L/O Question(Seller)
Im studying to do the purchase option www.investing.My question is,once i find motivated seller and we come to an agreement on price ,do i tell seller that i intend to subleast the property up front ?if so how do i tell this to him?if in the terms how would i word it on a contract?Any examples would be very much appreciated.
thank you
Yes, you do. You are going to put one of your "clients" in the house.
Tenant/Buyer has the unqualified right to sublet.
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Thanks for your help "LeaseOptionKing".I have another www.question.Ive been reading Peter conti's Purchase Option method and i don't understand exactly how he Locks up the property,or what it really www.mean.if you or another expert can help me understand exactly how it's done in layman terms i'd
appreciate it very much.
Thank you
Thanks for your help "LeaseOptionKing".I have another www.question.Ive been reading Peter conti's Purchase Option method and i don't understand exactly how he Locks up the property,or what it really www.mean.if you or another expert can help me understand exactly how it's done in layman terms i'd
appreciate it very much.
Thank you
A Lease with Option locks up the property, and then most people pay any Option Consideration due when the Tenant/Buyer is found. Usually, you can back out before a certain amount of time. I use a nonexclusive L/O and don't take the property off the market at all.
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LeaseOptionKing
Posts: 443
Joined on: 07/26/2004
Columbus, GA
Posted: 19:39 on 12-26-2004
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A Lease with Option locks up the property, and then most people pay any Option Consideration due when the Tenant/Buyer is found. Usually, you can back out before a certain amount of time. I use a nonexclusive L/O and don't take the property off the market at all.
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"A deal is only as good as the quality of your Contracts." --Me
LOK, what do you mean by "nonexclusive L/O and don't take the property off the market at all."?
Also, do you set a certain amount of time to find the T/B before you can back out of the deal? Is that without any consequence?
Thanks, Newbe
LeaseOptionKing
Posts: 443
Joined on: 07/26/2004
Columbus, GA
Posted: 19:39 on 12-26-2004
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A Lease with Option locks up the property, and then most people pay any Option Consideration due when the Tenant/Buyer is found. Usually, you can back out before a certain amount of time. I use a nonexclusive L/O and don't take the property off the market at all.
_________________
"A deal is only as good as the quality of your Contracts." --Me
LOK, what do you mean by "nonexclusive L/O and don't take the property off the market at all."?
Also, do you set a certain amount of time to find the T/B before you can back out of the deal? Is that without any consequence?
Thanks, Newbe
LeaseOptionKing
Posts: 443
Joined on: 07/26/2004
Columbus, GA
Posted: 19:39 on 12-26-2004
--------------------------------------------------------------------------------
A Lease with Option locks up the property, and then most people pay any Option Consideration due when the Tenant/Buyer is found. Usually, you can back out before a certain amount of time. I use a nonexclusive L/O and don't take the property off the market at all.
_________________
"A deal is only as good as the quality of your Contracts." --Me
LOK, what do you mean by "nonexclusive L/O and don't take the property off the market at all."?
Also, do you set a certain amount of time to find the T/B before you can back out of the deal? Is that without any consequence?
Thanks, Newbe
The Seller may continue to market the property until I find my T/B. I have a 30-day unqualified right to rescind (it becomes noncancellable by both parties after 30 days). The nonexclusive aspect eliminates the request for any money up front.
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Is their any paper work required to be filed at the court house regarding a lease option
Is their any paper work required to be filed at the court house regarding a lease option
None is required. If you are the Buyer, you should record something to help protect your interests.
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I believe that the people could at some point come back and say, "Well, thanks for the loan to get that cleared up, now have a great day.". Or something along those lines, plus, if there's a lot of equity in the home, there could be legal repurcussions as well.
If they didn't pay the bank why are they going to pay you? also if thier payment was say 700 per month you need to up that a bit to make a monthly cashflow for yourself. If they can't pay 700 why are they going to pay 750?My advice if you do the deal it is under the condition that they vacate.
