Assigning Lease Options To A Tenant Buyer

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Assigning Lease Options To A Tenant Buyer

Victor Maxey
Richmond, VA · Member since 2017 · 35 posts · 4 votes

I HAVE A BUYER IN PLACE WHO WANT THE HOUSE I HAVE UNDER L/O WITH SELLER. WILLING TO PUT DOWN 5% OF PURCHASE PRICE AND PAY MONTHLY RENT A MONTH. I PUSHED IT TO HIM FOR 10K MORE THAN I HAVE WITH THE SELLER. WOULD I REPLACE THE OWNERS NAME WITH MY NAME AND THE AMOUNTS BETWEEN ME AND T/B TO GET MY FEE UP FRONT AND CATCH THE 10K ON THE BACK END. THEN TURN ALL PAPERWORK INTO TITLE COMPANY TO TAKE CARE OF THE REST CORRECT? I BELIEVE IM ON THE RIGHT TRACK JUST WANT TO VERIFY.

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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
8y

With an assignment (LOA), all parties remain - seller is Optionor, you are Optionee. You assign for a fee and are done.

With a sandwich, you perform with the seller as agreed initially. When you sub-lease, sub-option, you become the Optionor because you now have the right to Option to your TB.

Sandwiches are not for rookies. You are responsible for the performance of the TB and for the property condition for the whole term. If the TB doesn't pay, you have to. When the option expires, you are responsible for removing your TB, catching up all missed lease payments and getting the place back to current condition. 

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  • Vince Mayer
    Wholesaler · Arnold, MO · Member since 2013 · 348 posts · 183 votes
    8y

    @Victor Maxey Why do you need a Title company? From what you wrote, no one is buying a house.

    0Reply
  • Victor Maxey
    OP
    Richmond, VA · Member since 2017 · 35 posts · 4 votes
    8y

    @Vince Mayer I would need to have the money taken care of through escrow. Its a L/O with the option tho purchase. I have with the seller for $250K and $1800 and found a tenant buyer who want to L/O the house for $260K and $2000 a month.

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  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    8y

    @Russell Brazil

    Any thoughts? 

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    8y
    Originally posted by @John Thedford:

    @Russell Brazil

    Any thoughts? 

     This is an area of real estate I know very little about. Lease options, wrap mortgages, etc. I deal with mostly straight forward stuff

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  • Victor Maxey
    OP
    Richmond, VA · Member since 2017 · 35 posts · 4 votes
    8y

    @Russell Brazil @John Thedford  Not familiar with Sandwich lease options? I have an attorney looking into it now. Should be able to do it though

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  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    8y

    OP's concerns should be with legality. Bringing an end buyer MAY be brokering. 

    1Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    8y

    With an assignment (LOA), all parties remain - seller is Optionor, you are Optionee. You assign for a fee and are done.

    With a sandwich, you perform with the seller as agreed initially. When you sub-lease, sub-option, you become the Optionor because you now have the right to Option to your TB.

    Sandwiches are not for rookies. You are responsible for the performance of the TB and for the property condition for the whole term. If the TB doesn't pay, you have to. When the option expires, you are responsible for removing your TB, catching up all missed lease payments and getting the place back to current condition. 

    2Reply
  • Victor Maxey
    OP
    Richmond, VA · Member since 2017 · 35 posts · 4 votes
    8y

    @Steve Vaughan  Thanks. So assigning would be my best strategy because this is my first. So would I get my fee at signing the introduce the buyer and seller afterwards? Have a appointment with modifications of paperwork and escrow holdings for Sandwhich lease but if simply assigning it is easier I would rather use that route. And would I still need a closing attorney. And could I still use option fee amount as my assignment fee?

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  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    8y

    Check VA RE regs to make sure this is legal. Don't always rely on BP for LEGAL info. Go straight to the state or a GOOD attorney that knows the laws.

    0Reply
  • Victor Maxey
    OP
    Richmond, VA · Member since 2017 · 35 posts · 4 votes
    8y

    @John Thedford  I agree. The lawyers want to charge me a $150 consultation fee, and its not even confirmed if they will be knowledgeable on what I am speaking of. Waste of 150 if you ask me. I am seeing that you can get a real estate agent to take care of it. Thing is Ive already found a buyer highly qualified to assign my options over to.

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  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    8y

    @John Thedford is right.  You need state-specific legal advice.  In TX for instance, SLOs aren't legal in any form.  I'd pay $150 for knowledgeable legal advice if I was this lost any day of the week.  

    I'm just a what and why guy. Not how.  Free 'get deep in the weeds' advice about a state I know nothing about is not only thankless but opens me up to liability. 

    Follow some of @Brian Gibbons posts on LOAs and SLOs.  He's literally written thousands.  Good luck.

    1Reply
  • Steven Gesis
    Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes
    8y
    Originally posted by @Victor Maxey:

    I HAVE A BUYER IN PLACE WHO WANT THE HOUSE I HAVE UNDER L/O WITH SELLER. WILLING TO PUT DOWN 5% OF PURCHASE PRICE AND PAY MONTHLY RENT A MONTH. I PUSHED IT TO HIM FOR 10K MORE THAN I HAVE WITH THE SELLER. WOULD I REPLACE THE OWNERS NAME WITH MY NAME AND THE AMOUNTS BETWEEN ME AND T/B TO GET MY FEE UP FRONT AND CATCH THE 10K ON THE BACK END. THEN TURN ALL PAPERWORK INTO TITLE COMPANY TO TAKE CARE OF THE REST CORRECT? I BELIEVE IM ON THE RIGHT TRACK JUST WANT TO VERIFY.

