How much time to find Tenant Buyer?

[R/E Possibilities 0]

1. Once I find a motivated seller that is interested in a lease option deal how much time should I allow to find a tenant buyer and allow them to move in? In other words how long should I lock up the contract.

 

2. During this time period is the seller legally committed to allow me this amount of time (after they sign the contract)? Or can the back out during the time period?

 

Thanks,

 

Ed

[MichaelC 160]

Ed, their is no "correct" amount of time you should receive when you are setting up your deals. Obviously, more marketing time is better, so you will always want to give yourself as much time as the homeowner is willing to allow you before your first payment is due.

For example, if I'm closing a deal today, I would want to begin my lease agreement on April 1. That will usually be sufficient to find a qualified tenant/buyer. This is for a median priced, bread and butter type property. If I'm working on a high end home, say $600K in an area where $250K is the median price, I would certainly lengthen that time frame.

All in all, Ed, take as much time as you can get, and remember that we have our cancellation clause should we be unable to find a tenant/buyer in the allotted time.

The homeowner, on the other hand, does not have the luxury of backing out of the deal, unless you specify so.

[Mark in St. Louis 0]

Michael,

 

What is it that prevents the seller from backing out? I know we have a contract, but contracts are broken all the time.

 

In a sandwich deal I know to always record a memorandum of option. That definitely gives the contract some additional teeth.

 

But what about in a CA type deal. Since we don't record a Memorandum of Option, I don't see that there is really anything to keep the seller from attempting to list the home or sell it on their own. I mean sure, they would be violating a contract....but I would have to take legal action to get any restitution.

 

Just curious about your thoughts.

 

Thanks!

[MichaelC 160]

Mark, most of these homeowners that we do these types of deals with have neither the interest nor the know how to put a deal together on their own. My experience has been they seem us as an ally in helping them with the present predicatment they find themselves in. That said, it is unlikely that they will sabotage our efforts at helping them.

I make a point of telling them that I am working with them. I am not competing against them. So, I tell them that I cannot accept their advertising the property or trying to cut a deal on their own. In most every case this is already understood and they shake their heads in agreement.

Now, does this mean that you won't have the occasional wise guy who tries something anyway? Of course not. There's always one or two along the way. We do have a signed contract and if a homeowner should knowingly break it, our decision is whether or not we want to push it legally. I don't think you'll find this to be anything more than a rare occurence, Mark.