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Author Topic: Lease Options Help!  (Read 26028 times)

Offline newmoney

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Lease Options Help!
« on: September 18, 2005, 09:26:41 pm »
Does anyone know about doing lease options, I am new to investing and would like to learn more about it.
Grant Harper
Regional Mortgage Financial Services
301-899-9774

Offline JeffInCT

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    • Uh, my Website?
Re:Lease Options Help!
« Reply #1 on: September 22, 2005, 08:01:20 pm »
Lease options are a great way to get into a property with little or no money down.

The price is agreed on at the start of the lease so if there is appreciation you still pay the option price at the end of the term and get advantage of the equity.

Some sellers will increase the option price of the house to capitalize on future equity. this is ok if there is still some left for you.

If you intend to re-rent at a higher rate, you must a have a sublet clause in your lease.

If the seller is putting some of the rent towards the purchase price check with your lender if that is ok.  I found out from one lender that they would only allow monies that were ABOVE fair market rent be applied towards the down payment.

This is because they don't want the seller to inflate the price to include a 'pseudo' down payment that never really happened.


I had a VERY good experience with a lease option and if set up correctly can be very profitable.

Hope this helps
Regards,
Jeff
« Last Edit: September 23, 2005, 07:15:18 am by kdhastedt »
I am a student of Carelton Sheets no money down technique. I always like to hear from other Sheets students. http://www.jyrentals.com

Offline newmoney

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Re:Lease Options Help!
« Reply #2 on: September 27, 2005, 09:53:06 am »
Thanks for the reply. I am in the process of looking for lease option deals now.
Grant Harper
Regional Mortgage Financial Services
301-899-9774

Offline elmillo

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Re:Lease Options Help!
« Reply #3 on: October 03, 2005, 10:53:50 pm »
Lease option is the way to go!! It worked incredible for me, lock in the contract with a 2 year gap, and you should have enough equity build-up, plus ask for a % of the rent to come back to you at the end of the option, Ho yeaa and one more thing dont ever be late since this voids your contract immediatly.

Offline newmoney

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Re:Lease Options Help!
« Reply #4 on: October 04, 2005, 09:21:17 pm »
Thanks for the reply, I am looking to flip lease options to investors. If you have any info on how to make that happen, it will be very appreciated.
Grant Harper
Regional Mortgage Financial Services
301-899-9774

Offline guagsh

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Re:Lease Options Help!
« Reply #5 on: October 04, 2005, 11:02:16 pm »
You may want to reconsider flipping to a note investor.  Here are some reasons as to why you may want to reconsider: Discounting of Note, Simulataneous Closing (You buy from Seller, You resell to End buyer, and You than sell note to the Note Investor), Property should have 60% equity, and the list goes on.

It would be better to Lease option/Purchase with Seller (at least 3 yrs) and then sublease/purchase it to a sub buyer (1 yr).  This will allow yourself the opportunity to sit on the property and allow it to build equity for the 3 yrs.  Remember that you've already locked in your purchase price with Seller, therefore in 3 yrs the property will have appreciated in value and you now have a house that is worth $170000 that you can buy for $100000.

Offline newmoney

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Re:Lease Options Help!
« Reply #6 on: October 05, 2005, 01:41:27 pm »
Thanks for reply
Grant Harper
Regional Mortgage Financial Services
301-899-9774

Offline mrlove

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Re:Lease Options Help!
« Reply #7 on: October 07, 2005, 10:44:33 am »
Is it possible to tell seller, you will lease/option purchase from them in three years and sublease to someone else without even living in the property?

A real estate broker told me to stay away from lease/purchasing for myself and subleasing to purchase to someone else because of problems that may occur. I really didn't see anything wrong if you have all of these things in writing correct?

Any responses would help.

Offline CJBEquity

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Re:Lease Options Help!
« Reply #8 on: November 25, 2005, 08:57:01 pm »
Most sellers interested in letting you lease option from them are very motivated and they don't care about the sub lease part as long as their getting their mortgage paid and their asking price.

Christopher

mtnwizard

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Re:Lease Options Help!
« Reply #9 on: November 29, 2005, 08:14:45 am »
When you lease option a home, you are responsible for maintenance and repairs, property management and collections, the possibility of tenant default, vacancies, etc.

With a NARS land trust, the tenant is responsible for maintenance and repairs;  the Trustee collects the monthly payments and makes the mortgage payments;  if the Tenant is late, the Trustee sends out the notices.

You are NOT on title or on any loan, but you control the property without the pitfalls of lease options.  I've done dozens of lease options since 1980 and even wrote a book about the benefits of them way back when.  

