Posted by WilliamGA on April 19, 2000 at 19:58:08:
Daryl,
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.
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Exercising the option is when the tenant/buyer actually purchases the home and cashes you out.
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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.
Good Luck!
WilliamGA
PS Read all the articles and “How To’s” on this site. That will answer alot of your questions.
W