getting option fee

[profyt7 0]

Total noob question but i am curious when you collect the option fee when doing a CA do you need to close at a title company or once you do the assignment and get the fee you just move on to the next deal.

[MichaelC 160]

No need to involve a title company. Simply collect the assignment fee, make sure the paperwork is in order, and move on to your next deal.

[Jonathan RexfordFL 8]

Documentation is so important when the Tenant Buyer obtains a loan. If you are working with someone that is getting financing at some point, be sure you let them know that they will need to remove this money from there bank account and obtain a copy of the check for their records. If the money is a GIFT have them obtain a GIFT letter (can be supplied by Mortgage Broker or Lender) and a copy of there bank statement where the money was held. This will help them to document the Down payment (if the money is used for that) or to show a trail where the money has come from.

[ToddieM 0]

Kind of a followup to that,something which is confounding me...

First of all, does a bank honor a down payment, if that money isn't sitting in a bank account somewhere but had actually been cashed by you, the investor, months earlier?

Second, if you offer rent credits, if the original owner is keeping all the lease payment in order to meet their mortgage obligations, how again, can this money be claimed as part of the down payment by the TB?

[MichaelC 160]

Toddie, every lender will have their own rules and requirements about option money and rent credits. My experience is that option money can be used as part of a tenant/buyer's down payment since it was a hard money transaction and there is paperwork in place to verify it. If the lender isn't willing to go along with this, my advice to the t/b is to find another lender.

Rent credits, on the other hand, are rarely used as part of the down payment. Instead, they are a credit towards the purchase price. Meaning, if the purchase price of the property is $200K and the rent credits total $8K, then the purchase priced is reduced to $192K.