The number one question I get from my buyers of lease option properties is how do I get paid? I get usually between $50-$100 from your monthly rent and the remaining when you exercise the option to purchase the property.
I tell them this is why, despite me telling them they can get a house with no credit check, I still want a copy of their credit report. What I do during the terms of the lease, is I help them work on their credit issues at no cost to them! I tell them that it is in my best interest to help them, because if they don't buy the house, I don't get paid!
The also pleases my sellers because they know at the first sign of trouble I'm going to be there, my check is on the line!
I also tell them that during any portion of the lease that they stop paying, I have an agreement with the seller, that the seller will stop paying me also. So you see, my helping you the buyer guarantees that I'm going to get paid. Unlike these companies that say they will fix your credit, but they want $5,000 up front, once they get your check, what incentive do they have to continue helping you? - NONE, they have already been paid.
So, for more information on buying or selling on a lease option call or e-mail me anytime.
Todd Clark - broker
Kastings & Associates
Phone: (503)524-9494
Fax: (503)622-8738
Todd@IFoundYourNewHome.com
http://www.ifoundyournewhome.com/
Todd Clark and the Friendly Home Team
Knipe Realty
Todd@IFoundYourNewHome.com
Phone: (503)524-9494
Fax: (503)622-8739
I am a licensed Realtor who specializes in Washington County, Oregon and also work in both Clackamas and Multnomah Counties including the cities of Aloha, Beaverton, Canby, Clackamas, Gladstone, Gresham, Happy Valley, Hillsboro, Milwaukie, Oregon City, Sherwood and Tigard.
All information contained in these posts are copyrighted and cannot be used without prior written approval authorization from the author me Todd Clark. If you are looking for an outstanding agent please give me a call I would love to help you with all your real estate needs.
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Todd, are you acting as leasing agent/ property manager? Does your broker allow this?
I, too have turned to lease options as a way to get some of the excessive inventory off the market--it's a great way to give a not-quite-ready buyer an opportunity to at least have a chance of his money working for him, and it benefits the seller becasue the house is occupied and the rent pays the mortgage. How do you handle the property management issue, btw? In Florida you have to be a licensed Realtor.
Great post!
Todd: It appears to me that you might be getting a bit too close to practicing law rather than selling real estate. I would hate to have this come back to haunt you later on. As for me... anything sounding like this... I would refer to an attorney as far as putting together what you describe.
If, however, you have approved contracts providing for lease/options... then that makes it totally ok. I am just reacting to what we have been told to do in Texas. Things vary so much from state to state, so if this is taken to be accusatory, that was in no way my intent.
Andrew - It has been working great and sellers and buyers do love it!
Michael - Thank you!
Jim - I don't fill out or work with the rental agreement between the seller and the buyer, but I do suggest they set up all payments through an escrow account to make sure payments are applied properly.
Loretta - As I told Jim, I have an escrow service collect the monthly rent, but if payments should stop the owner is responsible to give the 30 day notice to the buyer.
Bridgette - I wish you the best of luck, make sure a lawyer does review all documents to protect your seller and the buyer!
Karen - How do you figure? We are setting up a sale of a home, just at a future date. In my state we even have an option agreement as one of our standard forms. I would also like to know how you would consider this outside the law. It has been done for years and even our company attorney who used to work for the Oregon Real Estate Agency lawyer said what we are doing is perfectly fine. Just thought I would ask, what you see as illegal about it.
I used to do a number of installment contracts in MD when folks had enough money to pay me up front, but, sadly, folks don't have that kind of cash these days. I don't plan to get in the lease-option business this go round. The last one I did, the buyers had a big dog that did a lot of damage. Fortunately, they had a $35K earnest money that was forfeited when they slinked out.
Bad real estate markets create opportunities for the lease option business but I'm not sure this is the type of market that makes it a good deal for the buyers. Our prices are still falling and in a year or two of leasing, the house they planned to buy, assuming they were able, is going to be worth a lot less than when they signed the contract.
I admire your hard work and ambition.
I am afraid when a client tells me that they are hiring an agency and they are going to pay them $3000 for their services. I'm like "Ummm, you only owe $7000 in collections, you could probably negotiate them for the $3000 and be done with it"
Lenn - In our area prices are still rising so it works out well for both buyer and seller. You just have to make sure you do back groung checks the same as you do with a rental.
Rick - That is what scares me when people are told that they can have perfect credit after paying that amount and then get worse credit in the end!
Jeff - I do use the agency one for just the numbers and then have a rental agreement done by lawyers for the rental agreement that spells every thing out that both parties must do.
After seeing some of the comments, I just had to throw in another coupla cents (sense?)...'creative financing' does not mean 'do not disclose'--I think that the knowledgable professionals in this business that actually take the time to do a real service to their clients, such as those who will even deal with a lease option, for instance, should be applauded--so I am!
~clap,clap,clap!~
oh, and PS: what was the answer to the lease purchase question? I've not done one of those...it sounds to me like you're doing a straight 'lease option' contract, though.
Loretta - Thank you and I get paid most of my fee after you purchase the home!
Doug - I wouldn't do a lease option in your area unless I was purchasing a fixer upper and I was leasing it durning the fix up period. Then sell it for full ARV when I'm done, but other than that if I was a first time home buyer and wanted to own down there and didn't have the credit. I would say owner financing would be the way to go, buying from someone who's house is paid off in full!