Hello,
I’m a newbie to this business and live in Texas. I seem to have read or heard that using lease options to control properties in Texas has become a little more difficult because of legislation. Is that the case? If so how does one overcome this?
???
Don’t do lease options in texas, the law has not been tested yet and the state will most likely make an example out of few investors. If you want to do a lease option, then you need to do seperate unrelated contracts. A lease for a period of time, and an option to purchase that must not be continguent on the lease and preferably does not end at same time as the lease. The problem with this strategy is that if the buyer defaults and you have to evict him 3 months into the lease, he still owns an option to purchase the house 2 years down the road and you cannot sell it.
I live in Texas also. I know someone who is a new investor and she is trying to do options in texas. I told her that doing options in texas is as bad as doing lease options and advised against it. Is is true that “options” are frowned upon as much as “lease options” in texas?
Don’t listen to the Chicken Little crowd among us. “The sky is falling. The sky is falling”. :
Please. . .
Lease options can and are done in the great state of TX everyday. They require a bit more disclosure than previous, and your paperwork needs to reflect this. I have a friend who lives in TX and does nothing but lease options. After the legislation passed he sat down with his attorney and edited his paperwork to reflect the new law. He hasn’t had a problem since.
Spoken by the same poster that suggests bribing the inspector as a valid business practice…?
What does the Texas law say about lease options?
it’s best to use a wrap around mortgage in TX rather and trying anything with a L/O or CFD if you do not want to hold the property and rent it. u can use the wrap if u buy sub2 or conventional. the only way you can L/O or CFD in TX with any ease is to own the property free and clear. it is my understanding that there is a less tedius and stringent way to do a L/O if the loan is in your name, but I am unfamiliar with that method. (and it doesn’t involve a trust)
So is there anyone out there Still doing Lease Option property in Texas. Or has most everyone quit doing it in TEXAS.
Almost no investors are doing lease options now because of the restrictions and requirements. You can’t lease option the property for more than “fair market rent”, have to send statements, etc. I forget all of the rules, but 100% of the investors that I know who were doing lease options have moved onto other investment strategies.
Tony is right. Wraps (AITD’s) are a better way to go (with regards to Texas). If the new owner gets in trouble, head them off at the pass and ask to buy back the deed rather than foreclose.
You can also sell and take back a 2nd. A little riskier, tho.
BTW, is it possible to word a contract such that if I take back a second I have the legal rights to buy the property back rather than have the 1st position foreclose?