Guest Diver Report post Posted September 2, 2008 OK I know they can't do this but other area investors push to home owners that the buyer has to buy after the lease. How do they word their agreements to this? Sellers like to here this true or not and the other investors are doing better than me. Any ideas please. Diver Share this post Link to post Share on other sites
GetErDun 0 Report post Posted September 2, 2008 OK I know they can't do this but other area investors push to home owners that the buyer has to buy after the lease. How do they word their agreements to this? Sellers like to here this true or not and the other investors are doing better than me. Any ideas please. Diver I suppose one could always lie to do better in business. Sooner or later, these "investors" will get sued, and lose when a TB does not buy the house. Of course the sellers want to hear what they want to hear, but as a professional, we should only, I repeat only be telling them what is true. Are fines/jail time worth that extra sale? I say no. There are enough deals to be had without lying for them. I think you already knew that. Share this post Link to post Share on other sites
MichaelC 160 Report post Posted September 2, 2008 Diver, GetErDun is right on. I know some folks will argue that a lease purchase differs from a lease option in that the former requires the tenant to purchase the property as specified in the agreement. Fine and well, and I know some naive homeowners who buy into this. So it isn't surprising that some less than ethical "investors" are preying on the ignorant.But in reality, there is no difference between the two agreements. I say this because how does a homeowner get a tenant/buyer to buy their property if for whatever reason the t/b decides they don't want to or they can't? Take 'em to court? Great. Now the homeowner has a judgement against the tenant, but a house that remains unsold. . .and they're out the time and money for their troubles.Moral of the story: educate these folks with the facts and many will end up giving you their business as a result. Share this post Link to post Share on other sites
West Coast Girl 1 Report post Posted September 3, 2008 Diver, GetErDun is right on. I know some folks will argue that a lease purchase differs from a lease option in that the former requires the tenant to purchase the property as specified in the agreement. Fine and well, and I know some naive homeowners who buy into this. So it isn't surprising that some less than ethical "investors" are preying on the ignorant.But in reality, there is no difference between the two agreements. I say this because how does a homeowner get a tenant/buyer to buy their property if for whatever reason the t/b decides they don't want to or they can't? Take 'em to court? Great. Now the homeowner has a judgement against the tenant, but a house that remains unsold. . .and they're out the time and money for their troubles.Moral of the story: educate these folks with the facts and many will end up giving you their business as a result. The ONLY way I know that YOU can make a T/B buy at the end of the lease is what's called a Contract for Deed! However, they need to put up more than just 3-5% of the purchase price, and they also pay higher than fair rental market as well, which constitutes them as having an equitable interest in the property! Again, however, if they don't perform at the end of their lease/option, then the seller has no option than to start the foreclosure process if they don't buy as agreed upon! However, this technique has its pros and cons! The Pros: You make more money upfront and have a solid buyer at the end of the term! In addition, they are required TO BUY! The Cons: If they don't or renege, you are now FORCED to make the buyer buy at the end of the lease/option period, or are now having to deal with a foreclosure issue because THEY (the potential buyer) has an equitable position in the property and the law now resides with them on this issue! On the other hand, if it's just a lease to purchase agreement, then it's easier to evict the potential/buyer. However, this is not the reason why the seller got involved with the deal in the fist place. They wanted their home sold at the end of say, 3 years, end of story! WCG P.S. Don't get the these techniques confused with C.A's (Contract of Assignments) or you will be in deep trouble, as none of these techniques apply to the C.A.s (Contract of Assignments) which are discussed here at length at this forum! Share this post Link to post Share on other sites
Guest Diver Report post Posted October 5, 2008 OK I posted on Wendy Pattens site about LO vs LP and here's the reply. they are definitely different. The lease purchase is a commitment to purchase at a later date. The lease option is only an option to purchase without an obligation.If you back out of a lease purchase you are breaking a contract. The seller could sue you for performace. Granted the chances are low but it is still a legal contract. You should only do a lease purchase if you intend to follow thru. It's an ethical issue that affects all potential lease option & lease purchase investors.I only do lease purchases in sellers markets with a really solid deal. I definitely wouldn't do one in a declining market with a short lease period.The lease purchase is more secure for the seller and therefore preferable for them. However, as an investor you are better off doing the lease option. The lease option gives you the ability to pass on the purchase without violating a contract should the deal turn sour later. Wendy any comments? Diver Share this post Link to post Share on other sites
<Steve> 82 Report post Posted October 6, 2008 LO or LP one in the same. You can sue all day, but you cannot make someone buy anything. Share this post Link to post Share on other sites
MichaelC 160 Report post Posted October 6, 2008 What Wendy wrote is correct from a definition and legal standpoint. What Steve wrote is correct in the real world. Share this post Link to post Share on other sites
GetSmart 0 Report post Posted October 10, 2008 I want to comment on this one. You have to look at it like this. When you have a tenant that breaks a lease they still owe you the remainder of the lease. In NC, if you pursue the judgment, the court will garnish their payments until they are paid in full, so if a tenant breaks a lease purchase you can go after the tenant and win a judgment. You might not get it all at once, but you will get yours in the form of a monthly payment or force them to sell off items worth a certain amount. Is that something you want to do? Most certainly not, and I don't think that a lease purchase should be used to convince a seller to do business but a strategy to get a tenant to perform especially if you provide some type of credit repair. We are looking into providing credit repair for tenant buyers that are serious about buying one of our homes. Plus it is my understanding that with a lease purchase some lenders are willing to refinance anytime before the lease ends. Share this post Link to post Share on other sites
velozatdigg 0 Report post Posted October 12, 2008 There is no way to guarantee the buyer/tenant will perform on the contract. But with a Lease Purchase they have contracted to purchase the property, so they may be more likely to do so. Share this post Link to post Share on other sites
<Steve> 82 Report post Posted October 13, 2008 We are looking into providing credit repair for tenant buyers that are serious about buying one of our homes.This scares me, especially now. If I offer a credit service and the t/b cannot get financed are they going to come back to me and ask why my credit repair service didn't work? Then say, "I want my money back." The best credit repair is simply pay your debt. Which debt first? Contact a lender and let them review your situation Mr. t/b, is what I say. Share this post Link to post Share on other sites
Guest Diver Report post Posted October 13, 2008 Steve, I offer credit counseling to but I don't do it. My 2 Mortgage Brokers do it as part of their service. I like to see if they're making any progress and if they're not I'd be inclined to inform my seller and leave it up to them if they want to extend the LO or not if it comes to that. Diver Share this post Link to post Share on other sites
MichaelC 160 Report post Posted October 13, 2008 We are looking into providing credit repair for tenant buyers that are serious about buying one of our homes.This scares me, especially now. If I offer a credit service and the t/b cannot get financed are they going to come back to me and ask why my credit repair service didn't work? Then say, "I want my money back." The best credit repair is simply pay your debt. Which debt first? Contact a lender and let them review your situation Mr. t/b, is what I say.I agree. The more involved you are with the financing of the t/b's, the more likely you are to be blamed if things don't go according to plan. As a whole, I am very skeptical about the credit repair industry. Share this post Link to post Share on other sites
