Hi I'm in Georgia and need to know that after closing a deal where you buy sub 2 then sell with lease option, do I set up an escrow account for the tenant to deposit monthly rents too and what sort of statement would the tenant get that shows what they paid and the payment being deducted and balance on the loan after payment? Are there escrow businesses that can handle that? Also, if you get a monthly spread after the mortgage is paid, how do you collect it as well?
Great collection service for notes, wraps, and lease options
Never, Never, Never do a lease-purchase in Georgia where any portino of the rent is being applied to the mortgage balance, unless you have an EXTREMELY clear lease "amortization" table which shows that the tenant obtains no equity until the property is paid in full or "refinanced." If something goes wrong and you need to evict the tenant for nonpayment, but they own any equity in the property, you can no longer evict them. Magistrate and State Courts have no jurisdiction to hear a dispute over equity in Georgia, and the suit would have to be done as a suit in partition/ejectment in Superior Court, and you're looking at 12 months of litigation, rather than a couple of weeks. If your "lease option" is truly a lease with an option to purchase, then there is no need for escrow, since they are not paying the mortgage, or obtaining any equity. The consideration for the option is a separate, one-time fee. Again, if you blur the line by giving the tenant any equity whatsoever, you are also giving them far more rights than they would ever have under a lease.
I do have a 5 year lease with option to purchase. So they would just be paying the rent until they are able to qualify for a mortgage and pay of the sellers loan?
So then they would just pay the rents to me and then I would pay the mortgage? No need for me to set up third party to collect the mortgage ?
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