Offer Checklist
TOPIC: OFFER CHECKLIST
All credit for the below concepts goes to the wonderful Jack Miller, who passed away in 2009 and mentored many thousands of people.
BUYING HOUSES OR OPTIONS:
Give me a Dummy Option for 110% of market value in 5 years, and I’ll give you a few grand now, and I’ll have no idea if I’m going to come back…. You hope I don’t. If you’re listing it now, give them a buy-out limited to 90-180 days only at a 20% flat fee on top of your few grand. For example, I’ll give you $5K now to tide you over but if you get a sale, just pay me back $6K at closing or the buyer can split it with you.
Let me Master Lease with a throwaway option (propose a way high price unlikely to close) but guaranteeing me control over the next 5 years and deep cashflow. I’ll prepay a large sum of rents up front too to get your attention, and you can buy me out at anytime.
Give me an Option for a LARGE Consideration on Installments, allowing me to get your attention but assess the market as we go.
Give me an Option if I also make an affordable loan to you, over a short period of time, that you actually have a chance to repay.
Give me a ROFR Option so that if you do get an offer, I get a chance to match it OR we have set price/terms that I can exercise instead.
Give me an Option to buy on paper after your listing or subject-to the loan with a seller 2nd if necessary.
I’ll manage your property for an Option and pay you 90% of whatever I collect on a performance lease, or I want 10% of the net income of the building, and 10% of the appreciation from today forward. (Or choose your %)
I’ll renovate your property for an Option and pay you 90% of whatever I collect (rents or gain) whenever I can, as long as the property sells for appraised value in the future, but not after 10 years.
I’ll pay you 2x rents for a year (extremely high cashflow) in exchange for an Option and in lieu of further consideration.
Let me just take over your payments myself and I’ll give you some money to leave. If there’s enough equity I’ll give you the rest when I sell it, as a zero-payment, zero-interest bond (I can index it to a T-Bill if you insist).
I’ll master lease it from you for the same amount as your mortgage payment and the rest will be kept as a frozen seller 2nd.
The Note/Option SPLIT play (‘life support’): I’ll LEND you the money to cover your cashflow problem for 5 years. I’ll lend it each month instead of giving you money lump sum up front. So it’s an installment loan, which I’ll write you a promissory note for. I could secure my performance under that Note to something like my own real estate so it’s a sellable note (and I'm the borrower). But in total, there’s TWO instruments: the LOAN that I’m giving you at say 10% or 12% interest (accruing and will ultimately be paid out of your half) AND the Option that gives me half of the upside from today forward. But if I decide to stop paying on the Option, I only lose my equity position for future appreciation. I don’t lose the Note, or the total principal that I’ve lent to you which still is a secured lien on the property.
Let me Option your Redemptive Rights so that IF the property ever does go into foreclosure, I can raise the money and get it back.
Let me have a No-Payback Option which can only be exercised when you move out or die, but it’s based on your equity today. It might be a sub-to option for the mortgage balance way down the road. For every $1 I pay you for your equity today, I get a $1.25 credit for the purchase price. It might be a Remainder Estate.
Let me Master Lease it for 8 years and buy -$300-700 of negative monthly cashflow (by saying I'll pay your taxes or insurance or something specific) IF I can have the right to come back in 8 years and close at today’s value and guarantee you today’s equity. OR Let me Master Lease it for 5 years at breakeven cashflow IF I can have the right to come back in 5 years and close at 110% of today’s price and guarantee you today’s equity.
Let me Deleverage You for an Option by paying off adjustable-rate debt, or ballooning debt, or paying down some existing debt so you can more easily get a refinance into new, easy, 30-year money.
Let me trade you ANY of the following ideas: something of value like a car, boat, RV, gold, or something similar for an Option on your home. Or let me trade you a home or a note, and if you don’t want it I’ll buy it back from you on time. Or you can force me to buy it back after a year (for cash). Or you can go pawn it, or I'll refer you to a wholesale buyer, and you can get cash yourself for it.
Let me offer to pay something specific and recurring, like your property taxes for 10 years or your insurance payment for 10 years, in exchange for a 10 year option.
I just want to make 10% that's all... so give me an Option that I can’t exercise until prices have gone up by 10% above my strike price… but I MUST exercise within a year of that happening so that you know you’re going to get your money. Prices can be indexed to the neighborhood or by median price in the city, or CoreLogic, etc. I’m willing to pay you on installments, say $5,000 spread out over payments to make $30,000 or so (10% net net) or a 6x on my money.
