Approaching seller about 4 year lease option and buyer protection.

Hi, ive got a deal in the works wherein a seller has agreed to a 2 year lease option in order to build up down payment money on a owner finance deal. The lease purchase will turn into a true owner financed note. ( mortgage). The sell terms are gonna be part of the lease option contract. Its gonna make it real tight, so i thought about going back and asking for a 4 year deal instead of 2 years to lower the payment. The seller isnt in a hurry for a sell, but DOES want to get rid of the property.

My questions are:

  1. Are 4 year lease options done?

  2. The owner has a existing mortgage. How can i protect myself to make sure that HIS payments are made?

  3. This is my first lease option. Is there anything else i should be looking out for?

Thanx Javipa. After reading your responses, i want to clarify one point i didnt make earlier. Im purchasing from another investor who normally just rents out the property. Its NOT the seller’'s principal residence. He just wants to slowly liquidate his responsibilites of being a owner of some of his properties. So, based on that, he can go past the 3 year mark into a 4 year mark. The house was originally just for rent. I called the owner and ran my ideal by him and he agreed to sell under the lease option, then morph into a installment. Thanx for your response. It was very thorough, Thanx.

Oh, one more thing. It appears that the interest rate we have talked about, will let him maintain his monthly spread.

Any motivated seller is good to find, but it can be especially helpful when they don’t have to be trained from scratch.

Congratulations on the find.

One can do a lease purchase for any length of time…4 years is fine…you need to negotiate and when ALL parties agree, put it into a contract and it can be done as a legitimate transaction. To protect yourself in making certain that underlying mortgage is being paid current, negotiate as part of the transaction a specific power of attorney from the note maker to speak, on his/her behalf, with that mortgage company for that mortgage account…then you can check anytime you want without resistance and keep up to date on the status of that mortgage and payments…simple as one power of attorney by the authorized party on the loan.

Lastly, break out your calculator and make certain that the terms you negotiate work for all parties and that the terms accomplish all goals…if they do, get those terms agreed upon in a contract, execute the contract, then move on to your next transaction.

Hope this helps.