How do I purchase house when L/O contract is up? - Posted by Jim C

Posted by Mark-NC on January 10, 2001 at 11:36:03:

In all reality it would seem like you need this money to close, but you don’t, here’s why;

When your end TB/er or buyer obtains financing the money is usually wired to the closing agents escrow account before you even get to close. If it’s not, you make other arrangements with the seller stating that funding will be later in the day or when ever it may be.

This way the money you need is supplied by your buyer. When the 2 closings are complete the closing agent writes all the checks from the money suplied by your buyers financing. What I mean by this is they use this same money to cover all items listed on both Hud Statements. What ever is left over between the two contracts or Hud Statements is your profit.

Hope this helps.


How do I purchase house when L/O contract is up? - Posted by Jim C

Posted by Jim C on January 09, 2001 at 18:04:39:

When I Lease/Option a house, and say the T/B decides after the contract is up to buy the house for the agreed price, how do I pay the person that is Lease/Optioning the house to ME? Will I need to get the money temporarily to purchase the house? Or can I somehow use the money that my T/B will be giving me to purchase the house?

If I do actually use my T/B money, how do I do that? I mean how can I pay for the house before I actually have the money?

(Sorry if this is confusing)

Thanks a lot!!!

Here is another often overlooked way… - Posted by Michael Morrongiello

Posted by Michael Morrongiello on January 09, 2001 at 19:09:36:

Jim C. / Jim, IL;

Another way to make a lease option buyer (tennant buyer) be in a position to exercise their option and consummate the purchase of the home is to consider “rolling” them over into a SELLER FINANCED purchase money mortgage & note (in essence YOU are providing the exit stratergy financing to the tennant buyer.

This Seller financed note then can be converted through its sale into a LUMP SUM cash payout at the SAME time the property sells so that these cash proceeds are used to complete the purchase of the property.

It is VERY important that anyone working with lease option tennant buyers impress upon them the importance of making their rental payments in a timely fashion and being able to conclusively document them.

To your success,

Michael Morrongiello

Two ways to close these - Posted by Jim IL

Posted by Jim IL on January 09, 2001 at 18:41:55:

There are two ways to handle this.
You can assign your position to your T/B’er.
This is where they will pay you the cash difference between your price to them and the price you owe your seller.
You can do a simultaneous close.
This is where your seller, you and your T/B’er all show up to closing.
Your T/B’er comes with there loan in place.
You close in one room at the title company with the seller, and then step into another room and close with your T/B’er.
The funds are dispersed by the title company or escrow officer.
Your T/B’er gives the cash to you for there price on the home, you pay the seller at the same time the money you agreed to pay them, and you leave with a check for the difference.
Pretty simple actually, and most title companies can do this.
If you encounter a title company that says they cannot, find another one.
they are out there.

Jim IL

Re: Here is another often overlooked way… - Posted by Jim IL

Posted by Jim IL on January 10, 2001 at 22:46:32:

I have one T/B’er now that is my absolute best on time payor.
The only problem is that I cannot seem to impress on her the need to use a check to track her payments.
She pays every month on the 1st, and with a money order.
I do write her a receipt of course, and make the deposit by itself to show the money being received by my account.
But, when we put her in front a mortgage broker recently he said we did not track her payments well enough to do a refi.
Would a note buyer/broker look at this differently?
I even offered to help this buyer set up a free checking account, and she just does not trust banks.
Then again, if she cannot exercise, we will just sell to someone else and keep her option money.
I’d just like to help her, because she is my best T/B’er other than that.

Any words of wisdom?

Jim IL

Re: Two ways to close these - Posted by Jim C

Posted by Jim C on January 09, 2001 at 21:55:14:

But by doing a simultaneous closing, do I close with my T/B before I close with the seller? (I wouldn’t think so, but just asking)

I would assume that I close with the seller before my T/B and if I do that, then I won’t have the money at the moment I close. I would have to wait until I get the money from my T/B and that would be after I close with them. Is this how it works? Or does it not matter in a simultaneous closing?

The way that I’m seeing it is kind of like a Catch 22- I need the money to purchase the house from the seller before I can close and I can’t get the money until I close with the T/B, but I can’t close with the T/B until I close with the seller.

So will I need an outside source of cash for the 5 minutes I own the property?

Thanks a lot for taking the time to answer my questions. I really appreciate it!!!

Now your using your Noodle… - Posted by Michael Morrongiello

Posted by Michael Morrongiello on January 11, 2001 at 11:45:24:

I commend you for realizing how foolish that mortgage broker or his lender are for NOT being able to get comfortable with your tennants form of rent payments.

Often people in cash type business, individuals who wish to keep some or most of their income secret, etc. want to “drop out of the system” and refuse to use banking institutions.

If you tennant can document her money order receipts, or you have made copies of the actual money orders paid to you (a good habit to get into), and / or you can clearly document the actual rental payment amount going into your bank account each month, then this is a scenario that certainly would be considered by us as a “common sense” issue. We could take into account the prior rental payment history.

Of course all other underwriting requirements would have to be evaluated (things like employment, stability, overall credit profile, credit scores, cash down, any rental credits towards purchase,the condition and location of the property, its value, etc.) as well to see if a deal can be properly structured where you would “roll over” this lease option tennant buyer into a seller finance mortgage and note that would then be converted into CASH proceeds to you.

Let me know if we can assist you further.

To your success,

Michael Morrongiello
Sunvest Corp.