Contract Question

[MikeT/NC 5]

I have two people who have verbally agreed to my proposals that I'm supposed to meet tomorrow. One will be a sandwich L/O and the other a CA. I've got a question about the CA Option to purchase contract. In item number 3 (Option Consideration: What do I put as the amount when filling out the contract with the buyer. If I'm going to charge $3000 as option consideration and I put that in the blank space then it seems that the seller might balk and decide he wants part of that. Do you leave it blank until you assign it over to a tenant buyer? How does that work?

[MichaelC 160]

Mike, fill in the amount that you are paying the homeowner, (typically a buck or five), to make the option legally binding. The amount of option consideration you receive will be reflected on the CA Assignment Agreement.

[MikeT/NC 5]

Thanks MC. I went back and reread the agreements and I had about figured that out. Seems the smallest detail can throw you. Here's the two deals I'm working on.

House value= 140-150.

owner owes 76

owner wants 115

mortgage payment 660

will rent for 850-950

wants out to move into apartment to retire from yard and house upkeep.

Pretty nice front end,middle and back end profit if I can keep this deal afloat.

deal#2

house value 155

owes 150

mortgage payment 1000

owner is making two mortgage payments and said he may make one more on this house before he lets it go into foreclosure. I need to work fast before he walks away from it and the payments pile up.

[MichaelC 160]

Mike, deal one appears to be a solid choice for a sandwich lease, assuming those numbers are accurate. What's the length of the deal?

Deal two may work as a CA as long as that payment is current. You do not want to be involved in it if the homeowner is behind on payments. That's an invitation to trouble. What's the expected rent, and what length of lease is homeowner willing to do?