Lease Purchase Tips

by Rob Cassam   

One of the best ideas that I have used when trying to get a lease purchase deal closed uses an alternative type of option consideration/earnest money deposit. If the seller is okay with the idea of a lease option or lease purchase but thinks my consideration a little too low, I simply ask him how much exactly he needs. Once I get that figure my reply is something like this:

"So if I could give you $X as consideration, then you would be able to go ahead today?"

When he says yes, I offer to use all or a portion of the original consideration/deposit to purchase a zero coupon bond (not subject to state or local tax usually) that will be worth X in X period of time. Really, any type of financial investment will work here.

It is easy to show the seller the value of say $3,000 in x years when you have a Barrons financial news with you. I have paid for the brokering fees associated with this. Using this method, I have been able to turn $1,000 into $2,500 for the sellers option consideration/deposit. This works nicely with higher priced properties, since the sellers can understand the concept.

In addition, all of my lease options to a tenant buyer include a clause requiring electronic funds transfer of the monthly rent and option consideration. There are two types of services I use.

One allows a third party service to draft the tenants account. I am sent a postdated check every month, so I can cash them myself. I pay $1.50 per transaction. The other uses true funds transfer from one account to another. This can be done on your own PC.

I also avoid future problems for tenant/buyers qualifying by NOT giving monthly rent credit. In instead, they pay monthly OPTION consideration. This prevents the bank from questioning the rent as being fair market or above.

Loading subscribe form...