This is 2005 and the NARS land trust simply eliminates the pitfalls.  My own home as well as my other properties  are all in trust.
« Last Edit: January 02, 2006, 08:31:15 pm by Gary Mialocq »

dianafontanez

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Re:Lease Options Help!
« Reply #10 on: November 29, 2005, 10:53:19 am »
2 important things:

If you are subletting the property make sure you have 2 contracts. One is for the lease and one for the option to purchase. Do not mention anything about option to purchase on the lease.

Is it possible to tell seller, you will lease/option purchase from them in three years and sublease to someone else without even living in the property?

Is possible. It's called a Sandwich Lease.
To make more money in the deal. Negotiate a 2 to 4 year lease with the seller then sublet it to a tenant/buyer in one year increments.  Profit center:

Upfront non refundable option consideration money
Positive Cash Flow
Backend Profits

Lease options are NOT the way to go.
When you lease option a home, you are responsible for maintenance and repairs, property management and collections, the possibility of tenant default, vacancies, etc. (Posted by: Gary Mialocq)

I am sorry, but lease options is what i have been doing for the past 7 years.  To avoid landlordling problems you will have a clause that passes that responsability to the tenant/buyer you put in the home. If mayor repairs are needed (leaky roof), that is the responsability of the seller since you are a tenant and the homes needs to be habitable.  Big repairs goes to sellers, minor repairs go to tenant/buyer. This business runs on autopilot.

Seller doesnt wantto fix.. I have a clause that if i fix i will be compensated on a 2 for 1 basis! Neat! My contracts re that powerful!

To avoid or minimize the risk of tenant defaults.  I suggest you do the following:

1. Get enough option consideration. This creates an interest from the buyer and they do not want to throw that away.
2. Give generous rent credit: I give around 50 - 100% depending on the deal and the spread that I am working.
Have a clause stating that if they dont pay on or before the 1st of the month. They will loose that rent credit for that month.  This encourages on time payments.

I am strict when it comes to Lease Purchases. I place the strength where it needs to be and I do not play around. I train this people from day 1.

Payment on my hand on or before the 1st. Second day is late. No rent credit.  3rd day late and eviction starts!

this is a business and so you must treat it like a business. Get powerful contracts to protect you. Do not allow your tenant/buyers to assign the contract.

There are also other techniques within the Lease Purchase.

Sandwich lease:
Assignment: Take the contract and sell it for a fee to a third party. Even with a tenant in the home.
Cooperative Assignments: Works with non motivated sellers.
Pure Option: An option absent a lease. Works wonders for sellers who need to cash out and willing to give you a nice wholesale deal. Take the contract and sell it to a third for a fee.

To your success,

Diana Fontanez
Lease Purchase Specialist and Consultant

mtnwizard

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Re:Lease Options Help!
« Reply #11 on: November 29, 2005, 12:39:40 pm »
These are nice items but the lease option offers no protection against creditors, judgments, marital disputes, bankruptcy, etc.  NONE.  The trust offers complete protection.

dianafontanez

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Re:Lease Options Help!
« Reply #12 on: November 29, 2005, 12:51:40 pm »
Your strategy sounds so perfect like the perfect man i am waiting to marry! This perfect guy will never cheat on me, pay my bills, be submissive, listen to me cry and cry also.

When the babies cry at night he will wake up and feed them, change the diapers and do my nails! The perfect man!

What are the cons of your strategy if there is any.  ;)

mtnwizard

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Re:Lease Options Help!
« Reply #13 on: November 29, 2005, 04:09:59 pm »
The only con I have encountered is the fact that some people automatically shut off to any concept deeper than 80/20 financing.  It is not easy to explain but I've become pretty good at it.  

The NARS Land Trust is actually a marriage since you've brought romance into it;  a marriage of the land trust with the Triple Net Lease.

The advantage of a triple net lease is that the Lessee (Resident Beneficiary) has responsibility for maintenance and repairs, but also shares in future appreciation as well as enjoying the tax and interest writeoff benefits.  Happy tenants make a happy landlord.  I'm a happy landlord because I always have a positive cash flow and I never have to become involved in property management and collections.

The trust won't cheat on you and will most likely pay your bills.  I don't know about the submissive part.   Best of luck to you and the next time you are ready to place a lease option you may want to try the trust.  I'll be happy to help.

Offline paramedic2617

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Re:Lease Options Help!
« Reply #14 on: January 02, 2006, 01:42:30 pm »
Gary (and others),

Can you please explain how the trust works. What I am thinking of doing is buying SFH below market value and doing a lease option (or maybe a trust) to have is positive cashflow and turn it over within a year or two.

Does this make more sense then renting it out? I like the idea of not being involved in the property management. Also is LO or trust legal in NYS? Where can I find laws regarding this?

Thanks again,

Herschel
Herschel

 




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