1)  Where are these properties located?                          

      In the mid-west, mostly east of Colorado.

2)  Is the Sales/Support Package included in the price?                            

      Usually the Sales Support Package (SSP) costs $1,500 per property. This is to cover the cost of having staff in the Midwest survey the neighborhoods, put a new combination lock box on the door, place a few For Sale signs on the outside with an 800# (cost of such number is also covered). Additionally it also covers the cost of the staff in the office that takes all calls from potential end buyers as well as sends the installment sales contract (Land Contract Note) and finalizes the installment sale.  From time to time, I offer the Investors that buy 5 or 10 properties as a package either a discount or I just waive the $1,500 Sales/Service Package per property. For that fee my staff does all the research and promotion for you to get the property sold the first time around and creates the land contract note that should produce cash flow. Usually the offer is $500 to $600 down payment and a low monthly payment of approx. $300 to $395/mo. for 15 yrs. (selling price on land contract note between $29,500 and $39,000) . It is a sweat equity program where they take the property as is where is.  We charge the end buyers approximately 9% interest because their credit is usually not the best (We make sure it is less than rent in the area to sell fast within 90 days again as is where is, so you do not have to repair anything in the property) 

3) Are these properties in an acceptable condition?

The properties are in a livable/sell-able condition. Some may need some improvement but the terms are so attractive that properties sell fast as is. (The terms are attractive because the payments to own most homes are less than the rent in each of the neighborhood for the same size homes)

4) What is the difference between selling on a land contract versus selling normal?    

        A land contract is a contract between the investor/seller and the buyer/end user whereby the buyer has to make monthly installment payments over 15 years (maybe even more) to purchase the property. A land Contract is made when the seller (you) allows an end buyer (the person who will live in the property) to sign a contract with you committing to a certain sales price (e.g. $39,000) with a small down payment (e.g. $500) and a series of small monthly payment (e.g. $395) for a period of time (usually 15 years) a an acceptable interest rate  (approximately 9% interest).??You in fact give them the chance to take the house “as is - where is” and not go through a regular bank to qualify because maybe their credit is not good enough or the property needs some basic remodeling or maybe they do not have enough money for a down payment or the deed is not available etc.??This is a win-win for everyone as they get a chance to rebuild their credit, own a home by building equity through their monthly payments while you get to sell the property fast, at a better price and with little if any work on your part. The sales process is handled by Original Resources, Inc. The end buyer will make the payments to you (via a national loan service company) plus they should pay you for the property taxes and insurance.?You would have the legal right to collect and in case of default you can evict (and not foreclose) - which is faster and easier because you are still retaining the deed/ownership of the house and you do not transfer it over to them until they sell the home, or until they refinance and cash you out, or until they make payments on time for a period of time (usually 24 months) as spelled out in the Land Contract Note.. After that time you will sign over the deed (you would sign a form called a quit claim deed).?You can choose a title company on line where your property is located.?This way, the end buyer has all the incentives to accept the property "as is - where is" and stick to the payments.?You become like the bank but you make more money because as an example if you bought the property at any amount less than the note value of the land Contract  and receive the same payment amount your yield increases tremendously. The goal is for you to end up having a long term, secured position with positive cash flow of over 10% on average.?

5) When I sign the Deed over to the buyers after 2 years of satisfactory payments how can I make sure they continue to pay on time?

     Signing the Deed over to them does not mean that they will stop paying you. If they do you can foreclose on them just like a bank. Remember that you are still holding the Land Contract note and it will be recorded to protect your rights as a first lien.

A regular bank for instance gives the buyers the grant deed on day one of their purchase even if they are getting a loan. We wait 2 years for extra protection as the land contract allows us to evict if they default instead of foreclose. Evicting is faster and easier.

Buyers that get a loan from the bank have to sign a note (trust deed or mortgage) that gets recorded against the property to protect the bank. We do the same thing but we use a Land Contract and delay giving them the Deed and recording the note till they make 24 payments on time. 

Frankly is they default after two years you can keep all the payments they made to you, then foreclose on them and resell the property at full value yielding the highest return.

