An investor needs a blue pen
Ashley and I have been blessed to have had some of the best real estate investor teachers in the world. What differentiated guys like Jack Miller, Peter Fortunato, Dyches Boddiford and David Tilney, along with their seminars, from others was they were not in the seminar business.
What I mean by that is I’ve been to classes before that are a sell-a-thon for all the other classes the teacher has. These instructors tend to teach broad concepts without any real deal case studies to go along with them. In my opinion, this scenario often means those “real estate investors” are now in the seminar business, as opposed to the real estate business, because they are no longer doing deals.
Dyches, Pete, Jack and David, however, would not just talk about deals they’d done. They’d also teach on the deals they were currently doing. That fact is huge because it means the course material was not antiquated and was applicable as soon as you stepped out of class.
That’s the kind of teacher you want.
Going to classes from those guys is where Ashley and I got most of our book knowledge. But we got our true, hands-on, in the field education from one teacher. His name is Bill Cook. And without him and his wife Kim spending the time they did with us, Ashley and I would not be where we are today.
One of the things Bill taught me was that I should not carry any kind of pre-printed form with me. Instead, I should always carry a blue pen because you never know when you might have to write out a contract.
Let me give you an example of why pre-printed contracts are not a good idea.
I saw someone looking for help the other day on a social media post. The person was asking if someone could give him a purchase contract because all he had was an assignment contract. He finished up the post by saying, “I’m guessing that would not work for a straight purchase.”
Now, I haven’t read the document the guy has, but every assignment contract I’ve ever seen is a purchase contract with an assignment clause built into it. And all that clause says is that one or both parties signing the contract has the right to assign their interest in the contract to someone else if they chose to.
There may be some other contingencies that allow one party to terminate the agreement later on (we often call those weasel clauses because it allows someone to weasel out of the deal), but past that, the document the guy had was a purchase agreement. But because it was pre-printed, he didn’t know what was in the document. Nor did he know he could strike out the assignment portion and turn it into the document he needed.
Now, I am not knocking the guy. I think whoever gave him his education failed to teach him the concept that your paperwork should be custom-made for each deal. Bill used to remind that David Tilney said, “You should draft documents by design, not by default.” He would also quote Peter Fortunato saying, “Your documents are just a memorialization of when the buyer and seller have a meeting of the minds.”
But in order to create your documents, you need to understand what should be in them. So, let’s look at what a purchase agreement should contain.
First off, you can hand write your contract on regular notebook paper. It doesn’t have to be printed on printer paper. There should be a title that says “purchase agreement,” followed by the date and the names of the buyer and seller. I normally put the terms “date, buyer, and seller” in the left-hand margin, followed by a colon. I fill in the corresponding information on the other side of the notebook paper line, and I also attach the property address in the same manner.
Next, is the “terms” of the contract. This is where you spell out what is being agreed upon. In other words, this is the meeting of the minds portion. An example would be, “The buyer agrees to buy the house from seller for a total price of $100,000 payable at $10,000 down and $500 a month until paid in full.”
Add a closing date and what attorney you plan to go to, and that’s it. You have a custom-made purchase agreement that anyone can understand.
Doing documents this way omits fancy sounding legal language and will make your seller feel much more comfortable and land you many more deals. It also ensures you know exactly what’s in your document, thus making you a better investor. And that’s why an investor needs a blue pen.
Joe and Ashley English buy houses and mobile homes in Northwest Georgia. For more information or to ask a question, go to www.cashflowwithjoe.com or call Joe at 678-986-6813.