I am reading up on lease options and will be calling prospects in upstate NY (really). Do I need a real estate license to act as the middleman in a lo agreement?
For example:
I would find a renter/optioner for the buyer, take a small portion of the initial lo payment and collect the rent differential during the course of the rental agreement.
If the renter does go ahead and purchase the property, would my initial take of the lo payment have to go back to the seller. If not, would it be considered a commission and imply that I must have a re sales license?
Thanks,
Mumphis
hello mumphis…
A L/O is sorta like assigning your contract to another party. You do not have to have a RE lisence. AND you do not have to give the seller any money… depending on the deal… and what i mean by this,
if you L/O the property from a seller who wants 2000 down, u get that money from you T/B…
Than the final step in this option is to set up a price of the house for your property that u now have under contract… and the difference between A and B is yours!!
make since? hope so!!!
Good Luck!!
MONEY!!
Make sure the owner allows you to do this. Read the contract fully.
Also understand that you are 100% liable for anything your TB does. If they trash the place and leave, you get to pay to fix it up and you don’t even own anything.
If they stop paying you, you still pay the owner, again you own nothing.
Don’t do this with owners who will not put a SPECIFIC sales price into the contract. You should know before signing just how much the property will cost you to purchase from day one to the end of the option period. Many might have something like $100,000 year 1 price and then x% per year. This is fine if the % makes sense. Some owners try to put in there that the sales price will be set by an appraisal when you exercise the option. This is a no no. What is the point of buying an option if the price is not set? That is not what an option is for.
I don’t care for the whole middle man thing myself. Too limiting and no ownership.
The only plus that I see is if the TB does not exercise the option by the end of the option period, you could. The TB would have built you up a nice rent credit pot. So if the rent credit was $300 monthly and 24 months passed, you would have $7,200 down or off the sales price (depending on how contract is worked). So, if the property makes sense, you could buy it and make at least $7,200 on the sale.