If doing a lease option... what happens if?

Well, a few thoughts here...
first..don't put much energy or thought into the comments made by family members or friends when it comes to trying to give you input or put doubt into your head about you trying to achieve something in real estate.
Second...I've done LO's for 8 years, and never had a person die. I've seen just about everything else, but never had a person die. Are you thinking this potential TB is about to die or something?
Third..with an assignment, you're out of the deal anyway, so it's nothing to even consider.
Fourth..if you were really concerned about someone in the deal dying, then you could put an addendum in your docs addressing what will happen. Just like an addendum if the mineral rights don't convey, or an indemnification if there is a pool etc.

Happy New Year To ALL DG Members,

I have a real estate agent who want out of a condo he own but he want to lease with option to buy its a 2bd 2bath 3 level comps in area $170,000 it needs $20,000 in repairs.

He ask me to come up with a offer price.

How would you go about the offering price as well as with the lease?

Thanks for your help and support.

Tony

Tony Grant
One Investors Dream LLC.

First, find out what he paid for it through the county website so you know his baseline and the date he bought it.

Second, make sure your comps come from someone other than the seller/real estate agent.

Third, ask your seller if he currently has a mortgage on the prop. This doesn't affect value but it can tell you something about his motivation.

Fourth, get independent estimates on repairs. There may be additional ones that you weren't told about.

Fifth, you offer price is based on the answers you get from the 4 steps above. Can't help with that until that part is obtained.

you can have it in your contract that the contract passes on to the heirs, etc. one of the paragraphs in my option contract says:

"This option to purchase shall apply to and bind the heirs, executors and administrators of the respective parties."

that should cover you. hope it helps.

Hi Tony,
If you are considering a sandwich LO, be sure to do plenty of homework, including getting est of repairs.
HAving said that, LO's are great, but aren't the BEST fit for EVERY property.
I'm an optimistic person, but I see two big issues here.
1) It's a condo
2) it needs repairs
Condo's in the world of LO's aren't always a good fit, because most people wanting to get INTO a LO, want a house for their family. (Not to say you couldn't LO it, but the odds are FAR better with a standard single family house)
Also, with LO's you are wanting a good 3% down. IF a property needs repairs, people aren't nearly as likely to put money down AND take care of needed repairs.
Another hurdle with condos are the HOA fees. You may have a $100k condo, that should lease for $1k a month, BUT the HOA fees are $500 a month! YIKES Now you're up to $1500 a month, and your pool of people are now looking at what else they can get for $1500 a month.

I agree with john on that one. It's a deal breaker if there are fees involved in a condo like that. If it's a normal house it's not as bad and the hoa fees (if any) aren't hitrocious.

I don't think he will die anytime soon. He's maybe in his late 30's early 40's, steady employment. I feel bad for his situation with his other house, and wondered how I can help him and if I could help.

Thank you, that does help. Where would you nee to put something like this in the contract? Would you need to have it in the TB contract too or just the seller contract?

You would want it on the lease as well as the option. If you are looking to do a sandwich, then both contracts, between you and the seller, and you and the TB

all sorts of scenarios outside the norm. I once had I guy ask what would happen if a meteor hit his house. Really!!

But to answer the original question: You would simply place another tenant/buyer in the home if the original one died. If the seller died, there are steps you should put in place to cover this contingency as it can affect you. File a memorandum of option. Have a third party hold a signed deed and transfer papers.

This is a simple explanantion of the steps you should take. As I am not a lawyer, (nor do I play one on TV) please consult one for better answers as they might pertain to your state.

IT would be 1 in amillion, So you would have done good on 999 thousand. Sounds like good odds to me. Don't sweet the small stuff.

Randy

thihousebuyer; Another good reason not to bother with condo's is you eliminate buyers who are in the process of repairing their credit and will not pass a credit check by the HOA.

Andrew

for that and other reasons. The headaches with hoa's, numbers not working out, etc. I see your point, though.

Pertaining to the seller dieing, you would need to add the following to the contract. If the seller passes away the contract is binding to the next person in line:

SUCCESSORS AND ASSIGNS & SUBLETTING: The terms and conditions of this contract shall bind all successors, heirs, administrators, executors, assigns, and those subletting. Buyer has the right to assign the property at any time during the length of the contract, or the right to renew.

or..

BINDING ON SUCCESSORS. This Contract is binding not only on the Seller and the Buyer, but also on their heirs, personal representatives, successors and lawful assigns.

Both will work fine.

if your buyer decides not to take the option or can't make the payments and u have to evict, you just put in another buyer.
But make sure you have money to cover the payment if your buyer doesn't make it