MichaelC

Hi, Summer. The best way to assure you are dealing with a competent attorney, (or any professional for that matter), is to ask around for recommendations and referrals. Individuals who share your interests and techniques would be a good place to start. Perhaps some real estate clubs in your area would be a valuable source of info for this. Are we better off fending for ourselves? Depends upon how far you want to take that. When dealing with legal matters, tax matters, etc., I would need to say no. Learn to recognize when you need assistance and then get it. A few dollars spent today may end up saving you many thousands tomorrow. Let me just say I am not advocating calling an attorney for each and every deal you do, however. In fact, quite the opposite. You will find, Summer, that a routine lease purchase transaction should not require the services of an attorney. Are you in NM? I'm sorry to say I can't recommend an attorney. It's been a few years since I've been out that way, and NM is one of the most laid back States to work real estate deals. I all but never had a need for the services of an attorney. When I did have a question, my friend at the title company would ask the office attorney.

Yes, Joe, that is correct. You can set up payments through a third party and have the tenant/buyer start the process by making payment to that designated third party. From there, they follow payment instructions: $1000 to mortgage, $125 to homeowner, $100 to you, etc.

Setting up an escrow account can be handled in a number of ways. Perhaps the easiest is to agree with a homeowner on the choice of an escrow or title company. For a nominal fee, (shop around), you set up an account with instructions as to how to disperse the funds each month, and the company does the rest. I'm talking specifically about dispersment of funds here, not escrowing the title. That is probably best done with an attorney.

Agreed, Scott.

Not once, Scott, in about 150 deals. Anyone?

Hi, Scott. I'm delighted to see you here. You are obviously well read on the subject matter at hand and you have the experience of some number of deals under your belt. Your opinions and advice are most welcome here. We hope to hear from you frequently. The advice you posted above is dead on! I will say that in my experience the biggest difference between those who succeed in this business and those who don't is, first and foremost, effort. Location, capital reserves, lack of experience, credit worthiness, etc., are all minor players in the success we achieve in this business. Put down whatever it is you're doing, pick up the phone and begin calling FSBO's and FRBO's, and start doing! Market like hell and start doing! Stop making excuses, stop procrastinating, and start doing! It's called the Paralysis of Analysis and it is a success stopper. I agree with you when you write that many of the available courses and manuals contain similar information. What differs is the approach and how the information and material are presented. I like to thing my approach in The Naked Investor is very real world and practical. My goal with my manual and mentoring is to take the student from reading and studying about lease purchasing to doing lease purchasing. To get the student from studying and that damned Paralysis of Analysis, to taking action and doing as you described above, Scott. I am currently in the process of working out a number of site upgrades, additions, and improvements. I appreciated all the suggestions. The big factor is always time. The site will always be an ongoing work in progress and labor of love. As you know I currently have the Real Deals page up with examples of lease purchase deals. I would think this will help many newcomers get a feel for what is out there for them, what types of deals and profits can be had if they make the effort to find them and succeed. And for all you new folks I will gladly place your story, your deal on the Real Deals page. Pass it along with the details and a picture and you can share in the success of others who see your Real Deal and are inspired to create their own. As for your idea about getting together with some of the other members here and forming a type of support group, I'm all for it. If you folks organize it I will readily provide the board space and let you all do your thing. I agree that something like that will be an inspiration to others and help them to stop procrastinating and start moving and shaking. Lastly, Scott, you know you've won a copy of The Naked Investor, right ? However, you need to be a registered member. So, when you have the chance please do so, and then email or PM me with your mailing address and it's on the way. You say you have a number of courses already, but I believe there is always something to take away from whatever you study or read. An improved contract, perhaps one clause you didn't have previously. A new technique or idea, etc. I'm confident you'll enjoy the manual and put it to good use. Congratulations, Scott!

I do not collect a security deposit on top of the option consideration. That has always been my policy and preference. That doesn't mean it need be yours, though. I understand the reasoning behind collecting a security deposit. Some believe the argument could be made that buyers do not pay security deposits or damage deposits, tenants do. Thus, if someone does put down that deposit the argument could be made before a judge, (if it ever comes to that), that the person paid a security deposit and is a tenant with no equitable interest. Use your judgement and do what works for you and makes you comfortable.

That depends upon what your objectives are with the particular property. For example, with a lease purchase type deal, every tenant/buyer you speak with is going to want time. The more the better. If you offer a six month rent to own, Jack, you'll be as lonely as the Maytag repair man. Few will want to commit nonrefundable option money with the risk of having but a few months to obtain financing. On the other hand, if you are simply leasing a property, perhaps in an area that doesn't attract stability and is lower income, shorter term and month to month leases might be beneficial.

Ah, yes, wives..........got one myself . Actually, your better half is correct that college students and lease purchase deals aren't going to happen. Your typical college student is simply looking for a temporary residence. So, in all likelihood they are not going to be responding to your ads for Rent to Own properties. However, college town or not, there are many others in your community who do need permanent housing, and who will eagerly respond to your advertising for a chance to get into a property offered with creative terms. Try it and you'll see.

