terateam 0 Report post Posted February 17, 2004 I have a couple of questions for you guys that have been doing lease option for over a year. 1.Will the lender ALWAYS allow the T/B credit for the option money? 2. Will the lender ALWAYs allow the T/B credit for the rent credit NO MATTER how much you allow ? Is 100% rent credit allowed ? Share this post Link to post Share on other sites
MichaelC 160 Report post Posted February 18, 2004 Hello, terateam, and welcome to The Naked Investor. Good questions.Will the lender ALWAYS allow the T/B credit for the option money?My personal experience has been that most lenders will consider option consideration as part of the tenant/buyers down payment. I don't know that we can use the word "ALWAYS", but it's a bet I'll take every time.Will the lender ALWAYs allow the T/B credit for the rent credit NO MATTER how much you allow ? Is 100% rent credit allowed ?Quite the opposite. Most lenders will not consider rent credits as part of any cash down payment. This doesn't mean the tenant/buyer is out of luck of being mislead with the rent credits. The agreement we use state specifically that rent credits will be credited toward the purchase price. If it turns out that a tenant/buyer is able to locate a lender who allows them to use the rent credits as a cash down payment, good for them. But, in the meantime, we must be careful not to make promises we can't keep. Share this post Link to post Share on other sites
terateam 0 Report post Posted February 18, 2004 Thanks Michael, That clears up my thinking a lot. This is "Don". I'm the one that has the guy moving to California from Texas and don't know what to do. I did e-mail you my phone number. Share this post Link to post Share on other sites
gregzilla 0 Report post Posted February 19, 2004 Michael, Are you saying that tenant/buyers may not actually "get" their rent credit credited toward the purchase? So lets say an agreement says they can buy the house for $200,000 and they had put down $5,000 option consideration and had been getting a $200/month rent credit for 1 year. They should have $7,400 equity. But now are you saying a lender my only see it as having $5,000 equity? What happens to the other $2,400? -Greg Share this post Link to post Share on other sites
-Tony- 0 Report post Posted February 19, 2004 gregzilla, NO! NO! okay 200k house 2.4 rc and 5k option rc comes off the price of the house period (he is saying it might not be seen as down payment). adjusted sale price 197.6k less the option money (which most likely be seen as a down payment) They still get the credit, but the bank may not see as "money down" hope it clarifies this Share this post Link to post Share on other sites
MichaelC 160 Report post Posted February 19, 2004 Greg, Tony is exactly right. The tenant/buyer is guaranteed to receive their total of agreed to rent credits. The question is in what form will they receive it? As a credit towards the purchase price? Or, as part of their down payment? That will ultimately be worked out between them and their chosen lender. Share this post Link to post Share on other sites
Joseph44 0 Report post Posted February 21, 2004 Hi, The rent credit is mute you take it off the price and nobody ever has to see it.There is also no hassle when going to settlment.Have a good day. Share this post Link to post Share on other sites
