Calling renters w/ lease option proposal
Hi there,
I was just listening to an introductory recording (one of those "basic info to get you interested in coming to my seminar" type talks) by a real estate guru named Joe Crump.
One quick way he recommends to get cash flow going that interested me is the following method, but I need some clarification on a few points with it:
1.You call up the "apt for rent" ads in the paper.
2. ask the renter if he or she would like to sell rather than continuing to rent out the property.
3. If so use what he calls a "lease option memo." It gives the renter/seller a lot of outs and makes the deal very risk free. However, it also gives you the right to transfer the lease option to somebody else and collect a lease option fee. You're considered to have "principal interest" so you're not collecting a broker's fee, which would be illegal.
4. Get a whole bunch of buyers lined up by advertising in roughly this format: "rent to buy, anyone qualifies, call 123-4567"
5. sign over the lease option to interested end buyer and collect your fee.
He claims you can do this without ever meeting with anyone in person or even seeing the property.
Now a few questions:
A. Who pays the lease option fee? I'm really new to this - seems basic, but I need to know what he means by a "lease option fee." He means what, the seller pays you to find an end buyer? Or is it that you mark up the cost of the house to turn a profit and that's considered your fee?
B. What provisions exactly would be in this "lease option memo"? This is similar to the question I was asking about the "flex option agreement" I was asking in the other section. is this type of agreement 100% legal and what would you include in the agreement? I guess it's basically that if you don't come up with an end buyer after a period of time both of you can walk away, etc.
C. Would you be paying rents to the renter in the meantime while finding an end buyer?
D. Are there any variations on this technique anybody'd like to mention?
E. Any other relevant info anyone has about this kind of deal.
Thanks,
Will