Posted by WilliamGA on April 19, 2000 at 19:58:08:
Not an expert by any means, but I will try to answer your questions…
- An assignment of contract is when you get a property under contract to buy or L/O for one price and find someone to “step into your place” in the contract. For example, you contract to buy a house for 50k that might be worth 75k and someone might give you 5k to be able to buy that house in your place. You make $$$, and the buyer still gets a deal. You have “assigned” him your contract.
2.Option consideration is the cash that a tenant/buyer gives you to have the right to buy the house you are selling on lease/option at a future time. I have seen amounts recommended at between 1.5% to 5%. The amount you can get will be based alot by the value of the house and it’s condition. I like to get between 3 and 5% on mine.
Exercising the option is when the tenant/buyer actually purchases the home and cashes you out.
Rent credit is the amount of cash out of each months rent that you apply toward the purchase price of the house. For example, you may have a tenant/buyer pay you 800.00 per month in rent and you will apply 200.00 of it toward the purchase price of the house. This helps the tenant/buyer “save up” part of the price of the house. Some banks will count this amount towards the downpayment, some will not. Again, you decide how much of a rent credit to give. Most gurus say keep it small to avoid claims of “equitable interest”
I hope this helps you.
PS Read all the articles and “How To’s” on this site. That will answer alot of your questions.