enero2k

Thanks Micheal for clearing that up.

Hi, I searched the forum and may have missed this topic-I apologize if I did. When offering a L/O involving taking over the sellers payments, how is a variable interest rate mortgage handled as the sellers payments would fluctuate from month to month? Especially now, when the rates are slowly rising? Thanks

Thanks Micheal, Will do if I find anyone.

Hi Micheal, I have'nt been on the forum for awhile and might have missed the latest update on the legal eagle (miamidirtlaw) but I noticed that he does'nt seem to be offering advice anywhere. Am I all wet or is the eagle still perched close by for advice?

Hey Tony, Thanks for the reply. I guess my real question is not how to go about getting the ok from the tenant buyer but whether the credit reporting agency requires any more from me before they will release the info to me as a private individual obtaining credit information on another private individual ( tenant/buyer). Say a reason for the information, business verification, proof of business etc. etc......

Hi all, Can anyone explain the steps for a private individual to pull a credit report on the tenant buyer and what is required from the major credit bureaus i.e. TransUninon, Equifax and Experian. I understand you will get a signed release from the tenant buyers but then what? Is that enough? Or do you need a business EIN or something more? Thanks for the assistance.

I am currently searching for a good tenant screening service. Any ideas or recomendations? Thanks for your time.

Thanks, Micheal for the response. I'll take your advice.

First, sorry for the long post. I am filing Articles of Organization for the State of Indiana for an LLC and would like to know if I don't anticipate hiring any employees would I need an EIN from the IRS or would it be better to just get the EIN even if not necessary. I have not sent the forms in yet. By the way, as far as filing, it is a no brainer for the most part and I, like others, was contemplating paying an online service close to $500 dollars for a "deluxe" (yeah, right!) version until I read one of Micheals posts suggesting to a member to think of doing it themselves. Of course, it does depend if you feel confident doing it and if not, by all means, pay an attorney (plug for you Pinkerton ) or pay a CPA. to file to do it. By the way also, speaking of the process being a no brainer- actually it was until I went the the IRS site and downloaded the instructions for filling out the EIN form. What a crock! Typical govspeak! I guess I forgot to download the instructions for reading the instructions. By far the most difficult part of the process was reading through the gobbly gook for filing the EIN form.

Thanks Micheal, That makes sense.

When you sign up a L/O to take over a sellers payments, are you taking over the insurance and property taxes too? Or are you just taking over the portion of the sellers monthly payment having to do with P and I? And if so, how do you determine the amount if the taxes and insurance are combined into one monthly payment by the mortgage company?

Hi, All Is it true that in order for a lease option to be binding that some money has to be given for the option? Even a token amount? Say $1.00.

James, An unmotivated seller will always laugh at any deal you come up with, however, a truly motivated seller will be more than happy for you to simply take over his or her payments. In the case of Silicon valley anyone looking to rent to own in a hgh priced area for whatever reason will be happy to pay above market rent for the easy terms and will be able to afford the payment. Their reason for leasing from you may not be financial but may be due to not being able to qualify for a mortgage conventionally due to credit problems. As far as the truly motivated seller he will have no choice but to give you control of the property for his payment only or else risk damaging his credit and losing his home. Just make sure to negotiate the longest possible term with the seller and offer no money up-front. His profit will come at closing. Appreciation will be what carries the profit in this deal. Just a thought.

The way to avoid or at least protect against that happening is to take as large as an up-front option payment as possible. Remember the option payment is forfieted if they move out or decide not to excercise thier option. People with more money invested in the lease option are less likely to abandon the property. Don't forget that for the most part people that are going to lease option from you are serious buyers not ordinary renters. They are more likely to treat the property as thier own. Another suggestion is to seriously do your due diligence when finding your tenant buyers and thouroughly check thier references before signing them up. Include in your contract that they are to give you a ninety day notice before either excercising thier option or moving out. And finally, begin now to advertise for tenant buyers. Even if you don't have any properties available now you will begin to steadily build a file of people anxious to own thier own homes though your lease option program. That way if your tenant buyers move out unexpectedly a few phone calls should have your next buyers in thier within days not months.

Thanks for the follow Michael!

I have a question regarding the closing on a lease purchase deal with a tenant buyer in place that excercises thier option with you. How does the closing work? From what I understand, you would sign all the documents and close with the seller first and then sign the documents with the tenant-buyer, transfer the funds from the tenant-buyer to escrow or a closing attorney or title company and they will distribute the funds to both the original seller and then cut a check to you for your profit. Is this the case or do you need to obtain the funding first? Thanks!