Lease options in Ohio

5 Replies

Hey Everyone,

  I have been reading alot lately about starting out in real estate investing. Originally I was interested in doing wholesaling, and now my interest has shifted more into lease options, both doing sandwich deals and assigning your deal to the end buyer or another investor, also known as wholesaling lease options. I wanted to see if there was anyone in Ohio who is doing this. If so how successfull is this strategy? Do you use a realator or do you market the properties  yourself with our a realtor? Any and all feedback would be great.

Thnks,

Jason Hernandez

@Jason Hernandez  

I've been doing this for a very long time as my first one was in 1981. I use sandwich L/O, sub2 and land contracts to buy property in this crazy market. My goal is to do 15 per year as I am more interested in a slow growing business than getting homes that unravel if things go wrong. In other words, I make sure there is a positive spread for me in at least 2 of the 3 areas (front end, monthly or back end). Have taken a slower than normal process this year as my efforts have gone into obtaining multiple income sources outside of real estate. In my case, I never use a real estate agent as I have a personal preference to find deals myself. I have used birddogs in 2010 - 2013 with mixed results. I have traditionally focused on major markets in 13 states that border I-75 but I have shrunk my market to Cincinnati, Columbus and Dayton beginning in 2014. Basic reason is that having L/O in other markets over extended my management control and I got my *SS kicked in the Orlando market during 2008-2011 that taught me that I am a mortal. LOL. Anyway, I hope this information helps.

@Jason Hernandez  

Lease Options work as well as any other strategy. If you put in the time and effort, you'll get results. Use an agent or not where appropriate.

However, I'm not comfortable with what they're now calling "wholesaling lease options" with non-investors

When I lease (or buy) a property, I've made a commitment to make sure everything goes as smoothly as possible for everyone involved. If I step out of the middle I could potentially let either party get into a situation they can't or don't want to handle.

Need to understand that you are sub-letting, you don't step out of the picture. You can sell you option at a strike price.

You can only give credits (really bad idea as it screws up the end financing) or finance the option if it's a commercial deal, can't finance options to buyers who intend to occupy with meeting lending requirements.

And, if you enter into any financing arrangement like a sub-2 or CFD, you can sell, but you can't have a new buyer just assume an installment contract as the borrower without consent of the seller as these are unilateral contracts, by law, requiring consent. That is in all states. Commercial or residential. :)

Bill- Yes I understand the assigning of contracts and that the buyer needs to notified that it is assignable. Thanks for everyone's input. I'm also aware of not giving rent credits due to the new Dodd Frank Law that came in affect in January. My biggest question here in Ohio is unlicensed brokering which I know some attorny's feel you do when you go into this with out an agent. I have always thought if you have a home in contract and option money down, you have equitable interest, but I revisited the law and it doesn't mention anything about this. This is why I inquired about getting an agent to work with? Any thoughts or ideas?

Also if i go into this are of investing I plan on working with a mortgage broker to get the buyer tenants prequalified and have them go through a credit repair company to get any issues they have taken care of. I am looking at not getting involved into the deal for more then 2 years. But I want to set up both the buyer for success, and give a fair price to the seller. I only want to do this if all parties win. Thats what I like about this part of the business. Unlike other methods of investing. 

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