6)    If it’s so good and easy why is Cherif Medawar, the owner, not doing it for himself?

       Cherif is doing these deals for myself, hence the office and staff creation. But to keep the discount he receives from the bank, he has to purchase a lot more properties than he can handle, so he decided since the infrastructure with road staff and office staff exists to sell some of the REOs and notes to his data base of student/investors and charge them to sell their properties on a Land contract note where everyone benefits. Cherif has opened this opportunity to as many serious and advanced investors as possible and everyone with no exception has been making money so far.

7) Other than the purchase price of the property and the sales/service package fee of $1,500 to create the land Contract Note what additional fees do you anticipate an investor would have to pay?                                  

        There is a $450.00 deed preparation and recordation. The insurance and taxes are paid for by the end buyers but amounts may not be exact in the first year so an adjustment to the land contract by addendum may have to be made and sent to the end buyers. There are fees to be paid to the collection company (usually $75 to set up and approximately $10 a month). There are collection fees if end buyers fall behind, eviction fees and reselling fees if end buyers default. All could be easily off set by the new down payment collected when you resell through a local realtor or any other services. Keep in mind that unlike any other REO program in the country when you pay for the sales Service Package fee I pay any back property taxes due and any water liens and I exchange the property is it is a burned property or land only to make sure we can create the first land contract note.

The service package fee also covers the property signage where my road staff goes into the property, takes photos, checks the condition, surveys neighborhood rent and sale prices and places a new combination lock box, and post a For Sale sign in front of the yard. It also covers the 800 number expense placed on the sign outside the property.??

 8) After your support team sells my property on a land contract can I just sell that land contract note at a discount and get a big cash sum instead of waiting for these monthly payments to come in through the 15 or 20 years?

        Yes, you could sell that note for cash at a lesser discount from its full value (also called face value).??A land contract note secured against the property with a face value of $39,000 producing an income of $395 a month for 15 years is very valuable for many investors. You can post it for sale on many websites including craigs list or ebay etc. The more payments you receive (9 or 12 months) on the land contract note the more valuable it becomes. It is the proof that the end buyer is performing on the note (it is called a seasoned note when payments have been made for a few months). After 3 months of receiving these payments the note has a good value. After 6 months it has a better value but after 12 months the note is truly seasoned and it would have the most value because the end users/buyers likelihood of default usually diminishes exponentially.?(Of course there may be external circumstances affecting the end buyer performance).?

9) Why are these REO’s so inexpensive and what is my purchase minimum?

       They are purchased in huge bulk packages directly from the banks or asset managers in an “as is - where is” condition throughout the mid-west. Original resources, Inc. had to commit a huge sum of money and show proof to the banks that we have the experience and can create land contract notes with end buyers so as to not create problems with the cities and counties where these REOs are located.

The usual requirement for purchase is a minimum of five properties to be purchased in a mini-bulk package.

10)  How long do you think it should take from date of purchase to have property under a land contract sale producing cash flow? 

  Usually 90 to 120 days. Almost 80% of the properties sell on a Land Contract note within 90 days

Once you buy the property it takes approximately 45 days to get the signage and photos taken with the neighborhood survey and then my staff gets a lot of calls from potential buyers so it gets sold within less than 45 more days due to the attractive terms offered.?We will eventually evolve into strictly Land Contract Note sales but they will cost more as they would be ready to perform sooner.                                                        

11)  Who does the marketing?                                 

My road staff in the Midwest places a For Sale sign outside the property with an 800 number forwarded to my office staff. My office staff takes all calls and qualifies potential buyers. The signs have attractive terms: i.e. $500 down and $395/mo. (lower than rent for similar homes in the neighborhood)

This helps create demand for the property to sell it fast.

12)  Do I have to pay a real estate commission along with the support package when I sell?       

No you do not have to pay any real estate commissions. My staff provides the service as part of the sale price at this time so I can make it a turn key, income producing opportunity.??You just have to run your note business from that point forward using any of the local services you would need. You can find many on line services for REOs.

