Posted by phil fernandez on January 15, 2001 at 11:59:31:
Hi Mike,
The main stipulation you’ll want to put into your lease option contract would be enough time to find a tenant/ buyer. But what’s reasonable to where the seller will agree to your proposal. I would start with a three month window and negotiate the time frame from there. Make sure you know your market and what you can reasonably expect for rent and sales price.
How bout a clause saying," Optionee shall make first payment to seller/optionor 90 days from the date of this agreement or when optionee has secured a tenant within the 90 day period, which ever occurs first."
You’ll have to probably give your seller/optioner something for him granting you an option. That’s all negotiable between you and him.
What stipulations should I put in my contracts to give me time to find a T/B and collect option consideration from them to pay my seller, without pulling money out of my pocket and not having a T/B in place?
Mike,
Why offer to pay any option money to a seller?
If they ask for it, and the deal makes sense while still paying it, then negotiate that it gets paid when you get a tenant buyer or at some point in the future. (Set a time limit on it.)
Personally, I do not ever pay option money, and lately have started to get sellers on a regular basis to allow my payment to start at either 90 days or when I get a T/B’er.
I tell the sellers that my profit is not totally realized until my T/B’er exercises the option, and they obviously want that to be as soon as possible don’t they?
So, it will take me some time to properly market the home in order to get the best quality T/B’er into the home.
If we have to move faster than that, then I may be rushed and not get as good a person into the home.
This seems to make sense and works for me.
Posted by JasonTX on January 15, 2001 at 14:04:49:
I’ve heard that if at all possible it is good to offer to give the first 2-3 months lease payments to the seller up front.
From what I’ve read on this post, it really helps convince the seller that you are for real and it puts their mind at ease. Then when you get a tenant, you just pocket the rent until you owe your seller again.
If you don’t have the money, of course, this will not work. However, if you have the money, you aren’t really giving the seller anything special, your just giving the lease payment a little early.
Anyway, I’m still new to the game but that’s what I’ve read on this newsgroup a couple of times.