Lease option, subject to. Should I? Its in North Carolina.

34 Replies

@Alisha Mingus

First of all you're just do you're not dumb and some of my best students are beautiful blonde women!

For new people that I coach they should never get involved with upside down house and friends especially

The best thing to do with an upside down house it's in a great neighborhood and great schools is a lease option, over 5 years, but not a five-year lease , one-year lease with 4 possible extensions, and I wouldn't do them in North Carolina. 

If somebody's upside down they need to aggressively pay the upside down portion if  they want to maintain a great credit rating

And if somebody has a house that's 100% financed that has no equity. If they have no equity in the property is NOT worth anything to me. Because ten percent to sell with commissions at 6%, closing costs or 2%, and wiggle room to sell at2%

And that is to go to zero profit!

So if I am paying cash I'm not paying any more than 80% of value so that I can pay 10% of value to sell, and that 10% profit, paying taxes on that you're lucky to net  5%

I would look at your REIA president in Tennessee and start off with a two or four unit and live in one of the units, apply for a 203B loan from FHA 3 1/2% down

After a year I believe you could rent that unit out and do it again

Best of luck!

If you are executing a lease with ROFR (Right Of First Refusal) in NC, I highly recommend you follow the 47G guidelines/requirements. If your ROFR is in writing, has defined the parties and property, has a time line, and has 'consideration' a judge may consider your ROFR as an 'option' covered under 47G.

Disclosures: I do not offer ROFR on NC property. I have not entered into a lease/option since 47G was ratified in 2010, but if I did, I would follow 47G to the letter.

This post is for entertainment purposes and should not be construed as legal advice. Consult your attorney for your legal matters.

@Karen Rittenhouse

I seem to recall that Karen Rittenhouse has hands-on experiences in North Carolina regarding this topic.  Perhaps she can chime in as well.

ROFR is much safer option in North Carolina.

Alisha,

Aside from this deal, going forward you should try to not use the phrase  " got it under contract ". That phrase has become targeted. And unprofessional in itself. An acceptable alternative might be "signed P & S". I'm not a lawyer, just trying to help. 

Originally posted by @Chris Martin :

If you are executing a lease with ROFR (Right Of First Refusal) in NC, I highly recommend you follow the 47G guidelines/requirements. If your ROFR is in writing, has defined the parties and property, has a time line, and has 'consideration' a judge may consider your ROFR as an 'option' covered under 47G.

Disclosures: I do not offer ROFR on NC property. I have not entered into a lease/option since 47G was ratified in 2010, but if I did, I would follow 47G to the letter.

This post is for entertainment purposes and should not be construed as legal advice. Consult your attorney for your legal matters.

 Chris I missed this.

See ROFR writing and not getting language confused JD's in CCIM Magazine.

http://bundlr.com/b/lease-options-nc

Right, Brian, that's basically what I was getting at.

IMO, the root cause is that lay people think they can draft a "simple" right of first refusal. These people are (from a legal perspective) unconsciously incompetent. They are clueless at what they are doing and don't know it. They get blinded by 'it's not that hard' and end up drafting an option or some other attorney's wet dream. The takeaway I saw from your link: "...imprecise language regarding purchase rights can lead to serious consequences."

In layman's terms... Don't be that guy.

I fully understand why the NC REC does not provide an option to purchase form anymore.

@Chris Martin

I still say in North Carolina an operator who is honest and that wants to help renters become homeowners can create a lease with the properly drafted ROFR with an excellent attorney who knows the courts well as far as what a judge would think with the ROFR as written

I have a preference over lease with sale and purchase rather than a lease with option to help the seller have certainty in the transaction, and if you do a lease purchase and as a renter buyer you lose your earnest money, that's acceptable in the courts; if you lose your option money it's another story with how some of the judges think.

I think the judges of had enough about operators doing rent to own business.

I agree. And IMO in the 'big picture' the regulations helped curb abuse in NC. I believe a lot of the abuse was in the MH business, by park operators. I heard a few unbelievable stories, all before the statutory changes. There were a few L/O operators in SFR in Wake county... they are gone or 'less visible' now, although some for other reasons.

@Alisha Mingus Hi! I'm curious about what you decided to do with this deal? How did it work out??

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