Lease Option Assignments

22 Replies

Hello everybody! I hope I'm posting this question in the right place. If there are any agents out there doing these transactions, are you going through your brokerage? Also how are you advertising for tenant-buyers on (if you are) on Craigslist? I mean are you putting your brokers info on the CL post? I'm planning on focusing more on lease option assignments and I needed to get some opinions/insight. Thanks in advance! 

I'd also like to see what the community thinks about this!  I'd imagine you'd have to disclose that you're an agent?  Perhaps @Brian Gibbons can weigh in?  He's an expert and a true BP treasure trove of insight on this exact topic

@Octavian Cross

if you're in Louisiana,  I would do the following 

I would sign a declaration with my brokerage stating that 

"I am entering into transactions as a principal buyer and not acting as a fiduciary agent.  I am also having owners of real estate sign an knowledgement that although I am licensed, I am acting as a private business person and not as a licensed agent."

 I would call the Louisiana Department of real estate that oversees licensed agents and get their opinion of you acting as a private business person buying and selling real estate 

 They have a legal department  in the department of real estate 

I can't say what put on craigslist, but you can state that 

"you have homes for rent to own or bond for deed available, and you are private business person  and you are not acting as a fiduciary agent"

The more you acknowledge in every correspondence with every homeowner and every tenant buyer that you're not acting as a fiduciary agent and you are acting as a private business person, the better

 I would get  legal advice on what your disclaimer should say in Louisiana 

@Bryce Kemmerer thanks  for the shout out 

Virginia Maryland and DC are all pretty strict about being licensed if you're doing terms deals like lease options, subject to, and wraps

@Brian Gibbons , I was studying all the materials you've so graciously shared with this community and I heeded your advice and got licensed!  What I need to do is get that written memo of understanding or a declaration between myself and my brokerage like you alluded to above.  THAT's my next step.

I like the idea of being able to offer the full spectrum of options to any seller: I can list your home, rent your home out with property management OR, I could buy on terms, and here are the benefits/risks of each!  Just like you explain in your videos!  The ink on my license is barely dried, but I'm planning on getting out there and making things happen ASAP!  Thanks again for all you do here!  It doesn't go unappreciated!

Thanks Brian! I'll certainly take measures to implement your suggestions. If there are any other agents out there doing these types of deals, I would love to hear from you. 

I am glad you got licensed.  You can certainly do lease options as an agent, using traditional listing agreements.  So instead of "wholesaling" the lease option, just do a listing and get a 3% commission.  Yes, you will have to share it with your broker.  But you can maybe get 3% on the front end, and 3% on the back end?  There's no broker law that says you can only get one month's rent as a commission on a lease.

BTW - I don't recommend working with brokers that take 50% of your commission. Crazy... Try to find an REI friendly broker that will let you keep 100% of your commissions.

@Joe McCall

Joe McCall makes the most sense

The "wholesalers only" people hate getting licensed, I don't know why but they do

The transaction engineers that can "think outside the box" and offer the seller several solutions, whether it be a 

lease option, 

lease purchase, 

lease with ROFR, 

subject to existing financing, 

wraparound mortgage purchase,

installment sale on free and clear house, etc

You can always get a traditional listing too

And a word about finding the right broker if you're a transactional engineer

The traditional brokerage houses like Remax, KW, Caldwell banker, and the rest

These folks want to take sales people and control their activity completely

You would do a lot better to be able to get your sales license hung with a brokerage that would take a flat fee for your deals and comply with your state laws

Remember, the broker is liable for your business

So be completely transparent in your deals

My advice to you if you're licensed and you want to do your own deals 

Say to home sellers:

"I am a licensed agent, I am not acting as an agent in this transaction and I am acting as a private business person"

The home sellers sign a release that they understand that

@Octavian Cross   @Brian Gibbons gave some solid advice as well as @Joe McCall  (I thought you were overseas dude!)

You can certainly do this as an agent, and a few things you would need to do is disclose to all parties you are an agent but acting on your own behalf, like what Brian everyone knows you don't represent them..confirm with your broker he/she is OK with you doing ANY type of investments outside of the brokerage. 

i've said this before, but the only reason I would tell someone not to become an agent is if you are hitting listed houses like I am. 