Absolutely, yes, you can have the tenant/buyer responsible for maintenance and repairs. As long as the parties involved agree to the terms, and those terms are not in conflict with local law, what the parties agree to is legal and a personal matter.

Tony, the cost will vary from State to State. Here in Florida is was about $100. Cheap insurance in my opinion. I read here a day or two ago that in Oregon, I believe, it was only $20 to form an LLC online. Visit your State's Secretary of State website and you should find all the info and forms there. Talking to an accountant certainly wouldn't be a bad thing. You can probably receive a quick and free answer about this if you have a previous relationship with one from doing taxes or whatever.

You've got mail.

Scott is right in that the lease can be a series of renewable leases. It needn't be, but it can be. In the eyes of the courts, there was a case, Oesterreich vs IRS, where it was ruled that a lease option agreement longer than sixty months may be considered an installment sale by the IRS. This can create a number of problems for the parties involved. So, the wise thing to do is to keep your deals less than sixty months, obviously, and you shouldn't have a problem. Keep in mind I am not an attorney, and my interpretation of this matter may not be entirely correct.

Jim, I have never heard that "fact" before. I wouldn't put much stock in what you were told, but I would certainly verify that information. I'd be most interested to hear back from you on this, too, because this would surprise me to no end if it were true. Methinks someone is pulling your leg. One other aside: when I call on an ad and it turns out to be another investor, I end the call pretty quickly. Investors don't go into business to make other investors money. There are exceptions, of course, but I'm speaking generally.

Every seller is different. One might frown, another might not. You won't know until you present your offer. Once you do that you'll be able to work out the details. Remember, you don't want to be the motivated buyer, (even though we are ). If a homeowner wants you to begin your agreement in, say, three weeks, you have a decision to make. Err on the side of caution when you're starting out, and you'll be around a while in this business.

No, Michael, he wasn't. I deleted his two posts about it, but he basically said that if my spelling was so horrible on the board, then my manual must be a worthless rag. So I have to assume he was aiming for me. Why? Who knows? It was almost 1:00AM. I suspect it was the tequila .

Yes, of course. You'll see that on the Rental Application the tenant/buyer is required to complete, their signature on it gives you permission to obtain a credit report. You must do so to minimize the risk and future problems that a bad tenant could cause. Of course, you will collect a fee to run that credit check, too.

First, yes, get going on finding your first deal. That will be much more time consuming that setting up your business entity. You don't say what State you're located. Generally, if you go to that State's Secretary of State website you will find information about corporations and LLC's. From personal experience I can tell you that creating an LLC online is all of about five minutes. As for which is best, there is no "one size fits all". There are a number of factors that would determine the answer. How you plan on running your business, your assets, what you're trying to accomplish, etc. For simple personal liability protection, most people opt for the LLC.

Jim, you're referring to the Right to Cancel clause. This is not something that should be inserted but, instead, it is a standard provision in the Agreement. At least is should be. The Agreement should also contain additional layers of protection such as an Early Termination clause to further limit your liability in the event you need to break the Agreement. Finally, you also want to be sure to give yourself a far enough out start up date before the lease begins. In other words, marketing time.

Hi, Jim. Yes, you can set up escrow in a number of ways. The most efficient would be to have the tenant/buyer make payment to the escrow company. The escrow company would have instructions for the disbursement of the funds from there. This much to the bank/lender, this much to the homeowner, this much to you, etc. Efficient and safe. If the taxes are included in the homeowners mortagage then that issue is covered, also. If not, the homeowner would be responsible for making that payment directly. This is easily enough verified if this is a concern.

I've always preferred to do it myself. It isn't difficult and I prefer the control over who lives in one of my properties. Especially when you're new, it is probably an unnecessary expense.

Tony, in my opinion the DOS clause is a minor concern that I don't give much thought to. From personal experience I have never had it happen to me in any deal I've been involved in. It seems to me there would need to be a remarkable and unlikely string of events for a lender to call a loan because said lender discovered the homeowner agreed to a lease with an option. Doesn't make any sense to me as banks and lenders do not, at all, want foreclosed properties in their portfolio.

Don't worry, munruss. I'm actually a pussycat. I just get ornery around full moons and Halloween.

I find it amusing that you first post anonymously and make a few smart ass comments about using the spell checker. No need to, dude, because my spelling is fine. Then, the next moment you are a registered member asking for free contracts from this same moron who you just said can't spell. You've just been given a week's vacation, ScottyBoy. Enjoy it. Then, come back next week with your tail between your legs and, if you grovel enough, I just may let you back on board. The BigBadAdmin .

Witchdr, a lease option, (and lease purchase and rent to own, for that matter), is simply that: a lease agreement which also gives the option, but not the obligation, to purchase the property within a certain time period assuming the specified conditions within the agreement are met. Until that option to purchase is exercised the agreement is simply a lease agreement and title never changes hands. A land contract, (also called an Installment Land contract, or Contract for Deed), is an agreement where the buyer makes payments in a manner similar to a mortgage. The buyer has equitable title. However, the seller holds legal title to the property until the contract is paid off. The buyer has equitable title, and, for all intents and purposes, is the owner of the property.