Here are some key points to consider:

1. Pick a name. And while that seems like an easy thing to do a lot of people blow it by not using a name that represents what the business is about. For example they go with something like, "Domonikki's Investing". The problem with that is someone is likely to think that you're involved in stocks and bonds rather than real estate. Sometimes someone tries to get too cute in choosing a name and comes up with "Shedrickxz Young and Associates". The problem with this name is that it doesn't mention real estate investing at all and number two it may be a bit too intimidating for sellers when you hand them your business card. Your business name needs to tell the person hearing (or seeing your name on your business card) what your business is all about without them having to guess or being put on the defensive.
2. How to organize it legally. While most people will start their business as a sole proprietor it's best to convert it to a LLC (Limited Liability Corp) or a "C" type corporation when the profits start rolling in and you can afford to organize the business so it provides you with as much legal protection as you can get. Hey, we both know this is a nation of "litigation crazy" individuals that will take someone to court over the least little thing... so protect yourself as much as you can with the proper business organization.
3. Insurance. Thankfully real estate investing is a simple business to start and doesn't require a lot of insurances being in place but one very useful type of insurance that can help protect you in case of a lawsuit is an "Umbrella Policy". Most umbrella policies cover you for "x" millions of dollars and go up and beyond other types of insurances to help cover you in case you do get taken to court and end up losing. The great thing about umbrella policies is that they aren't nearly as pricey as you think they are. A policy cover you for a $1,000,000 can be purchased for a few hundred dollars per year. This can be very inexpensive insurance.
4. Money. Yeah, many of the principals I talk about in the books, programs and seminars I'm part of deal with strategies and techniques anyone can use to invest in real estate without using their own cash or credit... and those are very real methods of getting rich in this business that thousands have used in this country to make money in real estate.

BUT if you somehow have the ability to find or create or have quick access to a small "nest of money" let me tell you that success in this business can be made so much easier! Here are just two ways that you can start to build your little "nest of money". Way #1, Go to your local bank, introduce yourself and take out a very small loan. If your credit is spotty you may be forced to pay a very high interest rate or you may be forced to open a separate savings account with the bank that you'll have to put money in to help "secure" the note.

And yes I know it sounds kind of dumb for a bank to require you to have money in order to take out a loan but that's the way the game is played especially if your credit history isn't perfect. But what I want you to do is to take out a small loan and then... are you ready for this? Pay it back. Make a few regularly scheduled payments and then pay the thing off entirely. And then take out another loan... a bigger loan and do the same thing all over again.

Not only will this boost your credit score but you'll have that bank as an ally so when you come across a sweet deal that requires some of your own money down you'll be able to go through the front doors of your bank, sit down with a loan manager and in a short period of time walk out with check for the exact amount of money you need. This can make your investing life so much easier.

Here is way #2. Do the same thing with credit cards. Get a couple of spare ones that allow you to take out cash at very reasonable terms. And like the bank loan, use these cards and pay them off-quickly! The interest rates on many credit cards is astronomical so you don't want to be carrying balances for too long BUT the fact remains that most startup businesses in this country were started with credit card financing and if you can manage them properly and not consider them "free money" they can be very useful tools for your investing business.

And what if you don't have good enough credit to get a regular credit card? There are several credit card companies out there that provide credit cards to people that have damaged credit. What you would need to do is supply some sort of financial security in the way of a money deposit that the credit card company can access if you do not pay. These types of credit cards usually have a pretty low limit but if you make your payments on time it won't be long before you will start being approved by more standard credit card companies that don't require a security deposit.

Posted by TheBlogMachine.com at 9:02 AM EDT

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First The Good News:

You?re holding a cashier's check made out to you for $5000.00. You also hold in your entrepreneurial hands a contract that will generate $250.00 per month Positive Cash Flow. The deal even gets better; it's someone else's property and you have minimal liability with no Tenant & Toilet problems. You call home and tell your significant other to get ready; you're going to do the town and he/she is really proud of you! Yes, life is good! You have just created, negotiated and achieved your first Lease Purchase deal of your real estate investor career and now you can envision many more deals of the same kind.

How did you do it ?