@John Jackson

John if you are unlicensed doing lease-option assignments in Ohio or Florida or California, you better have a licensed agent in your llc

For the uninformed, soliciting Home sellers that have a listing as a licensed agent is a no-no

If you are broke, and are not licensed, you can approach expired listings, landlords, FSBOs, and we buy houses people for their leads that they can't do anything with

John I love how you have found a way to mail your marketing pieces in Texas to listed houses

Thanks @Joe McCall @Brian Gibbons, and @John Jackson for your thoughts! Brian, I'm just trying to find the best way to do these transactions now that I'm licensed. So Joe, as an agent you're saying just sign a listing agreement with the seller as any other listing at 3% commission of the total sales price? So I am only asking for 3% of the total sales price as an option consideration? I then assume that the tenant buyer puts my brokers name on the check? I can hear @John Jackson saying "Well that's no fun!!! Lol! And lastly your saying that I can also get 3% when the tenant buyer exercises? @Joe McCall , deal examples/stories are always welcomed from me! And Joe don't you have a partner out in Utah doing these deals also?  Thanks in advance!!

I bet Joe McCall would agree, you do not need to stick to 3%, and you dont need to split it 50 50 on a LOA.

@Octavian Cross

Get some training from someone that knows this business.

@Brian Gibbons I'm very familiar with these deals. Just not as an agent. My training came from "the naked investor" Michael is very knowledgeable in these deals. And besides I'm in the middle of one right now as I just put a lock box on the door earlier today. I just wanted some insight from an agent or some actual deal experiences as an agent as I'M going through my deal. I'm more of a linear approach guy. I guess basically I wanted to hear some opinions from a couple of agents.  I would love to get some training from an agent who's doing these deals as you suggested. @Joe McCall ?

@Octavian Cross

Run everything through your brokerage.  Period.  That's where the liability falls.  It may not be this deal, but if 10 deals down the road, you get a litigious buyer/seller and the division gets involved, they might start going through everything.  You want your broker's backing and insurance on your side.

@Joe McCall has good advice. There are a bunch of flat fee models that charge $300-500 per transaction. In a L/O situation, this is cheaper than a typical lease-up fee and not hard to push onto the seller because this is the cost of the deal being "licensed and insured".

As an agent, why are you doing assignments instead of just brokering the transaction? 

Thanks @William Hochstedler ! This is what I was looking for. Assignments are what I would normally do but since I just recently became an agent, I wanted to hear some opinions on which way would be best as an agent. I have no problems at all just brokering the transaction. Is there anyway you could give me a quick rundown on the steps of brokering this type of deal. Again I'm a brand spanking new agent. One thing I was wondering about was whether the tenant buyer paid the option fee to my broker. Any insight would be amazing! Thanks!

@Octavian Cross ,

To make the @ work, do the following:
Hold down the shift key and type @?
Look below this Window, and you will see a list of names of people that have posted in this thread.
Click on the name of the person that you want notified via an email, that you responded to them.
If you are a Colleague with anyone that has NOT posted in the thread, and you want them to see your post, hold down the shift key, type the @ and the first 4 letters of their First or Last Name.
Then look below this Window and click on that person's name.

As a Broker I do Lease Purchase Assignment deals but without the assignment.  Not being in the deal as a principal, instead representing the seller, is a safer position to be in.  No need to assign because I bring the seller and buyer together as a licensed broker.  The tenant/buyer pays a non-refundable fee to the seller and the seller in turn pays me my fee.  I also do sandwich deals and manage the property during the lease term, and then get paid on the back end when helping with the closing.

I broker the deal with my firm and do the property management on my own.  The added plus for the seller is I also market the property as a straight sale and other agents can show the house too.  It opens up the marketing of the property and I get paid either way the deal goes.

@Steve A.

I'm a firm believer in helping Sellars solve problems by using any technique that's legal and being licensed

Lease purchase with 3% down and a 12 month lease is I think a fair way to go for the seller and the buyer, create a lease purchase agreement and open up escrow instructions with a delayed sale

@Octavian Cross do you have a good RMLO? I am looking for a good one who will apply option fee to downpayment.

@Maz Mazivei

start with your REIA in LA,


Ask simply for an RMLO that is Dodd Frank compliant in Louisiana

Yes I do, I'll PM you that contact.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here