What steps would i need to do to get into a lease option contract?
Is it your goal to lock up a house for several years on an option with the right to sub-lease it back to a tenant?
Thanks
Jim
yes it is. I’d also want to know more about the term ‘bird dog’ what duties are involved and how i would get into it if possible.
Bird dog is a good way to start to earn a fee for finding cheap houses directly from owners. I typically pay bird dogs $1,000/house they help me buy. You need to become great at finding distressed properties not listed on the MLS and have a wholesaler or buyer who will ethically pay you for helping them.
Lease options can be a good way to go. I think the key is to get the houses locked up for as long as you can. The last ones I did were a few years ago and I have a 5 year lease and can renew for a 6th year if desired. It is important that the owner knows you plan to lease back out. Essentially you are doing their property management for them and you retain an option to buy in 5 years. Who would want to do this with you? Maybe someone relocating out of town that can not sell their house right now. Maybe a military personnel who is being transferred. When marketing, think in terms of who would be the best candidate for you to work with and target that group.
Congrats on moving forward
Jim
Long term lease law
While I commend your thinking and the L/O plan is a good way to get your foot in doors; however I’d recommend your doing some studying to see what a L/O Agreement needs to say and contain and your local law on its form.
In many (all?) states ANY RE agreement of 12 months or longer MUST be in writing, signed and notarized or it is not legally enforceable by either party.
I once took title (with T insurance) on a SFR that had a renter and when I gave notice to her that I was the new owner and she was to vacate the SFR by end of the 2d month hence.
She squawked and insisted she had most of balance of 7 year lease remaining on her written & signed lease and I’d just have to live with that fact…but when I finally saw that doc I realized it hadn’t been notarized and was therefore only a month-to-month rental agreement.
And when her lawyer learned of that MTM agreement he informed his client of the law she moved out as instructed by me.
Therefore anybody dealing in L/Os needs to know his state’s law on same.
Thank you i appreciate the information.
Jim,
On the topic of bird dogs, you are describing a situation where you pay a success fee to the ‘bird dog’.
Who is legally liable if it turns out the state requires a person to have a license before they can be paid a fee for matching a buyer and seller?
Good question John. I have paid bird dog fee’s for finding motivated sellers, but I write the contract and control the transaction. I have not run into any problems here in Virginia.
Check state Regs & Rules all states
I assume all states now follow the practice of having each state agency (e.g. Real Estate Agency that covers licensees and makes rues for their licensing and permitted and forbidden acts) make its own rules w/o requiring their legislatures to vote on @ one
Find your state’s website and check RE licensing, agency, etc and it might have regs on a RE Agent’s sharing of fees to non-licnsee etc…or if it doesn’t a phone call to that agency would probably get you a quick answer.
You could be amazed at the long list of state licensing agencies as I was.
Seems to me that today very little in life is unlicensed, unregulated, etc and I’m all for the-less-the-better rule!
Good point on the regulations and one of the reasons I do not want to be a licensed realtor.
Thanks
Jim