     Sounds like maybe this is an assignment - I have limited knowledge in this space, I like straightforward deals. Are you a realtor or just "wholesaler" ? Sounds confusing - why is someone being pushed into something higher than what it is listed for ?? 

    0Reply
  • Brian Gibbons
    Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes
    8y
    Originally posted by @Steve Vaughan:

    @John Thedford is right.  You need state-specific legal advice.  In TX for instance, SLOs aren't legal in any form.  I'd pay $150 for knowledgeable legal advice if I was this lost any day of the week.  

    I'm just a what and why guy. Not how.  Free 'get deep in the weeds' advice about a state I know nothing about is not only thankless but opens me up to liability. 

    Follow some of @Brian Gibbons posts on LOAs and SLOs.  He's literally written thousands.  Good luck.

    Thanks Steve. I coach LOAs, VA md MD and DC I would get my RE license and list the house for a lease option sale with a 3 percent fee.

    0Reply
  • Victor Maxey
    OP
    Richmond, VA · Member since 2017 · 35 posts · 4 votes
    8y
    @StevenGesis I shot for SLO to get paid on the front end, middle and the back
    0Reply
  • Victor Maxey
    OP
    Richmond, VA · Member since 2017 · 35 posts · 4 votes
    8y
    Steven Gesis
    0Reply
  • Victor Maxey
    OP
    Richmond, VA · Member since 2017 · 35 posts · 4 votes
    8y
    Brian Gibbons I was told to get my RE attorney to modify my documents to fit Virginia laws and that I shouldn’t have a problem once in his hands
    0Reply
  • Shiloh LundahlPro Member
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    8y

    @Victor Maxey It is also important to take a look at the option to buy that you have. To see if it is exclusive or not. We do lease options in Arizona but they are exclusive to the person who we put into the property. If they try to sublease it without our consent the option becomes void.

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  • Brian Gibbons
    Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes
    8y

    You can have your attorney look over any document you wantattorneys don’t know the agency laws as far as acting as agent

    I wish more licensed agents would discuss how lease option works for Sellers and then have a listing that offers a lease option to a buyer and earns 3% for a commission

    0Reply
  • Chinmay J.
    Investor · Northern, VA · Member since 2016 · 1k+ posts · 904 votes
    8y
    Originally posted by @Victor Maxey:

    I HAVE A BUYER IN PLACE WHO WANT THE HOUSE I HAVE UNDER L/O WITH SELLER. WILLING TO PUT DOWN 5% OF PURCHASE PRICE AND PAY MONTHLY RENT A MONTH. I PUSHED IT TO HIM FOR 10K MORE THAN I HAVE WITH THE SELLER. WOULD I REPLACE THE OWNERS NAME WITH MY NAME AND THE AMOUNTS BETWEEN ME AND T/B TO GET MY FEE UP FRONT AND CATCH THE 10K ON THE BACK END. THEN TURN ALL PAPERWORK INTO TITLE COMPANY TO TAKE CARE OF THE REST CORRECT? I BELIEVE IM ON THE RIGHT TRACK JUST WANT TO VERIFY.

     Jesus dude... Do we need all caps? 

    0Reply
  • Victor Maxey
    OP
    Richmond, VA · Member since 2017 · 35 posts · 4 votes
    8y
    @chinmay j. How relevant is that to the conversation? Absolutely irrelevant.
    0Reply
  • Victor Maxey
    OP
    Richmond, VA · Member since 2017 · 35 posts · 4 votes
    8y
    @Chinmay J
    0Reply
  • Chinmay J.
    Investor · Northern, VA · Member since 2016 · 1k+ posts · 904 votes
    8y
    Originally posted by @Victor Maxey:

    @chinmay j. How relevant is that to the conversation? Absolutely irrelevant.

    When I saw all caps, my eyes glazed over the chunk of information you posted, and I didn't even bother to read it. Based on the title of the post, maybe it is related somehow to Lease Option. So..... what conversation? lol

    It's a common courtesy on the Internet, not to post in all caps, as it's considered yelling at someone. It's sad I have to explain this. 

    0Reply
  • Victor Maxey
    OP
    Richmond, VA · Member since 2017 · 35 posts · 4 votes
    8y
    @Chinmay J. Get a life. I didn’t ask you for unnecessary input.
    0Reply
  • Vince Mayer
    Wholesaler · Arnold, MO · Member since 2013 · 348 posts · 183 votes
    8y

    I have a "rent to own" buyer in Texas who contacted me via my website

    I do not do Lease Options in Texas and told her I would try to find someone who did.

    She is looking in the Murphy/Plano Area and has a down payment. PM me if you you can help her out.

    0Reply
  • Brian Gibbons
    Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes
    8y
    Originally posted by @Vince Mayer:

    I have a "rent to own" buyer in Texas who contacted me via my website

    I do not do Lease Options in Texas and told her I would try to find someone who did.

    She is looking in the Murphy/Plano Area and has a down payment. PM me if you you can help her out.

    Vince

     Contact @John Jackson

    I trained him in Lease option assignments, in 2002

    He’s the best in Texas.

    0Reply
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