Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 16%
$32.50 /mo
$390 billed annualy
MONTHLY
$39 /mo
billed monthly
7 day free trial. Cancel anytime
General Landlording & Rental Properties
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 6 years ago on . Most recent reply

User Stats

3
Posts
0
Votes
Don Kephart
0
Votes |
3
Posts

Lease Option Agreements ?

Don Kephart
Posted

Sorry if this is long winded! But I do have a few questions pertaining to Lease Option Agreements.

Can I use the same “Lease Option Agreement” for both sides of the “seller/me” and “buyer/me” , and just change the terms?

After I find “tenant/buyer” for “seller/me” for the “home owner”, I want to leave the deal because of no equity, or I just don’t want to stay in the deal. Do I just simply “assign” the Lease Option? Is it really that simple and easy? If so, do I “assign” the “tenant/buyer” LOA to the “home owner” or is it the other way?

This is the one I’m have problems with, in a sandwich lease. At the end, and time of closing with “tenant/buyer” how do I reflect the “tenant/buyers” $10,000 “deposit” or “non-refundable consideration fee” if the “tenant/buyer” believes that the $10,000 is going towards the $120,000 purchase price of their new home?

SELLER/ME                                                                                           TENANT/BUYER

AGREES TO $100,000 purchase                                                      AGREES TO $120,000

           $1,000 DOWN                                                                $10,000 DOWN

                    $900.00 IN RENT/MO                                                     $1,200 IN RENT/MO

In the front end, I will be getting the $9,000 from “TENANT/BUYER”, on the back end I’ll get the rent spread and the difference of $10,000 at the time of closing. The “tenant/buyer” is going to tell the loan company the need $110,000 loan because that already put $10,000 “down”! How do I structure this deal to make their $10,000 non-refundable fee apply to the purchase price as a “down payment”?

Any and all insight would be greatly welcomed as I am very axoins to get this going.

Most Popular Reply

User Stats

13,438
Posts
19,497
Votes
Joe Villeneuve
#5 All Forums Contributor
  • Plymouth, MI
19,497
Votes |
13,438
Posts
Joe Villeneuve
#5 All Forums Contributor
  • Plymouth, MI
Replied

None of this is correct.  You are mixing up a number of things.  The SLO is pretty basic.  Let's start with the "what you never do" list:

First rule -  Never combine the two (lease and option) in the same agreement

Second Rule -  Never connect the lease and the option.  These are two separate contracts.

Third Rule -  Never give rent credits...ever.

Forth Rule - The Option Consideration is the act of the person buying the Option.  It isn't a deposit on the property.  When someone pays the Option Consideration, they are paying 100% for the Exclusive Option to buy the property within a stated period of time ..they are NOT putting up a down payment on the property.

Loading replies...