Joe
You will be very sorry to let them stay in the house. That gives them more time to trash the house and the other posters are right, if they won't pay the bank they won't pay you.
You are better off to offer to pay for a moving truck and first months rent at an apartment.
I've heard that basically the owner could take you to court and say it was a loan and you did not by the house from them. They were under duress and you took advantage of them. I have heard there are lots of legal precedents here where the judge takes the side of the owner and says you should have known better since you are in the business of Real Estate. Also that you may be running afoul of usury laws if this could be considerd predatory lending.
On the other side, I know investors who use the purchase lease/back exclusively so they have an edge over the competion. Everyone wants to boot the home-owner out but they offer the advantage of letting them stay. If you ask these investors why they do it like that they will tell you "I know they'll miss a payment and then I can just evict them." very nice.
I have had good experiences doing L/O. I bought a property for 60K that was worth 114k the previous owners did not pay per agreement so I evicted them and sold it for 100k all in about a www.year.Then I took the proceeds and rolled them into another project. So although I do understand the caution it worked for me.
Thanks for the replies everyone. The usury laws was what I was having trouble remembering!
I think the problem is that they could fight the eviction. And if they do, WHO has MORE of an equitable interest argument than the former Owners? All they would have to do is cry foul to a sympathetic judge.
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LOK,
I had no trouble in getting an eviction order. Our position was that they sold the property to me and refused to move at closing. I was also awarded a money judgment which they are trying to remove in their most recent tour of bankruptcy proceedings.[ Edited by edmeyer on Date 01/15/2005 ]
CARGOPILOT: The best advice a seasoned investor will give you is that before (preferably) or after you buy the property, get the seller out and have NO further dealings with them. Good Luck
You must have had a bright judge; unfortunately, this is not the case the majority of the time.
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LEVINE & LEASE OPT. KING have hit this on the head.
As they are absolutly correct. My Att'y. strongly advised me to "NEVER EVER let them stay in the house'. the 2 key words here:equitable interest & usuary laws.
You might consider finding a REI friendly attorney to consult on this issue.
Good Luck!
Where is the equitable interest or usury on a purchase where there is no option to buy back? Worst case is that you have a former owner (with no equity) that is occupying the house.
Legally, you are correct. But judges can use their discretion in ways that contradict sensibility and logic.
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LOK,
It would seem to me that any equitable interest or usury argument would be independent of whether or not the former owner occupied or not. I won my case easily in a court in one of the most liberal areas around-- Oakland, California. My ex has an eviction service and she has never had a judge award occupancy rights to a former owner just because they were a former owner. Sometimes, there is a stipulation agreement that allows a tenant to remain for a longer period, but this is usually with some payment to the landlord for the priveledge of remaining. Any breach and the tenant is out in a very short time and there is no judicial reprieve.
The caution that I here most often is that the financial condition of the owner doesn't change the day you purchase the property so that the likelihood of getting on time and complete payments is greatly diminished. I agree with this warning and my experience is also in concert with it. However, I would not have been able to do the transaction without offering to lease (no buyback option!) to the sellers. Also, I would not have done it if there wasn't very large profit potential.
I am curious ...have you ever had a judge award occupancy rights for a non-paying former owner?
Regards,
Ed
I can't say that I have, as I do not allow former Owners to remain in the property (as per my attoneys' instruction). Sounds like you have rational and knowledgeable judges in your area.
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BTW, the Tenants would probably have to raise the objection that they were taklen advantage of by you and/or claim equitable interest for the issue to come up.
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LOK,
I certainly understand your point that having an occupant in the property that can cry that I took advantage is a compoud problem. In my case, the property closed the day before the foreclosure sale at which time they would have gotten zip. Also, as I mentioned the position my attorney took was that there was no tenancy agreement and they just refused to move after the sale.
Thanks for your perspective,
Ed