Let me buy it for Half now, Half later (Harps Deal or a Hot50)
Let me Buy it for 70-80 cents on the dollar, in cash, and you carry back the rest (20%) of your equity as a zero-interest, single-payment note just like a bond.
If I want a LARGE Interest-Only Deduction: Buy the property upside down for example, $30K purchase under the existing loan balance, but on a wrap mortgage owed to seller. The payment is the existing loan payment for Interest Only. The seller gets little or nothing up front but has to wait for their equity (set $ amt) as a zero-interest single-payment note, if any. Lease or lease-option the property NNN, at breakeven, and pay down the loan balance until it hits your purchase price. Only possible if you’re not bleeding too much each year. Any bleed or repair cost can come out of the seller’s equity when you sell it. You’re basically saying I’ll pay you off ONLY when the underlying loan balance drops below my Wrap balance owed to you, way way in the future, but you will get some profit then.
Trade another Note or Promise to Pay $10K, for an Option at today’s market value for a wrap in the future. Pay seller $300 per month, for example, and all payments to count as a credit toward the purchase price. Must buy in 3 years on a Wrap Mortgage (or seller 2nd) at a pre-set interest rate, with payments that match the existing mortgage, with a balloon beyond that to payoff the seller. If the payments don’t match the existing mortgage (short), then the owner has to eat the difference. But… you can offer more consideration up front, like $500/mo, to entice them now.
Trade or 1031 Exchange a Lot or Boat, Car, Diamond, etc. for a one-year option at 90% of market value, plus a Promissory Note from you for another say $5,000 to sweeten the deal with payments of $500/mo starting now. Seller secures the Option with another asset (need more security for me). Remember, you can offer to buy back the Lot at a discounted price, or on paper, etc etc so the seller perceives he’s getting something for it now.
Offer the owner a Discount Sale Price (for loan balance) but a Buy Back Option. Buy it now for the Loan Balance now and tell the Seller he can come back and buy it back anytime he can make a better deal, in exchange for a 20% yield on my money plus a buy-out for the existing tenant at the time. I can tell him that I’m required to Lease the property with a cash buy-out contingency and that if the Owner wants to get the property delivered vacant, he can otherwise I’d be in default. If the Owner wants to stay in the property, he can lease it back from me for slightly less than the loan payment, and I’ll pay the bleed b/c the paydown and appreciation is absolutely worth it.
Buy the property for the Loan Balance. But give the Owner a Promissory Note for say $20,000, a portion of his equity and start making payments to him of say $400 per month. Owner wants to stay in the property so he leases it back NNN breakeven (including mortgage and all expenses) for 5 years, and if he fulfills his lease obligation gets a bonus of $10,000 in extra equity due on the note at sale or refinance.
Buy the property for the Loan Balance but on a contract for deed. Give the owner $3,000 in cash for the next 5 or 10 years IF he leases back the property breakeven and place a executed deed into escrow as security. If he defaults, you get the deed.
Exchange the owner a property with a lesser monthly bleed but something you want to get rid of with similar equity. All in all, the owner now has a smaller problem to deal with.
Create a bridge loan situation and go help them shop. Get the owner to agree to a price and to sell on paper also when you do exercise. Pay his full mortgage payments as consideration in the mean time so he can go buy a home.
Let me pre-pay you a huge amount of Rents now for the Option to Lease for 5 years beyond that. For example, if market rent is $5,000 per month, let me pay you $100,000 cash in pre-paid Rent for 3 years and an Option to Lease for $3,000 per month for another 5 years after that. I also want an Option to Buy, and if I buy, half of each Rent payment will be credited to your full purchase price, with the balance due in 5 years after closing, at 6% interest on 30 year amortization until then.
Instead of lending you money to get out of your hole, I’ll buy the home from you from you and trade you cash (to pay off your loan) and two of my houses that I don’t want anymore, so that the equities balance.
Sure I’ll buy it for a quick cash sale as long as you use some portion of my cash in reserve for pre-paid rent payments, to give you extra time in the property.
I'll DOUBLE the price I offer you on an Option, but at the end of 13 years (to capture their attention).
