Month: January 2017

As a huge believer in the lease to purchase investment method, I’m adamant about writing the lease option forms and contracts in an ethical and straightforward manner. Even if you’re working on your first lease option deal, you have much more knowledge and information about the process than the typical tenant/buyer. After all, you’ve thoroughly studied the subject while this is most likely a new and novel opportunity to the first time buyer.

You will enhance your reputation, your business’s reputation, and the integrity of each deal when you make sure the buyer fully understands the legal structure of the deal and the obligations of all parties to the lease option and contracts. A good way of firmly impressing this on buyers is by starting each contract with a statement similar to:

This is a legally binding document. If you desire legal or tax advice regarding this Lease Agreement with Option for Purchase, including all addenda, and attached exhibits (collectively referred to below as this “Contract”), you are advised to consult with your attorney or tax adviser prior to signing this Contract.

Major Components of Lease Option Forms and Contracts

A lease option contract is made up of two agreements: a standard lease agreement and an option to purchase contract. These should be written as two separate documents.

The most important aspect of getting the deal correct is writing the lease option forms and contracts correctly. Here, I want to give you important tips on getting that paperwork correct. First and foremost, keep the lease and purchase option paperwork separate. If you don’t, there is a real probability that the legal system will grant the lessee equitable value in the property even if he or she doesn’t execute the lease option forms and contracts.

Details of Lease Option Forms and Contracts Count

While this is not an all-inclusive checklist of what needs to be included in lease option forms and contracts, it is a good beginning.

1. Make sure the property is fully described. Include the street address along with the legal description. Describe the house for the number of bedrooms, bathrooms, and any out buildings such as detached garages and sheds. If there are multiple lots or acreage involved, be sure to specifically include what the sale price includes.

Additionally, include appliances and fixtures that will or will not be part of the sale. These include stoves, refrigerators, air conditioners, and                   anything else that could later be contested as being part of the sale.

2. Be sure to include the full legal name of the landlord and tenants. If there are multiple landlords and/or tenants with a right to purchase, include all full legal names. Include the landlord’s current address, phone number, and other contact information.
3. Clearly state the cost of the house and the responsibility for any and all closing costs that both the buyer and seller must pay. Optionally (not recommended) you can record how the future sales price will be agreed upon.
4. Lease option forms and contracts need to clearly state the date the option expires. Use a clause similar to: “As of midnight on Date, Year, the purchase offer fully expires”. After that date, the seller has the right to sell to another buyer and the tenant could be required to move out. The length of the lease option typically lasts between one and three years but is fully negotiable between the landlord and tenant.
5. Lease option forms and contracts are based on what the tenant and landlord agree on. However, there is typically a security fee and an option fee involved. The security fee belongs in the lease paperwork and describes under what conditions it will be retained or returned. The option fee belongs in the purchase option agreement and should clearly state that it is not refundable if the tenant fails to execute the purchase and/or if it will apply towards the purchase if the purchase is completed.
6. While the lease option forms and contracts need to be kept clearly separate from the lease agreement, this paperwork must clearly include what happens if the tenant decides not to buy. In almost all cases, the option fee is forfeited (this is separate from the security fee). Other things that need to be addressed include any maintenance investments or improvement costs the tenant makes to the property.
7. The lease (separate from the purchase option contract) needs to detail rules that the landlord requires the tenant to abide by. These might include no pets, no loud music, no illegal activities, etc. Once the tenant/buyer completes the purchase they are free to use the property as they see fit but until then, it is still owned by the landlord.
8. One of the big advantages of the lease option forms and contracts is the landlord often passes on responsibility to the tenant for most maintenance and repairs. Typically, if a furnace burns out, a roof begins failing, or other major repairs are needed the landlord is still financially responsible. However, replacing faucets, tightening loose hardware, unplugging toilets, keeping the yard in good shape, and other small maintenance and repairs become the responsibility of the tenant. The degree of responsibility is fully negotiable and should be accurately recorded in the lease option forms and contracts.

Before writing the lease option forms and contracts, be sure you know the legal requirements in your state and local.

By Wendy Patton

For more than 30 years, I’ve used the Sandwich Lease Option System to earn myself and my students millions of dollars. From my experience, I know there is plenty of room and opportunity in the real estate investment market for everyone wanting to participate to find profitable deals. It’s because of that fact and my personal success that I share the Sandwich Lease Option System with others.

If you found this information useful, please visit again soon at wendypatton.com.

For more exclusive content, please subscribe to my RSS Feed and YouTube Channel.

What did you think of this article? Please leave a comment below.

