There sre several options that are there but if it is a private home for yourself you have to deal with some added questions. How long is the lease? $420 a year of credit is very poor and if the lease is for a short time with purchase due at the end, he’s not offering very much. You should be able to get at least 50% credit of a lease/option deal. do that for 3 years and that is 15,300 toward the property. if it is a iinvestment of avenues are available. do not become passionate about property.
Hallo HR. I have been reading your postings and I do like to read a lot of your scripts. From reading what I have read, I have decided to ask you a question in L/Optioning. Please help me to pull this situation through.
I found a property worth $106,900.00, and the seller is willing to do a lease option. He is offering a credit of $35 per month and carging a rent of $850 per month. Cash down is $3000.00.
Now I would like to change my terms and come up with a very creative way where I will benefit from this deal and make it a win/win. The reason why I do really wanna go with this seller, who is also abroker for his agency, is that he is flexible and willing to do a lot. I would like to know what i can do, before we sign the contract. I would like to get a credit per month of at least $200.00. Now what would you advise me to do ??? Raise the asking price and then in turn the monthly charges or what??? Is it possble to lower the prices too, reason being it is a new house and no one has ever offered a reasonable rate. If it possble to reduce the price then, i would like that pitch. I do appreciate your help in this situation. Looking forward to hearing from you.
Thanks.
Suge.
Re: Lease Optioning Question for HR - Posted by Lonnie Turner
Posted by Lonnie Turner on May 24, 2000 at 20:21:39:
I would not give $3,000 for option consideration because this is one of your profit centers. You need to get more upfront from your tenant/buyer than you are paying out to your seller.
I like to have at least $100/mo for rent credit so that I can offer the same to my tenant/buyer.
You need to make a spread on the backend so that when your tenant exercise his option he is paying you more than you are paying your seller. For example, you L/O the house from your seller for 100K & sells to tenant for 115k that is a 15K payday minus closing costs. Make sure that your backend can cover those costs are get the seller & buyer to cover mosts of the closing costs.
Since you are dealing with an agent he mioght be expecting that you are going to live there. You need to let him know that you intend to sub-lease the house to a tenant. If he is using the oard of Realtors contract mostly likely the contract has a anti-assignment & sub-lease provision in it. These need to be taken out! Hope this help.
I do have Bronchick’s L/O course, though, and it is excellent. It answers many of the questions you may have. My answers only would be theoretical. Perhaps a lease option practitioner will answer your specific requests.