I’ll give you cash now for a Remainder Interest (triggered by some future event), and you have to deed that to a Trustee right now as a TIC who will hold it as security.
I’ll cure the back payments and give you a cash payable in lump sum or as an Income Stream (I'll write you a Note) which will be secured by the lease rights you have in leasing back the property (if I don’t pay your installment loan, you don’t have to pay the lease to me).
You will deed this property into a Trust and I will finance you in return for a Wrapped note. I will give you a ‘loan’ (but to the Trustee) and instead of it being a straight 3rd lien, it will wrap the first two liens and charge a higher APY. There will be one clean Note going forward. You are still the beneficiary (for now) but that can change if you default (it’s collateral interest). If you default, your position will default to a lease agreement with first month rent and deposit already paid for. The Trustee will pay the wrap payment to a servicer (which goes to me, and pays down the underlying debt also – required by me to do). The Trustee will also pre-pay 12 payments in advance toward the loan (to me). Collateralize with: a DOT, a recorded UCC-1 form, and a collateral assignment of his beneficial interest in the trust.
I will lend the you sufficient money to catch up delinquent payments and to carry current payments until the property can be sold in the conventional market. I’m going to charge a high rate of interest plus "points" and servicing fees to be paid out of the sale proceeds, then (maybe) add in a convertible provision which will enable me to take a percentage of the proceeds in excess of the loans for your profit.
Do the same as above, except, make your loan a Demand Note (protection in the event of a default on the loan above) which you can call at a later time when there's less competition (to outbid you at the sale). In some areas, the lender can call for a foreclosure sale, then switch the location and time of sale with only minimal notice. Or the notice of sale itself doesn't require wide distribution. By being the lender and carrying your loan as a "wrap around", you'll also get the benefit of any interest spread you can structure into the "wrap around" position.
I’ll cure your mortgage and buy your home, but for now you stay on title. For now I will pay/service a new Wrap Lien that I hold in a different entity (junior lien). You will sign a deed which I might decide not to record. If I had already recorded a wraparound mortgage in the public records and had taken over responsibility for making the payments on the underlying lien, my position would be reasonably secure against any further liens against the property. You'd have all the benefits of ownership, most of the security a recorded deed might offer, and any non-assumable underlying liens would thereby be effectively circumvented. The Garn-St. Germain Act permits junior liens on affected property.
I’ll buy it Subject2 at your very high price, but I WANT YOU TO WRAP YOUR UNDERLYING LOAN FIRST. I’ll match the existing payment amount, but I want the interest rate to be LESS or ZERO on the high wrap to me (amortizes faster). I say to him: if the 1st loan gets called, I’m going to buy out your 2nd lien or you’ll have to protect it at the sale and buy out the first.
Deed your house to a Trust, but you stay beneficiary and I’ll negotiate. If me, the Trustee, figures out how to buy the second mortgage out and pay it off or release liability, I get an option to buy the home for the 1st mortgage balance at any time. The first lender might agree to first loan funds back at construction rates to renovate the home and get it sold.
Cash and Pre-pay. Let me buy your house for quick cash and payoff your mortgage (and back payments) and give you 6 mos to 1 year worth of money as part of the sale, or a Note that gives you significant monthly payments (no interest) so you have time to get out and find another place without getting Foreclosed.
Cure, Make the seller a Wraparound 2nd, Catch Up, and get Control over Payments In this model, you create a new financing instrument—a wraparound mortgage—that includes the existing loan and your own terms for the remaining equity. Loan is caught up. You take responsibility for paying the underlying loan directly, thereby preventing the seller from missing future payments. This protects your investment while allowing the seller to remain involved or in the property temporarily. To further secure the arrangement, a Remainder Interest—the right to full ownership after a certain event or time—could be deeded into a third-party holding trust, which ensures neither party can act unilaterally without oversight. This trust setup insulates your investment from the seller’s potential misbehavior or future financial issues. It adds a layer of legal protection and a neutral mediator, reducing risk.