You know you need to learn more about real estate investing strategies, marketing, financing, hiring contractors, and creating financial FREEDOM for your family…

You know you should be more excited about buying and selling property… but when you don’t even know what to do first or next, it takes all the joy out of why you got into real estate in the first place.

Whether you are highly experienced or still sitting on the sidelines contemplating your first real estate investment, you are aware of the solid up-side to investing in today’s rising economy. What’s holding many back is a lack of knowledge about how to make the best out of today’s real estate markets. The fastest way to quickly gain that knowledge and access my decades of success is by joining Wendy Patton’s Inner Circle.

What is Wendy Patton’s Inner Circle?

To be honest, Wendy Patton’s Inner Circle isn’t for everyone. Who it is for are those that are serious about advancing their investment business. Those that are motivated and want to gain the knowledge to move their career forward based on the best practices in the current market. And those wanting to jump start a new career (full time or part time).

Back in the day, real estate investing was more static than it is today. Today, it’s much more dynamic and you need insights into what is likely to be happening today and six months down the road.

Without a doubt, the lease option and especially the sandwich lease option are my first choices when investing. The sandwich lease option is the best way to gain control of a property without investing personal funds. It provides a passive income while a tenant leases the house and then delivers a significant profit when the purchase is made. Never pay the owner a lease option fee until you have a buyer. The lease option fee the buyer pays you will be larger than the fee you pay the seller. Instead of having out of pocket expenses, you make a profit right from the start by bringing the two together in the sandwich lease option.

However, Wendy Patton’s Inner Circle goes into details about all of the other investment techniques including rehabbing, landlording, turnkey rentals, seller financing (using other people’s money), etc. While the sandwich lease option works everywhere, other strategies can be best suited to your local real estate market or the market that you are investing in.

Among the unequaled reasons to invest in real estate are:

• A solid investment and tangible assets.
• Best way to leverage your finances.
• Timing of the market.
• Pay down and pay off investments to acquire wealth.
• Tax benefits.
• Cash flow.
• Financial creative opportunities.

All of these points and much much more are covered by joining Wendy Patton’s Inner Circle.

Wendy Patton’s Inner Circle Takes Your Investment Business to the Next Level

There’s really too much content in Wendy Patton’s Inner Circle to fully describe it all in a short article. But in a nutshell, Wendy Patton’s Inner Circle is a select group of motivated investors that have direct access to Wendy’s wealth of information and industry experience. Go beyond the books and get motivated with monthly Live Q & A webinar sessions with Wendy. Also, you’ll have the key to open a vault containing hours of tips and training from Wendy and other industry experts.

Wendy Patton’s Inner Circle goes beyond lease options to cover the many other aspects of real estate investing that may be more suitable to your needs and desires. Some of these include:

• Foreclosure investing
• REO
• Short sales
• Rehabs

The deals are out there right now. You should be highly excited about real estate investing today.  If you’re not excited, it might be because you don’t know the next step to take. You should be asking yourself these questions:

• What is holding you back?
• Why haven’t you increased the size of your professional network?
• Why is further education NOT a part of your budget?
• Why are you NOT investing in your own profession? – Time? – Money? – Knowledge? – FEAR?

The objective of real estate investing is not to have as much financial exposure to the market as you can afford. The objective is controlling as much real estate for the least money with the highest profit potential possible.

With that in mind, it’s important to understand as a real estate investor, you make your money when you buy – not when you sell. The cheapest property isn’t always the best deal. The best deal is the one with a solid profitable exit strategy. Sometimes that strategy is rehabbing and flipping, at other times it’s the lease option, and at other times it’s holding the property and renting it out. What’s important is that you have a high profit strategy BEFORE you buy!

Other valuable resources that you’ll gain access to include expert guest speakers and monthly Q&A calls where you can submit detailed questions that I answer real time. I also provide video training on a variety of real estate subjects. You also have access to archived Q&A calls as well as other valuable resources.

The Live Q & A Call with Wendy Patton is typically held on the third Wednesday of every month. Wendy answers the questions of Inner Circle Members, telling them the specific procedures and answers needed to get their job done.

Wendy Patton’s Inner Circle shows you the details of all these strategies and more. You’ll soon learn what types of properties are best suited for each strategy. You’ll be able to go into your next investment deal fully confident that you have the highest profit plan in place. Join NOW at: wendypatton.com/what-is-wendy-pattons-inner-circle.

By Wendy Patton

For more than 30 years, I’ve used the Sandwich Lease Options System to earn myself and my students millions of dollars. From my experience, I know there is plenty of room and opportunity in the real estate investment market for everyone wanting to participate to find profitable deals. It’s because of that fact and my personal success that I share the Sandwich Lease Option System with others.

