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My "company policy"
   by Matt Bowman   

 Last night we collected the first half month's rent from a new tenant/buyer for one of our properties. They had already given us the option deposit at the beginning of the month to hold the house for them. The owner just moved out, so we told the tenant/buyer that they could start moving in.

 Of course, before we let anyone in our properties, they must not only put up their option deposit, but also their first month's rent IN CASH or cashier's check. When I started in this business, I would let some people "slide". I would accept partial option deposits, set up a payment schedule with the tenant/buyers to receive the rest, or accept a personal check for the first month's rent, then let them move in. EVERY SINGLE TIME I got burned! Every single time!

 Here I was trying to help people out and all they did was take advantage of my help and either pay with a bad check or never pay the rest of their option deposit. Well, I've learned my lesson over the years. I have now instituted a "company policy" that says that I must receive the option deposit and first months rent in certified funds or cash.

 The tenant/buyer called us last night and said that they had been running all over, buying new stuff for their new home and were low on cash. They wanted to know if they could give us a check for their first month's rent. They said that they had rented a UHaul truck and had to return it by Sunday at noon as well.

 I told them that it was simply "company policy" that the first month's rent had to be paid in cash. If they could not come up with the cash, they would simply have to wait until their bank was open on Monday to get into the house. I was not going to let them unload their belongings or give them the keys without collecting the money in cash.

 My partner told me that they had called and said that they had just taken their last few hundred dollars in cash to pay on a layaway order at Walmart. That got me thinking. I told my partner that we are not a charity, we are a business. (Of course, I was just thinking aloud. He thinks the same way as I do on this matter.) I told him that we were NOT these buyers' friends.

 Yes, we are helping these buyers and we like them, but we are not their buddy who they can come to for a loan. I told my partner that we had told them what our "policy" was a couple of weeks ago. Now could they go to Walmart, pick up some things, walk out, and tell the Walmart staff that they would be sure to be back on Monday with the money? Of course not! Why on earth would they think they could do that to our business???

 Here's the REALLY weird thing. When you make a "company policy" and stick to it, amazing things start to happen. Like all of a sudden, the cash appeared in the buyer's hand! How odd! They were assuring us that they could not come up with cash until Monday, but had to get into the house immediately since they had to return the truck they had rented by noon on Sunday. However, when it became apparent that we were sticking to our company policy which we reminded them of, the money somehow magically appeared!

 This company policy idea extends past our dealings with just buyers. The other day, when we were signing up a deal with a seller, we told them that it was our "company policy" that the seller make the next 3 months worth of payments on the house after we signed an agreement. The seller assured us that this was impossible because they would be moving and needed as much money as possible for the move and setting up in a brand new place.

 I told them that I was sorry, but that was just company policy and if they couldn't do that, then I guess the deal just wouldn't work for all of us. I started to thank him for his time and went to get up, and he quickly said that now that he thought about it, he could cover the payments, but it wuld be really tight for him!

 See? Magic words! They make magic happen. The words "company policy" magically make buyers have cash in their hands, as well as make sellers suddenly have the money to cover extra payments! Weird, huh?

Matt Bowman, www.reitoolbox.com, is a full time investor who started investing in 1997. After several attempts to get started in creative real estate investing, he found his niche in sandwich lease options.
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