13)  What kind of income should I expect?      

For a total investment of 5 properties you should receive a yearly income of over 10%. Some have gotten way more than that but you must monitor your account via the national note servicing company. Keep in mind that the buyer pays taxes, insurance and maintenance. (This is a NNN deal in residential real estate- NNN is a term used in commercial real estate where the Tenant, usually a national company, pays taxes, insurance and maintenance). The end buyers are not financially strong so the performance depends on many factors mainly the follow through of the investors in managing the payments. All could easily be handled by phone and emails. And the law is on the side of the investors. In this REO program the property is sold in as is condition and the end buyer makes the payments with taxes, insurance and maintenance) ??

14)  Why are we using a land contract?                   

In almost all the states in case of default you can first talk to the end buyers directly and/or hire a local law office (usually cost less than $700) to “evict” occupant(s) because they are in default on their contract (the land contract note) and they have no deed. The process is efficient and usually there is no need for foreclosure. This gives you more legal power, faster turn around and less hassles. It is important to note that if your end buyers keep their job and not get laid off in this tough economy, all should work out fine as they need to live somewhere and owning a home is much better than renting one. The likelihood of default also decreases over time and after one or two years if they default the investors can possibly make a huge return when reselling.

15) I heard that there was a bill in the senate that will prohibit seller carry back financing. Is it true? Do you think it will pass?

Yes it is true. I don’t think it will pass. Even if it does pass it will take effect in 2012. We feel that the REO opportunity will be over by that time. This is a very limited opportunity in time, price, locations and structure. Those who will take advantage of it could have good returns. 

16) What is the worst-case scenario?     

If you get a property and then a few weeks later we find out it is burned to the ground or it is a land only property and there is no house there. In these cases I provide an exchange guarantee. Within 5 to 10 business days I exchange it for another one. (I lose money on these but make my investors happy to reduce their risk in REOs)

Another risk is after creating the land contract and handing it to the investor, the end buyers can stop paying for whatever reason. In this case you can contact the REOs office for eviction and reselling. If the service is no longer provided then you can easily search on the internet for local service companies that collect, evict, clean up and resell the property on a land contract or for all cash.

17) What kind of buyers call in?     

They usually do not have high income or the best credit but need a chance to rebuild their credit and own a home. They love the opportunity to own a property and build equity while improving their credit. The Original Resources, Inc staff checks their credit, their rent payment history and employment income to make sure the risk is lower. The goal is to make sure the end buyers can take the property as is and afford the easy terms offered plus the tax and insurance monthly.

18)  Can I choose to NOT sell the properties and just rent them so I can enjoy the upside as the market comes back in the next couple years?

In the program where we sell the properties first you can certainly rent it but if you do so you are on your own as Original Resources, Inc does not work with renters. There are local service companies that can assist you if you search for them on line.                                          

The sales service package includes selling the property on a Land Contract Note. The price we get is usually much higher than your original purchase price and any cash sale. So you end up with a nice built in profit with secured monthly income and unlike a rental the end Buyer pays for the property taxes, insurance, maintenance and you can manage the note by yourself over the phone with basic service company supports.

19) What if I have the service package but found a buyer on my own the first time around by calling a local realtor?    

If you paid the $1,500 sale service package (SSP) the first time around after purchasing an REO property. You can cancel the SSP within 30 days and you may receive a $500 refund.

20) Who makes the decision on the choice of buyers?

Original Resources, Inc. qualifies the end buyers. Remember that almost none of the end buyers have good credit but we verify their employment and ability to pay monthly the principal, interest, taxes and insurance. There are no guarantees and statistically they stick with the payments as the program is a win win for all involved.

We strongly suggest for the Investors to sign up with a National Note Servicing Co to collect the monthly payments for all the properties including taxes and insurance then they deposit the money into each investor’s bank account and send an email confirming money received and amounts deposited.

21) What if the end buyers miss a payment or stop paying altogether?       

