lease to option to buy (by Rich [NC]) Feb 9, 2009 11:51 AM
lease to option to buy (by Virden [OH]) Feb 9, 2009 12:01 PM
lease to option to buy (by Lynda [TX]) Feb 10, 2009 3:51 PM
lease to option to buy (by Lynda [TX]) Feb 10, 2009 3:51 PM
lease to option to buy (by Lynda [TX]) Feb 10, 2009 4:06 PM
lease to option to buy (by Rich [NC]) Posted on: Feb 9, 2009 11:51 AM Message:
State Specific Question About: NORTH CAROLINA (NC)
First time leasing my home in NC i have someone that wants a two year lease with option to buy.We did agree on a price.What are good leases that I can purchase and any helpful suggestions.
Thanks,rich --69.40.xx.xxx |
lease to option to buy (by Virden [OH]) Posted on: Feb 9, 2009 12:01 PM Message:
First get a renter, then consider the option to purchase, everyone here will tell you not to do this because laws have proven when someone acquires more than %20 interest in a investment they are now vested as a partner, be very, very careful how you word this, in fact just make a 1 year lease with automatic rollover one occurrence to protect the tenant from a rent increase and then pursue the purchase agreement in the 22nd month for the price agreed on, if you give them interest in your property you or your heirs may never get it back when they default on the combined contract. --76.241.xxx.xx |
lease to option to buy (by Lynda [TX]) Posted on: Feb 10, 2009 3:51 PM Message:
Rich, this is usually a BAD idea. I have done this 3x and all turned out bad. If you are going to do it--do it right! First don't mix apples and oranges. This operation calls for 2 dif sets of paperwork. One is a regular lease (for 1 year!) that covers the behavior of the tenants while they are residents in the property. The 2nd is a Purchase Option, wherein the tenants PURCHASE the rights to buy the property(at a fixed price, and within a fixed time) IF they fullfill all the agreements. What the tenant buys with this Option is TIME and EXCLUSIVITY! They pay a price for this priviledge. It is called the "Option Fee" and is NEVER called a downpayment or a deposit! This is a non-refundible FEE.
So as to the Lease:
IF the tenant obeys all the the clauses of the lease, pays on time etc, then you can renew that lease for another year. Don't do a 2 year lease. If they turn out to be rotten tenants in the first year you have a much better change of getting them out of your property than if they have a 2yr contract.
So as to the Purchase Option:
The tenant/buyers pay you a FEE of several thousand dollars, and this buys them sole rights to purchase your property within the 2 year time limit, it gets them a fix price for the property that you cannot raise on them even if the property appreciates, and it buys them TIME to fix credit problems and create a new good payment history--with you. You can attest to this good history to the bank they are re --140.140.xx.x |
lease to option to buy (by Lynda [TX]) Posted on: Feb 10, 2009 3:51 PM Message:
Rich, this is usually a BAD idea. I have done this 3x and all turned out bad. If you are going to do it--do it right! First don't mix apples and oranges. This operation calls for 2 dif sets of paperwork. One is a regular lease (for 1 year!) that covers the behavior of the tenants while they are residents in the property. The 2nd is a Purchase Option, wherein the tenants PURCHASE the rights to buy the property(at a fixed price, and within a fixed time) IF they fullfill all the agreements. What the tenant buys with this Option is TIME and EXCLUSIVITY! They pay a price for this priviledge. It is called the "Option Fee" and is NEVER called a downpayment or a deposit! This is a non-refundible FEE.
So as to the Lease:
IF the tenant obeys all the the clauses of the lease, pays on time etc, then you can renew that lease for another year. Don't do a 2 year lease. If they turn out to be rotten tenants in the first year you have a much better change of getting them out of your property than if they have a 2yr contract.
So as to the Purchase Option:
The tenant/buyers pay you a FEE of several thousand dollars, and this buys them sole rights to purchase your property within the 2 year time limit, it gets them a fix price for the property that you cannot raise on them even if the property appreciates, and it buys them TIME to fix credit problems and create a new good payment history--with you. You can attest to this good history to the bank they are re --140.140.xx.x |
lease to option to buy (by Lynda [TX]) Posted on: Feb 10, 2009 4:06 PM Message:
What on earth happened? Anyway...At the end of the 2 yrs if everything went right, they have cleaned up their credit, applied for a mortgage for the purchase. You CAN if you choose, fund them an amount of every month's rent that they paid on time--and they can use this as additional downpayment for the loan (e.g. if they rented for 2 yrs and paid every month on time you could give them $50-100/mo at the closing table/$1200-2400). The more they can put down, the less amt they have to borrow.
NEVER agree to 'be the bank' and sell to them on a Contract for Deed! That way they have an equity interest in your property, and if they fail to make payments to you on the property, you will have to actually foreclose on them to get your own house back! That is a long and expensive procedure for YOU.
BEST way to handle this is to give the tenant a verbal that the house is theirs IF they pay all their rent on time, clean up their credit, save for a downpayment (to the BANK), and when they finally get the mortgage--you just sell them the house. That way the onus is on them to do all the right stuff and position themselves to actually buy. No contracts are involved, no courts, no lawyers. Lease Options usually DON'T work because tenants continue to make bad money jugements, don't save for the deposit, can't get qualified, and sometimes can't even manage to pay the rent on the Lease portion of the action! --140.140.xx.x |
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