Lp Vs Lo

[Sold ! 0]

Do you think it would it be more convincing to the seller and would they more readily say "yes" if you were doing a Lease Purchase (as opposed to a Lease Option), whether it's a sandwich deal or a CA?

 

Does anybody here position it this way?

 

Afetr all, an LP is a guaranteed sale, an LO is not. A seller with a lot of equity isn't going to go for the "iffy" option as easily as they might for the LP, in my opinion (with just one cup of coffee this morning......

 

Thoughts?

[MichaelC 160]

Rich, I love ya guy, but I disagree when you say a lease purchase is a guaranteed sale. I use the terms lease purchase and lease option interchangeably. That's because one can never guarantee a sale will take place at some designated time in the future.

For example, I do a lease purchase with you on your residence. It is understood that I am obligated to buy your property at some time within the next 12 months. My intentions are to do just that. Well, wouldn't you know it? My industry got hit hard by an unexpected downturn in the economy. I lost my job. My wife left me. I'm unable to cope. I start drinking heavy. My personal finances and credit are so terrible I can't borrow a cup of sugar.

Now, I ask you Mr. Homeowner, what are you going to do to me? File legal action? For what purpose? What do you hope to do? I can't buy your property. I can't get financing. And even if you were so inclined to sue, and even if you won, you'd have a judgement worth absolutely nothing. Hence, a lease purchase is always, in reality, a lease with an option to buy. At least in The World According to Carbonare. My take on things, Rich.

[Sold ! 0]

Well, there's the answer I was looking for....thanks !

 

Just one question, though, Michael........you said:

I start drinking heavy.

 

Ummmmmmmmmmmmmm ......where's the problem?

 

 

Happy New Year !

[bartendjoe 0]

Just one question, though, Michael........you said: 

I start drinking heavy.

 

Ummmmmmmmmmmmmm ......where's the problem?

 

 

Happy New Year !

<{POST_SNAPBACK}>

 

I think this may be the magazine for you. I know I enjoy it.

[Adam King (MI) 1]

I am starting to hear about more people being screwed on lease purchases because judges are seeing them as equitable interest. In my opinion, I am starting to stay away from using purchase agreements with my LOs. I am also trying to help the issue with rent credits as not being equitable interest. I.e. being credited and not "given" as credit. This means no more "extra" rent to go toward the sale price. Although I have never done this I know there's a few gurus out there that tell you to. I won't name any names.

 

There's a lot of people trying to come down on investors overall because there's a lot of us out there not doing it right. Holding when they cannot afford to. This comes with serious consequences.

 

Stick with MC's stuff and have your attorney make sure you use the right paperwork. Nice and simple.

 

One more quick point. Don't try to reinvent the wheel. There's just too many wrong directions you can go with improper guidance.

Regards,

Adam

[MichaelC 160]

I think this may be the magazine for you.  I know I enjoy it.

<{POST_SNAPBACK}>

Now I know why you're bartendjoe.

 

Adam, good post...all of it. I agree. We can get too smart for our own good if we're not careful. Stick to the basics, use common sense, full disclosure, and honesty. In other words, old fashioned ethics.

[Sold ! 0]

I am starting to hear about more people being screwed on lease purchases because judges are seeing them as equitable interest.  In my opinion, I am starting to stay away from using purchase agreements with my LOs.

So what does this mean, exactly? You are keeping the back end open as an OPTION and (if a CA) assigning the option rather than a P&S agreement?

 

 

I am also trying to help the issue with rent credits as not being equitable interest.  I.e. being credited and not "given" as credit.  This means no more "extra" rent to go toward the sale price.  Although I have never done this I know there's a few gurus out there that tell you to.  I won't name any names.

So, you don't give rent credits towards the purchase at all? No credits to the TB?

There's a lot of people trying to come down on investors overall because there's a lot of us out there not doing it right.  Holding when they cannot afford to.  This comes with serious consequences.

Are you saying that SLO's are not the way to go unless you have adequate money behind it all to make the payments if you have a flaky TB? CA's are the answer to people starting on limited funds?

 

 

One more quick point.  Don't try to reinvent the wheel.  There's just too many wrong directions you can go with improper guidance. 

Regards,

Adam

<{POST_SNAPBACK}>

 

Good point !