OfflineI have a lease option deal in putting together and would be doing a sandwich lease to another tenant buyer. My question is when I have the tenant buyer pay the deposit money for the option to buy the house which would be on a separate contract from the lease contract, can I get the money up front for me to spend? Or does this money have to sit in a escrow account until the tenant buyer exercises on the option contract. From what I learned and Deans successful student Greg Murphy says, you get paid up front, the middle of the deal and at the end of the deal. I'm confused and need some advice from someone who has down a lease option deal.
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Reynold Orozco
Need advice
Reynold Orozco
First of all, EXTREMELY IMPORTANT, never, never, never call it a "deposit" !!!!!!! Deposits are refundable and if you EVER call it that with your buyer, you could be setting yourself up for a lawsuit and have to return the money! And we all know that we don't want to do that!
It is an "Option Fee".
You DO get the option fee money up front (in the form of a Cashier's Check), as well as your first month's rent before the tenant ever gets the keys to move in. The money does not go into an escrow account. You immediately purchase a Cashier's Check payable to KarenG and send it to my address... OK. Forget the CC payable to me...
Always have the Tenant/Buyer give you checks or money orders. NEVER take it in the form of cash. You need to have a paper trail in order to be able to use the documentation to show to the mortgage company when they are giving them credit for the Option Fee and any rent credits you will be giving them. Make copies and put them in a file.
Then go spend the money any way that you please.
I have partnered with many people on their first few LOs if they are unsure of doing them correctly and they do not have good CYA contracts. I can usually set it up so that they are able to get a much better deal. If that is something you might want to think about, I will be happy to talk with you about it. Just send me a PM with your contact info.
Karen
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Yes I know what your saying, sorry I meant to say option fee. Who do you have collect the monthly rent from the tenant buyer, you? Or an third party company? Thanks for the tips and advice. I will be shooting you an PM.
Reynold Orozco
Hi Karen what a wonderful answer and explaining this to Reynold, Jim
jbischoff
As for right now, I don't use a third party. But it makes it much easier if you have the T/B set up an automatic deposit from their acct to yours and from yours to the mortgage co. That will also leave a trail for the payments when new motgage is applied for.
Karen
"You're never too old to be what you were meant to be!"
www.deangraziosi.com/real-estate-forums/investing-journals/59128/day-for...
"Shining Like a Star & Dancing on Sunshine"
"Shoot for the moon! Even if you fall short, you'll still land among the stars!"
"You're never too old to be what you were meant to be!"
www.deangraziosi.com/real-estate-forums/investing-journals/59128/day-for...
"Shining Like a Star & Dancing on Sunshine"
"Shoot for the moon! Even if you fall short, you'll still land among the stars!"