First potential Lease Option - need some advice please

A L/O is ABSOLUTELY a great option!

What is the seller wanting for his property? Is it in line with comps for the area?

Have your read this thread? It has just about everything you need to know to do a L/O.

http://www.deangraziosi.com/real-estate-forums/everything-else/71370/lea...

Read this and let us know what other questions you have.

Karen

The Lease Option is the best way to go here, the home owner gets cash flow out of the property, saving on cap gain taxes, check with tax person plus you get to help another person own a home that can't buy rigth a win-win thur a bank, but down the road say 12 to 24 months there credit is better and they can now get financing. the cool thing about a L/O is your the middle man you dont own anything you just have control of a asset. You get paid at the begining of the deal which includes a non-refundable down pmt, I would get between $5000 to 10k,, then lets say the home owner wants 750 rent then you rent it out 1000 to your tenent owner, and cash flow the difference over the next 12 to 24 months, now you can come to agreement about the price for the home at the start of the lease or wait til they decide to go to bank then get appraisal and your final profit in the end. Of remmber to come to agreement with the home owner about what price of the home well be. lets say you agree 175K you collect 5k dn and 1200 month rent over the next 12 to 24 months whay ever your lease is set up at then two years down the road your renter gets a loan from the bank, and the property goes up in value say 6% say 210k, you see the cool thing about L/O is you control the property, if the renter stops paying just evict and find another renter and start all over, I would do atlease a 3 year lease. that give you three years to find a renter that can buy the home. If for some reason it dont happen, after 3 years you just walk away or work another deal out with the seller..... well I hope this helps ya.........the numbers here are just an examlpe.

Sorry for the delayed response Karen. I really appreciate your input. I've received the sales and rental comps from my realtor and now have a figure in mind to offer the seller.

I already have another investor with tenant buyers looking in the area. Very exciting. So, now I just have to get the deal done!

I began reading thru the links you provided. Very helpful. The first few links wouldnt open. Figured I'd let you know.

Thanks again

Dave Visco

So Dave, how big was your mailing and who did you target?

Hey Dave,

Another way to go here could be a L/O assignment. Where you could let the owner finance the property to a tenant buyer, and you could collect an assignment fee from the tenant. Great way to get some quick cash and help both parties.

Finding L/O buyers is easy, easy.

Don't split your profit with anther investor because he has ready buyers. If you put an ad on CL you will be inundated with buyers. Just make sure you qualify them by running credit, cking previous landlords and their jobs.

Good luck! You are on your way!

Call me if you need help.

Karen

I agree with Karen 100%. Tenant/buyers are pretty easy to find. It is finding the property and seller that have a deal that will actually work that is the hard part of the L/O strategy.
I have my broker pre-qualify my tenant/buyer. I want then to be able to exercise the option in 12 to 24 months. I have them in a credit repair program with my broker from day one. If my broker says these people won't be able to qualify, I don't put them in.
Sounds like you could be on to a good one with the seller. Make sure your numbers are right. Don't figure any appreciation for the next 24 months. Most likely it will go down in value, so be careful if you want to make money on the back end. You said it needs no repairs or remodeling. Make sure of that1

Good Luck,

Michael Mangham
MD Home Acquisitions LLC

Thanks to everyone for the solid advice. I'll keep you up to date as things progress. I'm spending this evening looking for the proper documents to get it under contract. The documents I've been instructed to use from a past training is as follows:
1. Authorization to Release Information
2. Memorandum of Option - helps to prevent the seller from selling out from under me
3. Residential Lease with Option

I'd appreciate any input that you may have.

One other question - who pays the taxes on the property during the option timeline? I believe it's the Seller but wanted to make sure.

Thanks again

Dave Visco

I used to send 200 postcards every two weeks. I hadnt done this in quite some time. I started up again with just 100 post cards and this call resulted. I used to get a 1.5 - 2% response rate which is respectable for direct mail. Regardless, postcard postage is now at $.29. This can add up fast at mailing 200 pc everyother week.

I mail to expired listings I received from my Realtor. I track the cards that come back vacant notices and try to track down the owner. I also mail to any vacant homes I find while driving around.

I hope this helps

Take care

Dave

[quote=dvisco
1. Authorization to Release Information
2. Memorandum of Option - helps to prevent the seller from selling out from under me
3. Residential Lease with Option

One other question - who pays the taxes on the property during the option timeline? I believe it's the Seller but wanted to make sure.