You got with the program, worked hard and went out and found a nice 3 bedroom / 2 Bath Home, you know the one with the white fence around it. You have Negotiated the deal so you make money at the beginning of the deal, the middle and at the end. You now control it for the next two years with just one month rent out of your pocket. A Tenant Buyer will be renting to own from you in a Sandwich Lease and placing $5000.00 as non refundable Option considerationin to your pocket. A Sandwich Lease is simply when you rent and control another's property for a specific period of time with all the terms of the purchase pre-negotiated. If you have quality contracts with a specialized assignment clause you may rent this property to another. You should always profit immediately or upfront with what we call option money (a non refundable amount of money paid at the initiation of the deal), have positive monthly cash flow and a possible note or cash when the option is exercised (purchased). !

Congratulations, you now control the property without the title changing hands and you can sublet, assign, transfer or convey any rights which you have to a third party. Not bad, huh ? Only here comes Murphy's Law...................

The Bad News.

There are many ways your Lease Purchase deal can go wrong UNLESS you take some of the following steps to protect yourself and the deal.

1. Option Money: Always get enough non refundable Option consideration upfront. Nothing beats making money upfront, but better yet getting a substantial financial commitment from your tenant/buyer reduces the likelihood of a problem. Don?t do a Lease Purchase with a Tenant/ Buyer unless they can commit a minimum of Option Money (3 to 5 months rent or more). Remember we want to finance like a tenant and invest like a investor.
   
   
2. Contracts: Don?t use generic real estate office or stationary store Lease Purchase contracts. Have a good contract drafted by a competent real estate investor or attorney. It should contain the verbiage that will protect you. I use 7 different and specific Lease Purchase Contracts in my transactions depending on my strategy or position in the deal.
   
   
3. Memorandum: Record a Memorandum of Option. This document can be recorded simply and inexpensively and can offer tremendous protection for your rights in the property. You can file these documents at your local Registry of Deeds where the mortgage has been recorded.
   Example: The seller tries to sell the same property to another person without you being notified. The memorandum clouds the title and the owner is not able to sell the property without dealing with you first.
   
   
4. Credit Check on Tenant/Buyer & Owner: Check the credit of the buyer and the seller. Know as much as possible about the people you're doing business with - knowledge is power.
   
   
5. Preliminary Title Check: Do your homework and check out the owner and the property with one of the commercial property on-line services available or better yet contact your local Title company or a professional researcher for information. Do your due diligence.
   
   
6. Open Escrow: Open escrow and have escrow instructions issued at the onset of the transaction. It will create a paper trail and show the intent of the parties in the event of a legal challenge.
   
   Special Tip: Try to always use your Escrow/Title Company or Attorney in these matters. It just makes sense to work with people with whom you have established a business relationship. They might just look out for you.
   
   
7. Deed: Have the owner place the deed into escrow as soon as possible. In the event you or your Tenant/Buyer wish to close, there will be one less delay.
   
   
8. Payment Account: Set up a direct payment account with an escrow company, title company or a bonded/established accountant or firm to pay the bank, taxes, etc.
   
   
9. Insurance:
   A. Have the Seller make you the loss payee on the insurance policy (if you can).
   B. Require the Tenant/Buyer to have renter?s insurance.
   
   
10. Property Inspection: Do a property inspection/walk-thru with the Tenant/Buyer and use a complete inspection form that the Tenant/Buyer can sign.
    
    Note: Take a camcorder video of the property with the Tenant/Buyer and have them sign and date the tape.
    
    
11. Honesty: Be upfront and honest in your dealings with all the parties. Hopefully, in turn, they will reciprocate and you will all enjoy a Win/Win deal. Let the seller know that you will be subletting the property to qualified Tenant/ Buyers.

Final Thought: The best way to protect yourself in any Lease Purchase is to deal with all the possible problems before they occur, this is part of the Negotiating process whether with the Seller or the Tenant Buyer. Most real estate investors fail not because of lack of knowledge concerning a strategy, but rather they do not know how to Negotiate. Negotiating is a "Million Dollar Skill" and most people do not know how to do it on a consistent basis, but if you ask most people they have convinced themselves that they are a top notch Negotiator is every avenue of their life. My challenge to you is to take account of your life, success leaves clues; if your business/investing is not successful or your just trending water- you do not how to Negotiate adequately. Don't loose your upside potential to anyone or anything.

Hindsight is 50/50, but Foresight is 100%!

Posted by TheBlogMachine.com at 2:00 PM EDT

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