Once i find a seller willing to do lease option and i put the property under contract, how long do i have before i have to make the lease payments?
There’s no set time.
However, as a practical matter, we need to pack in as much lead time as possible, just in case it takes a month or two to find a tenant/buyer.
However, if it’s really taking us this long, something is wrong. Maybe, it’s time to offer full-on seller financing? That is, ask for 10% down, no qualifying, no credit check, etc with a slightly padded payment.
You’ll have to get the deed from the seller escrowed first (not recorded or transferred), and then get seller’s agreement to assign the depreciation and mortgage interest deductions over to your new buyer.
Here’s an example. We’ve got a buyer with the down, and he’s ready to move in this week. We’re assigning him all the tax benefits he would normally receive as a homeowner, but not as a renter. It’s a Land Contract deal we’re offering for 3 years.
La.Dean, What are your intentions with the property? Do you wish to keep it, rent it, or maybe assign it to another buyer? Herbster
The key is in the paperwork. You need to be realistic and set a timeframe for how long it will take you to find your tenant/buyer. Better still, you need to have an out in case you can’t find a t/b.
Or, you can avoid this potential problem altogether and do a Cooperative Assignment.
Javi,
On that deal you talked about, what paperwork did you sign up with the seller? Lease Option?
chunk,
This is a handshake of a referral deal. It would have (should?) been a cooperative assignment, I suppose, since my involvement ends when the buyer coughs up the money and moves in. Meanwhile, I get $2500 for both finding the buyer and furnishing the paperwork.
However, I’ve got another deal right now where I’ve got a 3 month option to finalize a lease/option that I’m reselling on a Land Contract.
I’m effectively buying via a 12/mo renewable lease/option for 120 months (at which time the 2nd of 75k will be paid off). I’m actually optioning the “zero” amount of current equity in the house today, not the price. So when the loan pays down, I capture the net equity in the house, when the Land Contract pays off, instead of the seller getting the net equity. The seller is getting out of a bad debt she can’t afford to cover, and is incompetent to seller finance herself.
So, I’m doing a “Lease/Option, Option, Land Contract Resale Deal” deal… :shocked
Cool. I’ve never done the co-operative assignment, so its interesting to see how you guys put it together. Just curious, how do you protect yourself from the seller selling the home from under you if you use the co-operative assignment? Memo? Some other way?