Lease Option Coaching FAQ
One pleasure I have is answering specific lease option coaching FAQ for my students. Now, I’m sharing with everyone so that you get a glimpse of what is available in my lease option coaching program.
These lease option coaching FAQ are specific to wholesale deals. This is a situation where the lease option investor is wholesaling to a rehabber.
I appreciate your prompt and detailed responses to questions. This is the question I have on my mind now:
Q# 1. I bought a fixer for $105,000 and found a rehabber that is interested at $142,000. The rehabber knows what I paid and wants me to come down in price but I really think it is worth the $142,000 that caught his attention. I don’t want him to feel cheated but this is how I make my living. What do you think I should do?
A# 1. Never feel guilty when you are making a ton of money if your investor wants to buy a home from you – even if you make more then he or she does. Rehabbers know their numbers. Let them decide what works. If $142,000 works for them, – TAKE IT! You deserve it – because you found the good deal in the first place.
Q #2. I haven’t closed on the deal yet but have closing scheduled for this Thursday. I do have a written and signed purchase offer. Any concern that my buyer is aware of the deal I have and will try to move in on it?
A# 2. There shouldn’t be as long as you have a signed agreement. Of course, every contract can be written differently. Look your contract over closely to make sure there aren’t any escape clauses for the seller such as being able to accept a higher offer.
Q# 3. I had an inspection performed that turned up a few minor issues but nothing that I consider serious when the house is going to be remodeled. Do I need to turn over the inspection report to the rehabber?
A# 3. That depends on state law. In most states, you do have to disclose major deficiencies. However, it’s also the responsibility of your end-buyer to have his own inspection done for his own satisfaction. The one thing about wholesaling to rehabbers is that it is a small community of investors. Assuming you want to sell to him again in the future, it’s not a good idea to hand him a bunch of undisclosed problems that you were aware of.
Q# 4. The house is over filled with stuff. Literally, the house is used like a storage unit and stacked top to bottom with everything imaginable. The inspector that went through the house didn’t say anything but it seems to me that it made a thorough inspect difficult. If the rehab buyer wants another inspection, whose responsibility will it be to clean the house out?
A# 4. I’d start with the original seller. If you don’t have a clause requiring the house to be cleaned out, try adding it before closing. Also, look at the contract you have with your wholesale buyer. Is there a clause requiring the house be cleaned out? You might be responsible or it might be a point that needs further negotiation.
Q# 5. What if the homeowner tells me that he “needs” $5k upfront in order to even begin moving? What should I do in that scenario?
A #5. I would put it with a title company anyway to protect yourself (you’ll at least have a lien on the house). Make it your lease option fee and part of the purchase. BUT don’t pay it until the owner has completed any changes or cleaned out the house or finished any other clauses in the contract.
Sometimes, I try to be a little light hearted with lease option coaching FAQ but still provide valid answers.
Q #6. Is “consideration” the same as “earnest money deposit”, for some reason I was thinking they were different? If they’re the same, I wouldn’t mind doing a promissory note. I have no idea how the promissory note should read.
A#6. Yes and no. An earnest money deposit is definitely consideration, BUT consideration can also be other things of value. It can be a promissory note, a car, silver, etc. (heck, in Michigan it can be “love and affection” – don’t ask me to explain that one, nor have I used that one yet. 🙂
Q# 7. If the homeowner needs up to 90 days to move out – would we (myself and the rehabber) close on the house the day the investor accepts the assignment contract? Or do we not close until the homeowner totally vacates the property? Truthfully, if I was the rehabber, I wouldn’t want the finance clock to start early if I can’t gain access to the property until day 91 – especially if they’re using “hard money”, right?
A #7. It depends on the contract – sometimes the seller gets what we call “occupancy” and can stay in the home. I would prefer them to be out the day it closes but that is up to the seller and you to negotiate. If they do stay there – then you will want some type of “occupancy charge” – which is a daily rate for the seller to stay there. Typically, it’s withheld at closing from the seller’s proceeds.
I do refer to these as lease option coaching FAQ but every deal is unique. That is why I offer one-on-one coaching sessions as well as regular group telephone calls and webinars. Everyone benefits from the group meetings and individuals get specific questions answered.
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.
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