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Makrita
real estate investor
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Lease / Option question
Monday, February 26 2007 08:30 AM
Purchased your system, Huge Profits/Low Risk with Lease Options, and had a couple of questions I don't see answered in your book (or I just missed that page)??
- You don't mention qualifying the tenant/buyer candidates. I assume you run a credit check on them before I go ahead w/them. If so, do I do that before I spend one minute of my time with them? And how low of a credit score should I consider before I 'kick them out of the system'?
- I currently don't have houses, but am marketing my services toward the 'customers/tenant/buyers' (i.e. they pick area and type of house, then I go out and find/bid). Obviously I qualify what size house they could afford, etc. This seems like the harder way to go, any suggestions?
- In your system, you don't mention how you determine the 'option price'? Can you elaborate? I was under the impression you try to get enough to cover closing costs - but am finding people typically don't have more than $2k or $3k to put down. Is there a formula?
Thanks.
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Randy Hughes
Master Advisor-39 years of experience
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Re:Lease / Option question
Monday, February 26 2007 11:24 AM
You don't mention qualifying the tenant/buyer candidates. I assume you run a credit check on them before I go ahead w/them. YES, DEFINITELY! If so, do I do that before I spend one minute of my time with them? YES, And how low of a credit score should I consider before I 'kick them out of the system'? THIS IS YOUR PERSONAL DECISION BUT I WOULD NOT WORK WITH ANYONE BELOW 600 AS IT WILL BE NEXT TO IMPOSSIBLE FOR THEM TO QUALIFY FOR A HOME LOAN WITHIN ONE YEAR.
- I currently don't have houses, but am marketing my services toward the 'customers/tenant/buyers' (i.e. they pick area and type of house, then I go out and find/bid). Obviously I qualify what size house they could afford, etc. This seems like the harder way to go, any suggestions? SO, YOU WOULD FIND THE HOUSE, BUY IT AND THEN RENT TO THEM WITH AN OPTION TO BUY? YES, THIS IS ONE WAY AND IS VERY TYPICAL. ANOTHER WAY IS FOR YOU TO LEASE-OPTION THE HOUSE YOURSELF FROM THE CURRENT OWNER AND THEN LEASE-OPTION (FOR A HIGHER PRICE) TO YOUR PROSPECT.
- In your system, you don't mention how you determine the 'option price'? Can you elaborate? I was under the impression you try to get enough to cover closing costs - but am finding people typically don't have more than $2k or $3k to put down. Is there a formula?
YOU SAY ABOVE "OPTION PRICE" AND I AM GOING TO ASSUME YOU MEAN "OPTION CONSIDERATION" OR THE AMOUNT OF MONEY THEY NEED TO GET IN TO THE HOUSE (NOT THE SALES PRICE OF THE HOUSE).
NO, FORMULA, BUT IT IS BEST TO NOT QUOTE THE OPTION CONSIDERATION REQUIRED...JUST ASK "HOW MUCH THEY HAVE TO PUT DOWN" AND IF THE ANSWER IS AGREEABLE TO YOU...THEN DO THE DEAL.
Randy Hughes
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Makrita
real estate investor
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Re:Re:Lease / Option question
Monday, February 26 2007 12:54 PM
One last question (ok for now, it'll be the last one)... Do you collect security deposit on the rental contract separate from the option consideration?
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Randy Hughes
Master Advisor-39 years of experience
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Re:Re:Re:Lease / Option question
Monday, February 26 2007 03:20 PM
Makrita,
If i collect $3,000 (for example) as total option consideration, i show in the lease a typical damage deposit...say...1,000.00. Since we always use two different contracts for these deals, the lease will show a damage deposit of 1,000 and the option contract will show 3,000 with a referance to 1,000 of it being considered a damage deposit IF the option is not exercised. the balance of 2,000 will be retained by the Optionor (you).
Did you receive the forms disc along with your purchase from us? if so, the Option Contract form explains all of this.
Randy Hughes
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