All right. Hey, there, everybody. How are you doing? I hope you enjoyed the video I did not too long ago where we were talking about Purchase Agreements versus the Assignment Contracts. I was kind of letting you know like some of the things I was seeing as far as individuals getting in trouble from using just a regular Purchase Agreement, and just doing an A to B, B to C transaction without using the Assignment Contract. Now if you haven’t seen that one, it’s on this blog, or if you’re looking at this on my YouTube Channel, it’s also on my YouTube Channel. I highly recommend you do that. That is the part one of this particular video series, I guess, if you want to call it a video series, but that’s what I’m putting together. I wanted to kind of go over in this video how you could be making your offers without using a non-executable contract.
Now, again, like I’m going to disclose. I’m not an Attorney, okay. If you need an Attorney, especially after watching and receiving the information within this particular video, I highly recommend you seek Legal Counsel. I’m not an Attorney. The information that I’m going to share with you in this particular video has been reviewed by my Attorney, so definitely check that out. I want to make sure that I give that full disclosure, and just want to let you guys know. Unfortunately, I’m not an Attorney, thankfully. I’m not saying anything wrong there about Attorneys, I love my Attorney that I work with, but I just would not see myself going to school for that amount of time, but let’s talk a little about the Letter of Intent, okay.
I’m going to be talking about the Letter of Intent document here. Now if you have a business to where you’re submitting a lot of deals, okay, so if you’re submitting … What I typically recommend for my students, when we are working together, is submitting at least 15 offers each and every week. That would equate to about 60 deals submitted each month, and the percentages that I’ve seen that really work out, is you’re more than likely going to get probably 8 to 10 deals under contract at the prices that you can allow yourself to make some good profits. From those 8 to 10, you’ll more than likely close 2 to 3 deals. If you’re just doing the bare bones minimum of 15 offers each and every week.
Now like I was talking about in the first part of this video series, is that you can get in trouble if you are submitting like a gazillion offers, and say, for instance, everybody is accepting them, and you’re not closing on them. People are getting really upset. The owners of record. The sellers that you’re submitting these offers to, they’re getting upset that you’re not closing on these deals. What this Letter of Intent does, is it allows you to go back and forth if you need to, and it does look similar to a Purchase Agreement. It states who the buyer is, who the seller is, the purchase price, and terms. Due diligence, that’s mainly going to be for checking out title work. That’s going to be doing inspections, appraisals, whatever it may be that you want to do during that period. It’s going to put closing date.
It pretty much looks very similar to a regular Purchase and Sales Agreement. The only thing is, it’s not an executed contract, okay. This is not a contract. It’s just you’re stating your Letter of Intent, your intent to purchase these properties. If somebody says, “Yes, I like those terms,” then you would put that into a purchase agreement, and at that point, you’d go ahead and get that put together, but still, do not … Once you do get somebody that says, “Yes,” make sure that you have a buyer put together, or at least you have the funds put together to close on those transactions.
I like using the Letter of Intent, because we tend to submit quite a bit of offers, and more than likely, our first offer isn’t going to be accepted by the seller, so we tend to go back and forth using the Letter of Intent, or through email communication, or through verbal communication with negotiating on the price. I put the Letter of Intent forward, in a position to where we can at that point, we could have a lot of offers submitted, and we’re not going to be getting a lot of folks upset, if we don’t close on those deals. Now in my team, and what I advise my students to do is to only submit deals that you’ve really kind of calculated out the numbers, and that everything make sense for you, and the individual that you’re going to be purchasing the property from.
Obviously, you need to be calculating in a way to where your buyer is going to be like, “Okay, that’s a great deal.” It’s priced very aggressively. It’s below retail, and it’s an off-market deal. I’m getting it to where I still have a lot of room, a lot of spread still in the deal from a profitability standpoint. You’re getting these deals submitted, you’re not putting yourself in a binding situation from an executed contract, and it allows you to filter out and send more deals to people, and not have to worry about, “Hey, I just submitted 10 to 15 Purchase and Sales Agreements.” Say, for instance, all 10 to 15 of those people sign back, and say, for instance, you didn’t properly do your due diligence on your numbers on 8 out of those 10 deals, well, now you’re going to have to go back and try to renegotiate.
Renegotiating can be somewhat of a difficult thing to do. I don’t recommend it unless it’s something that’s needed. There are some times to where I just want to get a deal under contract, but it’s got to still be at a reasonable price. What I mean by that is, say, for instance, the seller, the owner of record, the owner of record and I we agreed to a price, let’s just say $70 grand. This is an example, and say for instance something comes back, like on the inspection, or something comes back from an appraisal standpoint. Well, I can go back to that particular seller and say, “Hey, I saw these things. They popped up. I’m not going to be able to close at the $70K, but what I can do, since I do have to do some of these repairs, and that wasn’t factored in, because obviously I’m not an inspector. I was unable to really justify what I’m submitting, because I can’t see the things than an inspector normally can see. What I can do is I could come in at $65, we could still do an all cash offer.”
