), also called an LOA, and verify the seller can represent this package.  They will only let the other party know that each side is true.  A small problem with this is when a buyer is ordering a custom package the LOA won’t exist at the onset.

If you can successfully put two legitimate parties together in this wonderful game of Bank Bulk REOs then you are well on your way to eventually become the buyer yourself.

Happy Investing!

Kevin A. Dunlap

Trident Investments Group

O: 702-516-5698

C: 702-591-1784

kevin@tridentinvestmentsllc.com

http://www.tridentinvestmentsllc.com

Today’s topic will be the use and how to use a Sandwich Lease Option to your investment portfolio.  To my knowledge this is the only technique where you are guaranteed a positive cash flow without actual ownership of a home.  It doesn’t matter if you are buying in San Francisco or in a medium sized town in the Mid-West.

Over the past 6 years of helping owners find lease option tenant/buyers for their investment homes, I have strongly considered doing a “Sandwich Lease Option” on some of these homes.  Let me begin by explaining the basics of a lease option and then the sandwich variety.

When a buyer wants to do a lease option with an owner the buyer is ideally saying he wants to buy the rights to buy a home at some later time frame (i.e., do a lease with the option to buy).  This is not a transference of ownership; it is merely buying the rights to buy within a time frame, much like options in the stock market.

When this buyer does a lease option with an owner then the buyer has to provide some form of consideration (usually in the form of money) and a contract is drawn up between the two parties.  Frequently there will be a monthly rent credit paid out of each of the monthly rental payments.  This credit is considered an incentive for the buyer to buy.

The term of the contract is open to whatever terms the two parties will want but is often set on annual terms.  In strong appreciating real estate markets the term can be one year or less and weaker non-appreciating markets the terms can be two to three years or longer.

Prices can be negotiated within an infinite number of ways.  The most common is to set a specific price and that is the price.  The second way is to set it at some appraised value (or appraised value minus some percentage discount) in the future.  Either method or a combination of the two can be desired.  A combination would be at an appraised value with a minimum or maximum value also placed into the pricing terms.

Thus, as you can quickly see there are a lot of variables when doing this rent-to-own process.  Adding in a Sandwich Option takes everything stated above and then doubling the complication.

In a sandwich lease option there is an additional investor thrown into the mix as a forced middleman.  This investor not only does a lease option with the owner of the home, but he also does a second concurrent lease option with a tenant/buyer.  Of course the first option must allow for assignments or subleasing.

This is how it works.  The investor goes into contract with an owner with very specific set of terms.  These terms will include: 1.) A set purchase price; 2.) A set timeframe which is as long as possible; 3.) A set amount to be paid monthly; 4.) The best rental credit she can get; and 5.) The lowest option payment possible.

Then the investor enters into a similar agreement with the end user (tenant/buyer).  Except in this case she is doing the exact opposite terms as she had with the owner.  This means the tenant/buyer gets terms that are not as favorable as she made with the owner.  The reason for this is that the difference is where the investor makes her profit.

Thus, in relation to the terms with the investor the end user’s terms are:

1.)    A set purchase price – but higher than what the investor agreed upon with owner.

2.)    A set time frame but shorter than with the owner.  This way the investor can have time to find the end user or another client if the first tenant/buyer does not exercise their option.

3.)    A monthly payment.  This can be set $100+ higher than what the investor has with the owner.

4.)    The rental credit needs to be equal to or less than what the investor has with the owner.  This term will greatly depend upon the aforementioned monthly payment.  Ideally, the rent credit should be less.

5.)    The highest option payment the investor can get from the tenant/buyer.  This is how the investor gets reimbursed for her option payment and where she can make some initial profit

Obviously, the terms will widely vary depending upon the part of the country the home resides.  Monthly rents and purchases prices in Mississippi will not compare to Hawaii or California.

Let’s show a basic Las Vegas, NV deal.

Terms between Owner and Investor

Set Purchase Price: $145,000

Option Payment: $3,000

Monthly Payment: $1,100

Rental Credit: $200

Length of Contract: 3 years

Terms between Investor and Tenant/Buyer

Set Purchase Price: $155,000

Option Payment: $4,000

Monthly Payment: $1,200

Rental Credit: $150

Length of Contract: 18 months or 1.5 years.

Assuming the Investor is savvy and finds a tenant/buyer prior to actually initiating the contract with the owner then this is how the cash flows at the time the contracts are signed.

Tenant/Buyer pays $4,000 to Investor which pays $3,000 to Owner and pockets the $1,000 difference.

First month rental payment collected from Tenant/Buyer is $1200 and Investor pays $1100 to owner.  This will continue for the next 18 months.  I would suggest only giving the tenant/buyer a 3 day grace period while the Investor has a 5 day grace period with the owner.

If the tenant/buyer does not buy after the 18 months and decides to vacate then the investor can either find another tenant/buyer for the remaining 18 months or less.  OR the investor can cancel the deal and walk away.  Assuming the latter case then the investor made $1000 + 18 * $100 = $1000 + $1800 = $2800 on a property she never owned.

If the tenant/buyer were to buy in this case at the 18^th month then the investor made:

$1000 credit on the option payment + 18 monthly payments cash flow of $100 per month + 18 months of $50 difference in the saved rental credit + $10,000 on the price difference.  This becomes $1000 + 18 * $100 + 18 * $50 + $10,000 = $1000 + $1800 + $900 + $10,000 = $13,700.  Not bad for never owning a property.

The dangers of a sandwich option comes mainly during the vacancy periods.  If your first tenant/buyer vacates how quickly can you get the second one in there?  Granted, you will be getting a second full option payment which you keep for yourself.  What if it takes 3 months for you to do so.  In the above scenario you paid three monthly payments of $1100 to the owner and thus paid out $3300 to get the second $4000 option payment.  This means you only received $700 and you still have to credit the full $4000 if they were to buy.  This can be dangerous if the new tenant/buyer exercises early.

If you are wanting to get into an unique method to invest in real estate with no money out of pocket and a guaranteed positive cash flow then the sandwich option may be your ticket.  Make sure you know your numbers, though.

Happy Investing!

Kevin A. Dunlap

Trident Investments Group

Office: (702) 516-5698

Cellular: (702) 591-1784

Info@tridentinvestmentsllc.com

http://www.tridentinvestmentsllc.com