       You are in control. You can email me at CherifMedawar@yahoo.com and is I still provide the collection service, I will have my staff retain a local law firm for you. The law firm will process the eviction. You should always contact the end buyers directly prior to this process. They may work something out with you or they may leave with a simple agreement. Once defaulted end buyers are evicted you may retain my company to resell the property for you on a land contract (for $1,500) or you may list it with a Realtor. Or you may chose to sell it yourself as a For sale by Owner.  The land Contract Notes are created for 15 plus years and I am not sure when this program will slow down. As soon as it does (prior to 2012 is what we expect) I would strongly suggest for all investors to search on line where the REO properties are located and retain local services such as attorneys firms, local realtors etc. to collect, evict and resell at minimum cost. 

22)  What if after I sold and carried the land contract note I do not want to keep getting the cash flow and would rather sell the note?

You can market your note directly to other investors and any title company can assist you in transfer the note. You can sign an assignment document similar to the one you will get from Original Resources, Inc.

This could be very profitable for you as you would be collecting more than what you paid for the property along with all the payments that were made to you. This can potentially make your yield a lot higher starting from the first year.

23) How do I start?      

The REOs business model keeps evolving to adjusting to the bank changes and what competitors are doing. At this time you can email me requesting the current REO list to select the properties that you want to buy. Then download and sign the contract and finally wire the funds into Original resources, Inc in Puerto Rico. The process to resell the property and create a land contract takes approximately 90 days.

Soon we shall evolve the model into buying the Land Contract Notes directly based on a certain return and a fixed yearly cash flow. This will cost more and will be rolled out beginning 2010.

24) How does the process of buying work?    

I send you the list of REOs and a contract. You get back to me asap on the ones you chose. (Make sure you selected more than you want so I can see what’s available and hold it for you). Then I forward the contract to you with the wiring instructions and the list of homes you have on hold. You wire the funds within 48 hours or the homes are released to other buyers. Once funds are received you will receive the copy of the contract signed along with a confirmation of funds received and an email explaining to you the steps support has started to take to sell your property.

Remember – you can also use your self-directed IRA/401k funds to be a part of this opportunity.

25)  Can I buy the houses from you then flip them by selling them to someone else quickly at a higher rate?     

       Yes you can but you need to explain to the other investor/buyer that the property does not have the deed yet and it will take 90 to 180 days for the deed to arrive in their name. Just inform me by email showing in writing the new name so I can have my staff prepare a deed transfer form into the new buyers name to be recorded when the deed arrives. 

26) When I buy an REO from you and want to flip it can you extend the service package? and how much can I mark the property up?

     If you paid for the service package then I shall extend it to the next Investor/Buyer provided the mark up does not exceed $1k per property to give the next buyer a chance to make money on his/her land contract note.

If you are flipping the property and the Buyer/Investor you have is not interested in a land Contract you may sell it at any mark up you wish.   

27)  How can I prove to someone that we own the property when there is no deed and we can’t take title yet?

     The contract spells out the fact that these are REOs and the banks take up to 6 months to issue the deeds. I can Sign an affidavit of sale as proof of ownership if that helps you (cost is $45) it is notarized and shows that I am the owner of the entire bulk package including the homes you are interested in.

28)  Can you run out of inventory?     

       I believe we should be in good shape till end of 2010 but as you know the market will recover soon enough and these prices will probably never be seen again in our lifetime!

29)  What are the absolute worst-case scenarios that can happen? And what could be the solutions to each?

A) The area where you purchased your REO gets a bunch of more foreclosures that drop the market values. Solution: You bought it so inexpensively to begin with that you should still come up with profit albeit the margins may be reduced

B) The REO property you purchased is in a very bad neighborhood and in an un-sellable condition.            

Solution: If we can’t sell it the first time around we exchange it. Once the first land Contract note was created it could usually resell again in case of default and resale is needed.

C) The REO property you purchased is out in no man’s land and there is very little demand so it may take longer than 90 days to sell it and all you can get is what you paid.                                                                  

  Solution: The sales staff can make the terms attractive so the end buyers would feel the deal makes sense. Even if you carried a land contract at the price you purchased the properties at (it has never happened before- but just in case) your interest rate is usually 9%, which is much better than having the money sit at the bank at 2 or 3% interest .

