Option Consideration
Can someone explain Option COnsideration?
When you Lease option, lets say for a 2 years Lease. Then the Lessee can excercise that option at anytime or wait till Lease is up and excercise the option or simply walk away or ask for an extension if the Lessor will grant an extention.
Ok, if I am on target so far... what about the Down payment or is it called an OPtion Consideration.... What is an Option Consideration...is it the same as First and Last.....
Is it an amount that is placed toward the purchase price if the Lessee excercises their option to buy.....
Is it refundable or non refundable?
Or is this spendable cash the Lessor gets for giving them the Option?
Help me out here guys to clearly understand this.
Mark B[ Edited by MarkB on Date 01/27/2003 ]
MarkB,
A Lease agreement with purchase option:
Your lessee during the period of the lease makes rental payments monthly and has the option at the end of the lease period to:
1. Purchase the property during the period of the lease for an agreed upon firgure.
2. Exercise his option of ownership of the property at the agreed upon term of the lease period.
3. Your Buyer can pass on the property and not renew the lease or option to purchase.
Sometimes an agreed upon amount or all the rent payments can be credited to the purchase of the property.
The price your tenant pays at the end of the lease period is set at the beginning of the lease and is also know as the residual amount.
John $Cash$ Locke
$Cash$ covered all the bases but I just wanted to add that - Option Consideration Is Non Refundable - can be anywhere from $1 up (often 2.5-5% of sale price) it is the binder to the Option Agreement and is necessary to make the Option legal - usually all rent credits (if you offer them) and Option Consideration are applied towards purchase price vs Down Payment. Hope this helps.
Good Investing..
J.
PS: $Cash$ : hope you don't mind if I translate your Sub2 course (which should be here anyday)....need to give a crash course to my lawyer... <IMG SRC="images/forum/smilies/icon_biggrin.gif"> <IMG SRC="images/forum/smilies/icon_cool.gif"> <IMG SRC="images/forum/smilies/icon_biggrin.gif"> [ Edited by JohnC on Date 01/27/2003 ]
JohnC,
I have a heavy weight investor contact in Rome, I will be forward the contact to you after you have had time to review my course, then e-mail me we can get you rolling.
Thanks for the help on the Option Consideration.
Talk soon,
John $Cash$ Locke
John thank you very much...I'm rereading the manual for the third time...I'll email you this weekend...being able to meet and interact with a Pro would be great especially considering the CREI situation here....as opposed to the US...thanks again.