Co-op Lease Options Addressing Imp Tenant Question

I would think if the property shows to support itself and the owner has enough of reserves/credit for the loan that it shouldn't be a problem. A pro forma would show this to the lender. When the pro forma has a signed lease agreement with it the banks/lenders are more willing to approve the loan.

If needed they could use the leased property as collateral.

Mike

That is a question that most investors will not want to hear. Because a lot of the time even more so now with the banks getting tougher with the requirements,people will not be able to get more than one mortgage.

Other problem that comes up for them is the fact that they can't get equity line, because with a L/O the bank says that the property is already sold under the L/O agreement.

In most cases the owner would have had better luck if they had just rented the house, and showed an income from that.

Mike, thanks for your advise. I was wondering about their being able to use the lease property since it now has a clouded title.

Jim, your answer is in agreement with most of what I heard and read and thank you. So, next question: If we do get that question, I guess it would be best to advise them to discuss their plans and situation with their account.

CORRECT Just tell them you can't offer any financial or legal advice,and change the subject quick.

Thank you Jim.

If they bring it up. It has been addressed that you, with the correct wording, suggest that they do the same (a L/O or something on that order) and hopefully they ask if you could assist them and they usually do. Watching how you do it make a contract with them that you will try to find them a place. Just make sure you are not breaking any state or local laws first. This was one of our get out and practice lessons quite a ways back. This way you have a rolling stone effect. Just a suggestion. If I'm wrong someone please correct me as I'm considering looking at things from that angle.

Mr Mike that is a great answer. You mentioned get out and practice lesson...was that in your Suc Aca program. Im gonna enroll as soon as I can. Thanks Mike and have a happy day! beep beep

No.
It was in one of Deans extra videos when I first signed on, I did some serious back tracking. You had to follow the links but it was there. Do diligence.
It gives you an instant end buyer over and over, hopefully. Even if you have to bring in a RE agent or attorney, keeps the ball rolling. The attorney part sometimes, when said right perks the seller up as you usually have to have one anyway. That way they know it is legal.
So you get them to sign/lock it up with a subject to you finding a new place and you run like _elll and get a place for them. Roll on & on. ***Watch your legals though.***

This is great additional infor. Thank you buddy...I owe you!!

"That question is how do we address the question we might get from the owner of a LO property regarding the fact their ability to buy another home will be encumbered until the tenant actually buys their property."

If you are dealing with a motivated seller, that won't be an issue. If their biggest problem is buying another house, the L/O solution you offer probably won't work for them. Say someone is transferred. What are their options, renting and making double payments while they rent in a new location until the other house sells? If they do a L/O they get payment relief. It all boils down to the seller's motivation. A seller who wants to downsize because junior has left the nest doesn't have the same degree of motivation as a seller who has to be at a job 1500 miles away in one month. Those who understand the value of what you bring to the table will realize you can solve their problem and you won't have to sell yourself or your concepts to them. Some Will, Some Won't. So What, Someone's Waiting....SWSWSWSW. Deal with motivated sellers and that question won't be an issue.

Thanks for posting and for your comments which are dead on. But, my question was a "what if" question that could throw off many new investors who are not able to shoot from the hip like the experienced guys. Being prepared for the expected is much easier than for the unexpected, and I think these little exercises help.

Hope all is well with you!

first of all, 75% of their rent on the L/O property should be credited toward the new loan, but that may not help that many people right now. i believe you mentioned that. you could offer to do a L/O for them or a land contract on their "new" home, which i think was also mentioned. i am looking at that situation right now myself for some sellers. not a bad position to be in. as for the proforma someone mentioned, i would doubt that lenders put much stock in those. proformas are "what could be", not what is and they are not worth the paper they are written on (in my opinion). just my 2 cents worth.

I think TRSD has a point. From what I understand, the motivated sellers that are right for L/O are already in a financial pickle, which is why they are motivated. Additionally, it is difficult for ANYONE to get a mortgage these days, with all the strict requirements. Someone I know of had a client with several $million in the bank, but because he did not have a job was refused a mortgage. (He didn't NEED a job!) So we need to target the RIGHT sellers, and then the RIGHT buyers (those who can't get a mortgage)... which could very well be the desperate sellers, when they need another house?

Linda: thank you for your information, and btw your 2 cents worth is graciously accepted.

Val: Yes TRSD (Tom) is dead on and a very motivated buyer is the ultimate situation, but refer to my post #11 (what if question).

I hope you ladies are doing marvelously in your REI!!