Lease Option Q&A
Q: What type of agreement will we sign with you?
It depends. We present many offers at once. In most instances, we will have a Lease Option agreement with a clause that allows us to sublet the property. In some cases, we might actually buy the home or take over the payments.
Q: What will this cost me?
In most instances, the cost to you is nothing. We get paid by the tenant-buyer, out of the non-refundable option consideration fee.
If you wish to “do it yourself” we also offer Consultations.
Q: What is my involvement in collecting the rent and/or dealing with the tenant?
Again, it depends. In some situations, once the all of the paperwork is signed with the Tenant-Buyer, and assigned over to you, we are completely out of the deal. In those cases, unless we agree to do otherwise, we would have no involvement in collecting the rent.
In other situations, we may agree to “stay in the middle” of the deal, wherein will be the “perfect tenant” and make sure rent is paid on time, deal with any repairs and maintenance, handle tenant calls and issues, etc.
Q: Why don’t I have just have my Realtor help me? Or, my Realtor says Lease Options don’t work.
A Realtor will likely want you to utilize the standard Realtor MLS form, which does not provide what you want and is a great way to get sued. Why? The standard MLS document protects the Realtor, not you! It also provides the tenant an equitable interest in the property, which means if you get a “wise guy” for a tenant, you will have to first foreclose and then evict. With our lease option agreements, if the situation requires us to remove a tenant it is with a straight eviction.
While we do personally know some Realtors who understand how to properly set up Lease Options, most of the Realtors we have encountered do not. And let’s face it – the confused mind says “no”. In other words, what people don’t understand, they usually believe won’t work. (Our personal feeling is that some Realtors might also fear losing out on potential commissions from your listing…but that’s just a theory and we could be mistaken.)
Another important point is that our leases are “triple net” with the tenant taking responsibility for all routine maintenance and repairs on the home. (After all, it is going to be their home.) Our contract is structured to highly incentivize the tenant to purchase the home and provides the vehicle to ensure they are in position. We also understand finance, and what it takes to get financing, and we refer our clients to credit repair and other professionals, when appropriate. We believe in our clients and are willing to help this become the turning point in their lives!
Not having ever been involved in finance or credit restoration, most Realtors have no way of knowing what it will take to put someone in position to get a mortgage. Our involvement in qualifying a client for our program goes far beyond having someone else give them a credit score. Our clients come to us because they WANT to own a home and they are willing to work to get one. Your tenant will be qualified with the same standards that we use for our homes.
Q: Why can’t I just do this on my own?
Maybe you can! However, with a single property, you will most likely attract a career renter, which is not what you want. Career renters don’t exercise the option to buy, often destroy the homes, want to harass you at every opportunity about repairs, and generally want to pay less than your cost to carry the home. Our clients come to us because they are interested in our lease option program. Very often our first contact is non-specific to a home. This is our business, and we’re good at it. We believe it would be difficult for you to provide the same level of value to the tenants that are able to offer. This value, along with our experience, allows us to attract a better caliber of tenant.
We now offer CONSULTATION services for all the “do it yourselfers” out there!
Q: What do you mean when you say you provide “value” to your clients?
Well, for starters, we take their financial futures very seriously. Our contracts are truly set up to put them in a position to eventually purchase the home. We also offer them opportunity to increase their income via our referral program. We understand finance (we ourselves are private lenders), and we have a large network of professionals to whom we refer. We can even set them up to report their monthly rent payments to the national credit bureaus! No one else does this!