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Backend Profit

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Let's say you set up a SLO with a seller with a purchase price of $300,000 and a rent payment of $2,000/month.

 

Let's assume your agreement with the T/b is as follwos:

Purchase price: $325,000

Rent: $2,000/month

Rent credit: 50%

$5,000 received as option money.

 

After a year the T'b decides to exercise the option to purchse.

 

After the T/b has arranged financing to purchase the property, a closing date will be scheduled. You go to the closing with any/all contracts you had signed for this deal. Most likely a double close will occur (dictated by your state/county). You will sit with the seller and exercise your option to purchase the home for $300,000 using the T/b's financing. You will then sit with the T/b and they will exercise their option to purchase at $308,000 [$325,000 - $5,000(option) - $12,000(rent credit)].

 

You will receive a check for the difference ($8,000) from whoever is handling the close (title comapny).

 

That's about it.

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Jeff,

 

Do you record an affadavit to protect your 8k?

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Jeff,

 

Do you record an affadavit to protect your 8k?

I'm not Jeff, but I'll play him today...if you are in the deal for any length of time, a sandwich lease for example, you should definitely record a memo of option to protect your interest in the deal.

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