gt4329b 0 Report post Posted January 12, 2007 I love the SLO strategy -- it does, indeed, seem like a win-win-win for all parties. However, what I can't quite get my head around (and at least one attorney that I've talked to can't either -- although she was a bit out of her area of expertise) are the down-in-the-dirt mechanics of how a SLO closing works. A textbook example to work with: Joe Seller, Jack Investor, and Jim Buyer.Jack Investor has the following terms locked up with Joe Seller:- 3-year lease term- $1100/mo rent- option purchase price of $120000 Jack Investor has found a tenant/buyer, Jim Buyer. Jim's terms with Jack:- 1-year lease term- $1300/mo rent- option purchase price of $138000 Now -- whenever Jim is ready to buy, what are the nitty-gritty details of the closing? I.e., does Jack ever actually *own* the property as part of the transaction? If not, how does Jack collect on the 18k spread that he's managed to create? Put another way, what are the instructions/explanation I would give to a closing attorney for making this happen (yes, I wouldn't ever use an attorney that wasn't already knowledgeable about such a close, but I'm asking it that way for the purposes of understanding the transaction). Is the closing in essence just an assignment of Jack Investor's position in the T/B contract to Joe Seller? Thanks in advance! Share this post Link to post Share on other sites
tara.lancaster 0 Report post Posted January 13, 2007 Good question. That has been playing over in my head all day long. I was also wondering if the tenant/buyer gives the investor $5,000 in option money then it's time to exercise their option to purchase, how will the tenant/buyer benefit if they will have to come up with a larger down payment in order to close the deal? Share this post Link to post Share on other sites
MichaelC 160 Report post Posted January 13, 2007 emthree, good question but, unfortunately, one that I am going to give a vague answer to. In the scenario you describe where the t/b is going to exercise their option to purchase, I have found that how the closing is handled is very much determined by the people involved, the location, etc. Different attorneys and title companies will get to the same end but by using different methods. I have done double closings, and various types of assignments to get the deal closed as per the terms of the deal.My best advise to you is to remember that these folks handling the transaction work for you. You are paying them and you call the shots. Meaning stay in control of the deal and advise those working for you what you want to accomplish. If everyone is on the same page, everyone will cooperate to get the deal done. And should you run into any attorney or title company who tries to tell you it can't be done, or it's illegal, or some such nonsense, take your business elsewhere!Two related threads on this very topic here, and here. Share this post Link to post Share on other sites
gt4329b 0 Report post Posted January 16, 2007 Michael -- understood. It makes sense that every closing is going to have it's own structure, but are there any particular closings that you see more than others? Share this post Link to post Share on other sites
MichaelC 160 Report post Posted January 17, 2007 Michael -- understood. It makes sense that every closing is going to have it's own structure, but are there any particular closings that you see more than others?I can't say I've noticed any trend. Again, it's whatever will get the deal done while satisfying all involved. Share this post Link to post Share on other sites
