Lease Option - Tenant/Buyer responsibility

[Michael Baradell]

Hey BP,

I have been researching Lease Options and have been getting mixed reviews on who is responsible for maintenance on the property. Prior to doing research on lease options, I would have said that the Owner/Seller of the property would be responsible for any major issues ( anything over $100 ). After reading up and watching some videos, I have heard several people say that the TB is responsible for maintenance and repairs. How is this possible? Legal?

[Benjamin Cowles]

Originally posted by @Bill Gulley:

Originally posted by @Benjamin Cowles:

Originally posted by @Bill Gulley:

... 

Under the tax code a Tenant as a business entity may be entitled to costs of leases, repairs and improvements to real property as an expense, long term leases allow depreciation of the "in-fill". If the tenant pays for items they are not just entitled but required to expense items under generally accepted accounting principles and the tax reporting. The owner may not take expenses that they do not actually incur, that should make sense, that is tax fraud..

...  

An option given conveys an equitable interest to the extent of the option price paid and that interest is amortized or depreciates over the term of that option as the rights to purchase are consumed.

Bill, the first paragraph I think was what I was looking for. Plz confirm. 

So as long as I classify myself as a business(LLC, license, however that's done) a seller can allow me to take care of repairs and maintenance as a master lessee in a sandwich LO scenario?

I'm trying to figure out how to use this strategy correctly and keep getting stumped on all the rules particularly the one regarding repairs. If my assumption of your post is correct, I could slip between a seller with no time to find and manage his/her property as a biz before selling it at a good price(-cost and hassle of realtors) and passive wannabe presently unqualified home buyer and essentially manage the lease and facilitate the eventual purchase. Do I kinda sorta got it?? 

And the last paragraph - whoa! What was that? I must have missed a class. "amortized or depreciates" as in like relative to the dynamic value of the property? And how are the rights to the option "consumed". 

Thanks Bill. 

Yes, it's a commercial venture and you need to sort out who takes depreciation with your accountant. 

Next issue, leasing and facilitating a lease as a business,  do you have a license? 

Sub-letting homes gets very tricky, there are better ways to skin the cat, IMO, but good  luck :) 

Thanks Bill. Yeah, speaking of which I've been reading on your site about using options and TIC's. Can't find the scenario tho where Jane's "Jack" tries to flip a standard purchase agreement the usual way, but I'm following along just fine. I'm in the beginning of your course and read some comments you were planning on going deeper into "tic tac toe". Did you ever? Well I'll find out soon enough. Thanks for what you've provided in your website!