Now the other thing that I didn’t speak of in the last video, and I’ll just kind of touch on that here quickly, because I brought up the renegotiating on your original contract, is if you go ahead and do that, and say it is a cash transaction, and you don’t really have the cash, you must have something lined up. Either through private money, bank financing, and bank financing you can get through the local mom and pop type banks. You can get 100% financing, yes, it is mainly based on your credit, but you can still get those types of loans. Even if you need to get like something from who I spoke of previously in the other video, was Duane Ortega. Duane Ortega with Best Transaction Funding can get you a proof of funds letter. Okay.
Now that proof of funds letter from Duane Ortega is only going to be for one day funding. Okay. If you are going to be lining things up, you definitely have to make sure that your seller knows that you do have the funds, or that if you are getting financing, that you can at least show that you’re able to perform, because a lot of folks, that’s where they’re getting in trouble in at. They don’t have their cash, so a lot of wholesalers that are still wanting to use the Assignment Contract, are starting to get in trouble, because they’re trying to flip contracts, and that’s not something that can be very appealing. Especially if you’re not closing a majority of your deals, so make sure that you’re doing that. Okay.
The Letter of Intent document, you can have your Attorney whip that up for you, or if you’re a member of my program, we already have those documents in there for you. Those documents are in there for you, but you also have to have them reviewed by your own State Counsel, your own State Attorney, because it is a legal document, but again, the one I have, it’s very self-explanatory. It’s very easy, okay. That’s the one thing you have to remember here. It’s very easy for folks to look at, because you don’t want to complicate folks, especially the owners of record, that you’re trying to do business with. Once things get complicated, that’s when they start losing faith in how the process is going. You don’t, obviously, want that to happen.
The Letter of Intent document is very self-explanatory. It states everything that you’re doing. Then if you agree on that, then you put together the Purchase and Sales Agreement. Again, you just let them know, this is my intent to purchase your property. Obviously, it states up here, “This Letter will serve as a non-binding Letter of Intent to purchase the above-referenced property, located in, I just put Anywhere, USA, under the following terms and conditions.” This is just an example that I printed off for you guys, just so you could kind of see it, but it’s a document that you can use. Once you guys agree, you and the seller agree, then you can obviously put together a binding, executed contract at that point, once you guys sign in the appropriate positions on the Purchase and Sales Agreement, but I didn’t want to make a super long video explaining this. I just wanted to kind of give you guys an overview of what we’re doing, and how we’re doing it, and how you can replicate and duplicate it within your business, and really start making things happen the right way.
If this isn’t the right way for you and your business, that’s fine. I just wanted to make this so you guys can have additional tools within your tool bag that you can use, if you choose to do that, but that’s completely up to you. Obviously, make sure a Letter of Intent, again, it’s a non-binding contract, so it’s really cool. You could submit multiple offers to folks, and they can read right up at the top it’s right there. It says it’s a non-binding contract, so they can review it. There’s really nothing for them to get upset about if you say, “Hey, I’m sorry. I submitted about 10 offers, and I accepted 8 of them.” You could just let folks know that, too, so they don’t get upset with you.
Some people that I know, when they’re doing like a direct mail campaign, they’ll actually submit the Letter of Intent with the letter that they’re doing, so if are doing either yellow letters, white letters, whatever type of direct main campaign that you’re doing, some folks will actually stick the Letter of Intent in there, just to kind of put forth the seriousness of, “Hey, we really do want to acquire this property.” That’s another thing that you can get from this video when you’re doing your direct mail campaigns, is you can stick this. My document is three pages. Third page, it could all probably … It just really depends on what you want to do. We have different things in here. You could take out probably the brokerage fees, and you could make it probably a two page document, if you wanted to. Either way, it’s three pages, and then with whatever direct mail content that you wanted to do in there, it would be four pieces, so you would still be under the regular postage fees for sending this out as a direct mail campaign piece.
That’s all I have for you today. Leave me a Comment below. Let me know if this is stuff that’s … This is like information, like you’re like, “Oh, okay, cool. I can start using and implementing that within my business.” The whole point of me creating these videos is to just kind of give you, whoever this is on the other end, to really just kind of give you information that we’re doing in our business, so that you can also implement it, and really start seeing the results that you want within your business. If you need help executing any of this, either I spoke about direct mail in this campaign. You need help with that, you need help implementing the Letter of Intent, or the Purchase and Sales Agreement, if you need at all with anything in your business, simply just reach out, and let me know. That’s what I do. That’s what I love to do. I’m very passionate about giving back, so definitely reach out.
Let me know how I can help, and we can take that step forward. I tend to like look at folks more as like not just a business relationship, but also from a personal standpoint, too, so we have to be able to gel together in order to make any type of relationship work, so let’s connect with each other. If you need anything, just let me know. Hook up with me. If you’re looking this up on my YouTube Channel, just leave me a comment below, or if you’re on my blog, just let me know what you thought of this video, if it was helpful at all. If it wasn’t, I want to know about that, too, but that’s what I’m here for.
I want to help you, so other than that, I don’t want to ramble on about how I can help you. You know what I can do for you. You know how I can execute that for you, so I will talk to you later. Hope you enjoyed this. If you need anything else on this blog, just take a look at it, or if you’re on my YouTube Channel, take a look. Connect with me though on social media. I’m on Facebook, Instagram, LinkedIn. Hook up with me, and let’s start doing some business together. Other than that, you have a great day. Talk to you soon. Bye, now.
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