If you found this information useful, please visit again soon at wendypatton.com.

For more exclusive content, please subscribe to my RSS Feed and YouTube Channel.

What did you think of this article? Please leave a comment below.

Generally, the answer to the question “are lease options legal in my state?” Is YES. However, as with many things in real estate, there are state and local regulations that apply.  For instance, recent legal changes in Texas (a few years back) shortened the lease option period to six months. Some investors stay with this short time period while others convert the agreement to a land contract once the buyer has proven that he or she will reliably make the payments.

The intent behind most state and federal laws is protecting consumers that are less knowledgeable about contract law than investors are. A few rare investors unethically approach lease options with the intent to collect the option fee and soon evict the tenant on a small contractual technicality (keeping the nonrefundable option fee). That is plain wrong.

As an investor, you should begin by seeking out tenant/buyers that are most likely to successfully complete the purchase. And then, working with them to make it happen.

The right answer to the question “are lease options legal in my state?” is approaching the transaction as a win-win or win-win-win (sandwich leases) proposition. You want the tenant to complete the purchase, pay you a handsome profit and then move on to the next deal with a fully satisfied tenant/buyer in place. Think “word-of-mouth advertising” here. Your next tenant/buyer may well be the brother-in-law of the buyer you just made happy.

In all scenarios, consult your state to determine what laws govern lease options. That’s the only way of accurately knowing if lease options are legal in your state and what regulations apply.

Are Lease Options Legal in My State? – Understanding the Difference From a Land Contract

Most investors are familiar with the concepts of both the lease option and the installment land contract (also called contract for deed) but may not be completely familiar with some of the legal differences. The main difference that triggers other legal implications is the installment land contract is a completed sale from the beginning. However, the lease option is not a sale until the option is exercised.

A land contract is similar to how many people purchase cars on contract. The buyer is the outright owner. They are able to use the house, modify the house, and do pretty much anything they want with the house. However, the lender retains title to the house as security (much the way a car lender retains title) until the loan is repaid in full.

The buyer (owner) on a land contract gains the tax benefits and acquires the appreciated value. As well as being solely responsible for maintenance and repairs.

Contrast this with a lease option. With the lease option, the seller retains full ownership until the option is exercised. Through the legal contracts, I typically transfer as much of the responsibility for the property as possible to the lessee as the potential owner. However, ultimately, I am still legally responsible for the property as the true owner. I am also entitled to the tax write offs and depreciation a well as responsible for paying the property taxes. With the land contract and when the buyer exercises the option to purchase, all of this transfers to the new owner.

Are Lease Options Legal In My State? – What Laws Might Apply

In the past, sellers where able to slightly overlap the land contract concept with the lease option. Over the years, the laws have changed and they do vary from state to state. I’m not an attorney and I do not intend to give legal advice. I’m only providing some insight from my many years of experience. You should seek competent legal advice before trying any of these investing techniques.

In years gone by, the overlap took the form of the lessee making higher than market rent payments against the lease option. The seller would then apply a portion of these payments towards the down payment. This resulted in a reduction in outstanding balance. Just because you call it a lease option, doesn’t make it a lease option in the court’s view.

Some courts have ruled that when there is a reduction in the outstanding balance, that the lessee has an equitable value in the property. When monthly payments stop or other problems come up, what would have been a relatively easy eviction under the lease option can become viewed by the court as a foreclosure when equity value is deemed to exist. Therefore overlapping the lease option and land contract concepts is never a good idea.

Both concepts work well and should be used on a case-by-case basis. Deciding which is the most appropriate should be based on your thorough analysis of the cash flow, tax issues, and how much work either is going to require of you. Once you gain a complete working knowledge of both concepts and understand the laws in your state, you can still combine the two in other ways such as buying on a land contract and selling on a lease option. Another version is buying on a lease option and selling on a sandwich lease option or buying on a land contract and renting out the property.

The bottom line is that the more you learn, the more you earn.

By Wendy Patton

For more than 30 years, I’ve used the Sandwich Lease Options System to earn myself and my students millions of dollars. From my experience, I know there is plenty of room and opportunity in the real estate investment market for everyone wanting to participate to find profitable deals. It’s because of that fact and my personal success that I share the Sandwich Lease Option System with others.

If you found this information useful, please visit again soon at wendypatton.com.

For more exclusive content, please subscribe to my RSS Feed and YouTube Channel.

What did you think of this article? Please leave a comment below.