Can Any Of You Fill In The Blanks.......
Hello all,
Just another question in the pursuit of RE greatness..
When setting up a Lease-option or lease purchase whatever you may call it,
after you have optioned with the "motivated seller" and have contracted with the tenant-buyer, how can the tenant-buyer exercise their option and make "you" the investor money??
They can't deal with you because i do not own the home??
Can someone please assist me with this confusion. Thanks in advance!
SacVestor
Sac,
First, you should have option money up front that is more than the option fee you gave to your seller. Second when the tenant/buyer exercises the option, you then exercise your option with the seller. That is when you make money on the back end.
Very well said. When the tenant/buyer chooses to buy the home, the title company will handle everything from there. You collect a check at closing.
GOOD LUCK
Bnorton,
So with regards to a lease-option deal, you "need" to exercise your lease option right?? so you have to qualify just like a normal buyer.
what if you can not qualify, then what?
SacVestor
If your lender is satisfied with the appraisal and has no seasoning requirement, you can do a collapsed closing (providing all parties are disclosed to properly). Seller signs Deed to you, and it goes in escrow. You sign Deed to the T/B, and it goes in escrow. Financing from T/B funds both transactions. Out of your profit, you will have to pay to record your Deed (can make the T/B pay most of the time) and a transfer tax/fee (if applicable in your State).
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Sac,
Not that LeaseOptionKing needs my endorsement, but he is correct. Bottom line is you don't need money to do this.
It's also wise to have the Contract with the Seller to state he is to pay for Title Insurance. I have my Sellers get a Hold Open Policy (called different things in some States). This policy incurs no additional fees if the property is resold in 12 to 24 months. That way, you can avoid having to get Title Insurance in the States where the Title Companies are overzealous. The T/B pays most of the other closing costs.
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