Cure, take sub-2 with Leaseback pre-paid, and offer seller a 0% note (or income stream) to supplement PITI payments: Buy the house at a price of $74,200, subject to 1st and 2nd Liens, with $2000 in cash to make up the back payments which are overdue; plus a Note for $7,200 payable at $600 per month. (In the event something should happen, always build equity above the loan in the deal to provide an incentive for someone else to bid against you at the foreclosure sale so you can recover your investment plus the interest in cash. Not a good idea: implied usury. If you are buying a distressed property, structure the transaction in such a way that NO payments are due to you. You can achieve this by giving the occupant pre-paid rent as a part of the deal. Never include any Option to buy the property with the lease. This will help avoid imputation by a court that this was a disguised financial transaction in violation of the mortgage lending statutes. This way you will have been making no payments at all, while you will have been making all the mortgage, tax and insurance payments, you will have the 'Badges of ownership' recognized by law. You can even proceed to re-sell the property to a bona fide third party and capture your profit on a "break even net lease back" while you continue to make payments. Your lease back and the current occupant's free rent terminate at the same time, so the person to whom you sell the property can perform the eviction - or take over management of your occupant. This keeps you out of the line of fire in case of litigation.
Cure back payments and give them a new high-interest Refi Wrap, with extra cash to Owner which acts as pre-paid Interest payments. Place property into Trust with provisional Lease as security. Trust holds neutrally and deeds to Lender (me) in the event of default, and I would becomes Landlord. Owner signs a new Wrap promising a payment that encompasses the existing lien amounts but wrapped at a HIGHER interest rate and $10-30K ABOVE the existing total loan balance. The Wrap loan gives CASH to the Owner/Borrower but that cash must STAY IN A RESERVE ACCOUNT and is used to cure all payments, is drafted for the next 12 months of payments on the underlying lien. This buys the Owner time. So now I am a Noteholder on a wrap with higher interest that doesn't amortize much at all. There might not be any cashflow, but I get all the pay-down on the underlying liens. By placing title into trust, the true owner of the property is the Beneficiary of the Trust. The loan was collateralized both by a mortgage put on the property by the borrower, a recorded UCC-1 form, and a collateral assignment of his beneficial interest in the trust. In the event of default, the lender would be able to either retain the property in the Trust to avoid liability and to maintain privacy, or he could put the title into his own name, or the name of anyone to whom he might sell the loan. And a loan thus secured would be very marketable. The lender in this case undertook no risk. Title was being held subject to his loan by an independent 3rd party Trustee. Nothing the borrower could do would slander the title. Nor could he run up more debt secured by his house, since he would no longer own it. The funds he received were allocated among his present and future creditors, so there was little likelihood of his getting into any serious financial troubles which might cause him to file bankruptcy.
Get the Wrap and hope that there's a default/foreclosure so that you're the only one to bid at the sale (and no one outbids your wrap position. This preforeclosure strategy involves positioning yourself as the second lienholder through a wraparound mortgage, giving you control over the distressed property while still subject to the existing first mortgage. You provide the homeowner with enough funds to cure the default and possibly carry future payments, securing your position with a high-interest wrap loan that includes points and servicing fees. If the borrower defaults, you initiate foreclosure on your second lien. At the foreclosure auction, your goal is to be the winning bidder — ideally without competition — so you acquire the property subject to the first mortgage still in place. This setup allows you to step into ownership without paying off the first lien upfront, giving you access to any equity between the first mortgage balance and the property’s market value. If no one outbids you, you effectively buy the property at a steep discount. Since the wraparound gives you an interest spread, you may have already profited from cash flow before the foreclosure. You can also structure the note with a demand clause, allowing you to call the loan at a time more favorable to you — such as during a lull in investor competition. The risks include being outbid at the sale, or the first lienholder foreclosing before you, which could wipe out your interest. However, if executed carefully, this strategy enables you to gain control of valuable properties with minimal upfront capital.
Get the Wrap but delay the recording of the Deed. This strategy involves negotiating directly with a distressed homeowner to acquire the property after curing the foreclosure, but in a way that allows you to delay or even avoid recording the deed. First, you agree to help the homeowner by bringing the loan current and taking over the monthly payments. In return, the homeowner signs over a deed to you (often held “in escrow” or unrecorded), giving you control of the property. You then record a wraparound mortgage in the public records—this secures your financial interest and shows that you are now responsible for making the payments on the existing loan, even though title hasn’t formally changed hands. By recording the wrap, you protect your position against any future liens or judgments that could be filed against the seller, because your lien would be senior. Meanwhile, since the deed remains unrecorded, the transfer may go unnoticed by the lender holding the original mortgage, helping you avoid triggering the due-on-sale clause. This is particularly useful with non-assumable loans that would otherwise become due if ownership changed. The Garn-St. Germain Act explicitly allows junior liens (like your wrap mortgage), so this structure is legal. Ultimately, you get most of the practical benefits of ownership—control, equity, and profit potential—without officially showing up on title, at least until you decide it’s the right time to record the deed.