D) The REO property you purchased has end buyers not performing from day one.             

Solution: Although this is extremely rare. No one can guarantee what these end buyers will do and from what date till what date they will perform. In case this is the scenario that you have Original Resources, Inc will make every attempt to assist you in the eviction and reselling the property at the lowest possible cost for you, provided of course the REO operation office is still up and running. If not than a local service company can assist you at a minimal cost.

?30) Can you send me the list of homes I can choose from? And what do you recommend when I choose a property?       

I am happy to send you the list of homes so you can choose the ones you like. Frankly it does not make any difference because no one really knows how they look like until I send the team over to break into the property and take photos, survey the neighborhood, look at the condition of the house and place a For sale sign outside based on an attractive down payment and a low monthly payment. Some areas are better than aothers but then that is reflected in the price. Soon we shall be selling the land contract notes based on the payment amounts and the lower payments are usually in cities like Detroit or Cleveland where the properties are less expensive and the property taxes are a bit higher. 

31)  I live in California, should I buy these in my name?

You need an attorney and a CPA to answer this question but most of our buyers are from California and they buy in their name then they have 90 days to set up an entity in Nevada like a C Corp or LLC with a separate Federal Tax ID number and a separate bank account in Nevada. Since the properties are outside California they feel that this set up will protect them and help them minimize their taxes. The properties then sell on a land contract and the income goes to the Nevada entity’s bank account that they allocate expenses against it or borrow from it etc. please verify with an attorney.

32) I have a seminar company would you present them for my students?

Yes, seminar companies buy them from me and resell the properties on webinars and in seminar hotel rooms at a much higher price.

33) Can I see the photos of the properties before purchasing them?

No, but within 45 days after your purchase we have the team dispatched to do the signage package whereby they take photos, put the combination lock box on the door, survey neighborhood for prices, check property condition and place the For Sale sign outside based on competitive and attractive down payment and monthly payment with an 800# forwarded to my office.??

As the REO program evolves eventually we will sell LC Notes based on a specific structure and cash flow then the next level would be to sell a specific note on a specific property with all the photos and details presented.

34) If you survey the neighborhood and decide on a specific low down payment and an attractive monthly payment that beats the rent prices, how do you come up with the sales price?      

Original Resources, Inc sale staff sells the properties as is where is to end buyers who do not have good credit scores but would like to own a piece of the American dream. Owning a home for them is a matter of affording the monthly payments plus the tax and insurance. So we make the payments as low as possible (same principal of a car sale) to attract these end buyers and close within 90 days or less from your purchase date.

What we do is back up the numbers by figuring out at XX monthly payment (that is competitive to the neighborhood rent), at 9% interest for 15 yrs. What would the selling price on the land Contract have to be? And we come up with the amount of the face value of the land contract note. 

For instance if I sell the property at $395/mo for 15 years at 9% interest you would back up the numbers and see that the selling price (face value of your land contract not) would be aprox. $39,000. We decide which price to choose based on the length and interest rate provided the main obstacle has been overcome which is whether the end buyer can afford the monthly payments plus tax and insurance. (This is determined by checking their income and rent payments for the past year- Their credit score is secondary)

Here are two websites that calculate the loan amount by backing up the numbers using the monthly payments, interest rate and number of years loan is amortized.

http://www.premiermove.com/loanamountcalculator.html

https://www.unionbank.com/company_information/hidden/financial_tools/loan_paymentcalculator.jsp 

35) If I have other questions can I email them to someone for a quick response?  

If you have any other questions please do not hesitate to email founder directly at cherifmedawar@yahoo.com

The mortgage note business is the best business in real estate. It made banks and other lenders huge returns through the years. You are in control provided you take responsibility and run it like a business.

You can modify a loan term, you can foreclose, you can sell a partial payment. You are only limited by your knowledge, creativity and ability to communicate?

SUMMARY: