LEASE OPTIONS for seller / WHAT are my options?

You knew I was going to go after this one but first...what is your question. If you know the mount you want to option them for then what are you asking...terms?

If that is the case let me suggest that you run your numbers. Add additional monies to the lease amount once you figure out what the comp rent is for that area on that size house.

EX. if rent is 1000K per/mth comp, then you lease option it for 1300.00 with 300.00 going toward dp at the exercise of the option. Giving them an accumulated dp amount of 3600.00 at end of (1) year, (7200.00 at end of (2) year if you are giving them a two year option.

You can ask for 3% down if you are doing a lease purchase or if doing lease option you ask for security deposit + 1st and last if legal in your state.

Remember 1st year on lease option is a regular lease with the additional payments going toward the dp for purchase at time of execution. If they decline the option at them end of the lease then you refund the additional monies paid (-) 30% for administrative cost.

I knew you couldn't resist.

Unfortunately, I wouldn't be able to get NEAR that amount of rent here, but the money up front and the money I'd make in the sale would be worth the transaction to me, plus the experience of doing something I haven't done.

I've been considering doing a 5-day sale with something this year, too. But that's on the back burner.

Thanks, Anita, for your input. NOW I've got to get the right forms to use and get all that lined up. Plus the house today will be the first one I'll be purchasing directly through my business. I've got a financing contingency on the purchase agreement and a call in to the business banker. The house is owned by FannieMae, and they want to close by July 10th. That's cutting it REALLY close. $100 per diem after that. Wish me luck!

Rina

I just read nette's post about the 1031 exchange contract. I would like to do that, too! Goodness, how to work them all together is the dilemna. It's fun to have the wheels in your head turning, though. Ha Ha

Rina

at anitarny@**** and I will send you all the forms

what do you mean by "$100 per diem after that"

A lease option is the same as a lease purchase, the rent credit and the deposit is also non-refundable because it's with the premise that they're purchasing the home, whether they exercise their option or not. The monthly credit is only applied to the purchase price if the payments are made on time otherwise they lose that credit. If they don't execise their option they do NOT get any of their money back. If they want to extend the contract you get another non-refundable deposit.
Only on a normal yearly lease is the deposit refundable because they're considered renters not buyers.

Elena, for the info. Anita, I'll e-mail. D, per diem is per day. If I qualify for financing, then it must be in place in time to close on July 10th. If my lender drags their feet, it will cost me $100 per day in "fines?" until we close.

Well, I went to sign the counter from FannieMae for $87,000 and thought "That is still too much!" So we countered for a fourth time at $85,000. Gail called a couple hours later to say they accepted. I called my business banker earlier today. I was working at the foreclosure house and he said (to my surprise) that he wanted to take a ride over and see it, and also drive by the other 2 houses that I'm going to use to secure a business loan. I said sure. So he (vice president of the bank) and another lady I had not yet met (she is the branch manager) showed up together. It's POURING rain up here today. She had to walk through the mud in her heels. I apologized. She laughed. We had a VERY nice visit. They are pretty enthused about my excitement with the REI, and are anxious to help me out.

I have been thinking I NEED to get some cash back in my hands to pick up more properties. Maybe I should flip this new one with seller-financing of downpayment. Might get a buyer really fast.
I saw a friend at the store today. She asked if we had the Foxboro house ready to sell yet because a relative was very interested in buying it. (We haven't even touched that one yet.) Aaaah!
I guess I should be writing this in my journal instead of here.
I'll paste it in. Sorry.

Anyway. To lease or not to lease. That is the question. lol

Rina

That is GREAT!...but I agree, I think you need to put more cash in hand for futur e purchases so good luck with that and as far as the business loan and the banker visiting, that is not uncommon, When I had my cell phone stores, the bank president and the Head lending officer would come by a lot of time just to talk and also on business. They like to see here their money is actually going...lol..

hello Rina, lease purchases are my favorite. You will see that it is the best thing to be getting into. At least in todays market. I have a home, did a lease purchase, completed it today and go to settlement in 2 weeks. My profit will be 10,000. My cousin is a realtor and she walked me through everything and she specializes in lease purchases, it's a win win situation no matter what. Don't be scared, be happy. you can do it. Lease purchases are becoming very popular, they always will be, take that step, you will not fall. I am going to toledo ohio this weekend with my cuzz and my kids and we hope to come out good with the purchase of another home. Go for it!!!!!!!!!!!

$10K, nice little chunk o' change girl! Lease purchases and assignments are my favorite deals too. You're in and out quickly with little time invested and a big bank roll! Lucky to have cuz's help to walk you through it, makes it less scary if you've never done it.
Great work!

Yes alot less scary. I won't have no fears anymore when i do my next one. Hey i noticed on the forms and doc's under student resources the agreement to lease purchase with option to purchase, it says seller is responsible to pay the taxes. My lease purchase is not that way, It is owner being the buyer is responsible for the taxes. Am i missing something? I didn't understand that at all. I used my lawyer to do mine.

Mine is like yours, that's their responsibity not mine. Keep up the good work!

Thank you for the encouragement on the lease purchase. I have some time to think about it. It's nice to get input from people who have already had the experience.
And good job on your REI transactions!!

Rina

What you've been doing RE wise is alot harder than lease options. You did that with no problem, you can do lease options. I think their easier. With your experience and expertise you'll have mastered in no time and sharing that knowledge with US!

You know how it is , just gotta take that first step. I've certainly been learning, contemplating, and implementing a lot of new strategies since reading Dean's book and joining you all!

To all the combined knowledge of the DG forums, Here here!! or is it Hear, Hear!! lol

Rina

You're comments are so funny! You make my day... He He!

Thank you for that tid bit of info. I was wondering what happened to the monies if they declined the option. Here is my other question does the less 30% monies (admin costs)go to you or does it go to the seller? I'm curious and unclear. Where does the seller profit in this situation or does he at all if they decline option? Or does the seller just get another renter and move on without any loss (financial?) Here I go again, my mind is going off an a tangent! I'll stop now while Im ahead, I think LOL!

Beth

I have read the forum about lease/options and have questions. I am on the buyer end of the lease/purchase. My first goal is to get a house for myself, then expand. I definately want lease/purchase. How do I structure an offer to the seller/homeowner?