TRADE for a Good Note: Exchange the foreclosing lender one of your seasoned and well secured mortgages on another property for the one he's foreclosing. Most people don't like foreclosures. This way his income stream would be restored and you can do the dirty work. This puts you in the same position as above, but without the use of cash. Now YOU can control the foreclosure and have a priority position in negotiating with the owner.
Buy sub-2 at their VERY HIGH ASKING, but I WANT YOU TO WRAP YOUR UNDERLYING LOAN AT LOWER RATE. I’ll match the payment amount, but I want the interest rate to be LESS on the wrap. If the loan gets called, I’m going to buy out your 2nd lien or you’ll have to protect it at the sale and buy out the first.
Become the Trustee and negotiate to WIPE OUT the junior lien before auction in exchange for an Option. A distressed homeowner is facing foreclosure. They owe $180,000 on their first mortgage, which is still current, and $60,000 on a second mortgage that is in default. The property is worth about $250,000 in its current condition but could be worth $330,000 after $30,000 in repairs. The homeowner is overwhelmed and unable to refinance or sell fast enough to avoid foreclosure. An investor approaches the owner and offers to help: the owner agrees to place the property into a land trust, naming the investor as trustee and assigning beneficial interest with the understanding that the investor will deal with the debt and potentially buy the property. The investor negotiates with the second mortgage holder, offering $6,000 to settle the $60,000 debt, which the lender accepts since the second would be wiped out in a foreclosure anyway. To protect his position, the investor records a wraparound mortgage or similar instrument in the public record. Now in control of the property “subject to” the first mortgage, the investor approaches the first lender and explains the plan: continue making payments while renovating the home to sell it for a profit. The lender agrees to loan the investor $30,000 for repairs at standard construction loan rates, since full repayment of the mortgage is now more likely. After completing the renovations, the investor lists the home and sells it for $330,000. The proceeds pay off the $180,000 first mortgage, cover the $30,000 renovation loan, and leave a substantial profit for the investor. This strategy allowed the investor to acquire, improve, and sell the home without ever taking full title upfront or using much of their own capital. All parties benefit: the homeowner avoids foreclosure, the lenders recover their money, and the investor earns equity through a creative and structured deal.
If an investment property or commercial - how about a shared appreciation loan to fix the problem? I'll be both lender and equity investor in your deal if it makes sense.
The “I don’t care”: Let me give you some money now to solve your problem and if you come back in a year and give me my money back plus a return then I’ll give you the house back and you can sell it, I don’t care.
“Let me pay to watch as we go”: We can both agree that we don’t really know what the price is, we’re too far apart, we don’t know what the market is going to do. You want to much and I want too little. So let’s just agree on a price today and I’ll pay you for the privilege to the buy at that price but I want a long time to determine if I want to overpay.
Let me offer some Overhand-Underhand pitches to get them in a GOTCHA: if I (Thomas the investor) need short-term cash, I'll raise the interest rate I offer like crazy to tempt the seller but I'll chisel down the purchase price. I might be able to get a 10%-15% margin on a house by picking up a house for 80 cents on the dollar instead of 90 cents (where they figure they're gonna net you know with an MLS sale). Do it by saying "let me pay you the maximum interest rate... maybe like double or triple the going rates if you give me this price on seller finance". Now you get your margin and then you can go try and sell the house ASAP. Make sure it's a non-recourse note and then you can try and go sell the house and pay them off. Then they make about what they would by just dragging their ass out on the market you know for 85-90 cents on the dollar anyway so especially if they have low basis in the house... they're not really worried about not recouping an investment. If I DON'T need money then I'll go the other way around. I'll go low low interest right but I might be willing to give higher price. In which case I'm NOT gonna sell the home, but I might create a wrap mortgage and just sell it at a higher interest rate or sell the house on a lease option. I'll pay the wrap note as the borrower then sell the wrap note at say 80c on the dollar for cash, but I'm gonna keep the house. I'm gonna keep the house and remain borrower on that wrap note (payor). But I'm gonna keep the house for the benefits of being a rental if I want write-offs.