RENT CREDIT to me question? ALSO her REALTOR - Posted by Johnman

Real Estate Investing
1

Posted by johnman on January 07, 1999 at 17:38:53:

Paul,

Thanks for your input. I appreciate it.

Johnman

2

RENT CREDIT to me question? ALSO her REALTOR - Posted by Johnman

Posted by Johnman on January 07, 1999 at 01:22:23:

Hi everybody,

First of all, I really am excited that my “I Buy Houses” ad of 4 weeks drew 7 calls. hoo hooooooooooooo!!

OK.

One call from my ad was a motivated seller. She has two house payments. She just wants me to take over but on a lease/purchase agreement.

I met her today and she was with her Realtor (nice lady). I was asked about rent credit. Basically what doI want. I said 100%. The seller said OK but of course the friend wanted to make sure that with the rent credit, the seller will not have to come up with more cash than necessary at closing.

Here are more details:

PITI about $700
recent appraisal (within 6 months) $81,000
loan balance $74,500
house is 3 years old

Since I asked for 100% rent credit, what part of mortgage payment will be credited? I believe it would be the portion that is paid towards the principal. Is this correct?

Here is a plus for the Realtors out there and to those that think that Realtors are difficult to deal with.
The seller’s Realtor friend was a sweety. She let me talk. I printed out the benefits of doing a lease/option and presented this to the seller and the Realtor read it too. She was the one actually explaing to the seller how this is a win-win situation. As the Realtor was talking I found out she also does lease/options. She pretty much sold the idea for me. I will be waiting for the seller’s call to give me the keys for me to inspect the property. It’s not a deal yet but I’m halfway there. Hoo Hooooooooooo!!! By the way, I did bring Mr. Bronchick’s lease/purchase contract and we went over it. A few things they wanted to add like late fees which is not a big deal because I don’t intend to be late and loose this deal.

So there you have it!!! Realtors that understand REI can be help to you (in my case I didn’t even ask for her help).

Please don’t forget to comment on my rent credit question.

Thanks,
Johnman

3

Re: RENT CREDIT to me question? ALSO her REALTOR - Posted by DanM(OR)

Posted by DanM(OR) on January 07, 1999 at 09:53:14:

John,

Hold on to that realtor she is worth her weight in gold. They are hard to find. I wonder if she’d relocate to Oregon?

Great Job!

Dan

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Re: RENT CREDIT to me question? ALSO her REALTOR - Posted by JPiper

Posted by JPiper on January 07, 1999 at 01:49:28:

The rent credit has to be related to something…it’s a percentage of the rent payment to be applied toward the purchase. You don’t say what the purchase price is or what the proposed payment is.

But making an assumption that your payment equals the seller’s PITI payment, why bother with the concept of credit? Just make the payment, with the option price being the existing mortgage balance at the time of exercise. If you do it this way, set up a 3rd party escrow to receive your payment and pay the lender, so that you are sure your payment goes to the appropriate place.

The result of handling it this way is that you will acquire the house for the loan balance at the time of exercise. 100% rent credit is great if there is equity. If there is none or little, as in this case, it won’t work.

JPiper

5

Re: RENT CREDIT to me question? ALSO her REALTOR - Posted by Johnman

Posted by Johnman on January 07, 1999 at 17:36:46:

Dan,

Are you trying to steal her away from me? ha ha ha!!
Thanks dude. I’ll keep her like you said, they are hard to find plus we did hit it off.

See yah,
Johnman

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Re: RENT CREDIT to me question? ALSO her REALTOR - Posted by Johnman

Posted by Johnman on January 07, 1999 at 17:20:09:

JPiper,

Thank you. I will make the option price as the balance of the note at the exercise of the option to purchase.
That is great!!!

Thank you again.

Johnman

7

Rent credits - Posted by Paul Macdonald

Posted by Paul Macdonald on January 07, 1999 at 06:42:45:

How about starting with your format but refining it down a bit. Assuming (dangerous word)an original note of 77k at 8.5%, a note that was 3 years old would only have to wait about 4 years to reach a 90% LTV if you had zero appriciation.

That hopefully conveys the idea. Take the true numbers and see how it works. There are alot of justed missed lenders that will “refi” a lease optionor if they’ve leased for over one year. They base it on appraised value not purchase price. The biggest swinger will be is it an owner occupant or an investment unit. And if the current PITI is over the neighborhood rental schedules you can probably get a Fannie/Freddie underwriter to give full credit for the difference.