Real Estate Investor · Saint Louis, MO · Member since 2009 · 31 posts · 4 votes
Dodd Frank has effected lease options in a very negative way since you can't offer rent credits to Tenant Buyers!; What incentives do Investors NOW...(2016) give Tenant Buyers to do lease option deals? That was one of the biggest selling points to get Tenant Buyers to do sandwich lease options and, or lease option assignments. If you specialize in this niche, has your business been effected?
First off, a mortgage broker/banker has told me twice now that they will only consider the amount paid above fair market rent as creditable towards the down payment. So, if the fair market rent for the area is $1100, you would need to get $1300 for it and credit them $200 off their down payment. However, if you're worried about rent credits because of Dodd-Frank/SAFE Act, PERHAPS (not an expert) could do it this way: Lease for $1100. Option agreement $X down now and $200/mo.). Just an idea. I was reassured by the mortgage broker that this would work for them as well. Problem is, the renter could move out and still have an option. Or the renter could stay in at $1100 and stop paying the option fee.
The effect of the lease option locks in 1. The house price. So the sell is that you won't appreciate the house at time of sale (ie a discount to them). 2. That you won't sell it to anyone else. as an investor a tenant occupied property is more valuable than vacant.
A strong lease and a "right of first refusal" will secure the rights of the tenant to buy the house
as long as the tenant pays on time he has a right to buy the house at current appraisal as long as the tenant Lives in the house he has a right to buy the house
@Brian Gibbons you have great points but that still leaves no solution for the tenant buyer in terms of rent credits... Any ideas on solutions/replacements to that specific piece enticement?
@Brian Gibbons what you mentioned is not enough to get tenant buyers' attention. Do you have any other ideas, anyone? Thanks to all those who replied to post...