Rent Credits from The Homeowner

[Michael T. 0]

Hello All;

 

I'm in the process of reading the manual and I'm a little bit confused about the topic of rent credits from the homeowner that are discussed on pg. 18-19 of the manual. Is there a benefit to the homeowner for giving rent credits. A little clarification please, because all I see is benefit for the investor and the potential TB.

 

Cheers; - Michael T.

[mpine 0]

The benefit to the homeowner is that if you give rent credits you are more likely to get a T/B who will purchase the property. You will also keep the property filled more often with a generous rent credit.

 

Best Wishes,

 

Michael Pine

:ph34r:

[Michael T. 0]

Hello;

 

Let me clarify, I understand giving rent credits to the potential TB, but as the investor, is the any benefit to the original homeowner giving me rent credits. Can I explain a benefit to the original homeowner for doing so, other than it may help in locating a future TB without cutting into investor profit.

 

Thankyou - Michael T.

[mpine 0]

I find it to be a harder sell and may scare away some homeowners. If you get the house a price that gives you your margins there is no need for it. of course if say they want a larger down payment from your T/B which cuts into your profits it would probably be a great negoatiating ploy and you may even get it for there getting a short term fix of cash.

 

Best wishes,

 

Michael Pine

:ph34r:

[Michael T. 0]

Thankyou MPine for the much appreciated input. I hadn't looked at it that way. All other comments and Ideas welcome.

 

Cheers; - Michael T.

[mpine 0]

My pleasure,

 

Welcome to the Naked Investor Community

 

Mike

:ph34r:

[MichaelC 160]

So, this is the thread of The Michael's, I see.....MT, MP, and MC. Well, boys, let me take a flyer at this one....

I tried to make it clear in my manual the pros and cons of rent credits in various positions throughout the lease purchase process. When trying to secure a deal with the homeowner I have often found this topic to be a bucket of ice water for the seller. Try as I might, when I start talking about and asking for any rent credit, they will usually see this as a losing proposition for them. In their eyes it is simply money out of their pocket and into mine.

So, rather than do battle and lose deals, I simply negotiate the best purchase price I can and lock it up for as long a period as I can. Cleaner and simpler and one less number for the homeowner to choke on.

Also, negotiating a higher price and thinking you are crafty by also negotiating a fat rent credit from the seller may just come back and bite you. How? What if you were anticipating, say, $15K in rent credits over your 24 month agreement with the seller, but your t/b suprised you and decided to exercise their option in month three of their deal with you? All those profits you were anticipating via rent credit paydown just went up in smoke.

Again, your best bet is to negotiate the best price you can with the seller and use the rent credits to your advantage with your tenant/buyers.