All Forum Posts by: Del Kelley

@Rob Duke - No one is suggesting breaking the rules. I want to get into consulting.
Any legal question would go to an attorney. 
The reason for this thread concerned the non-refundable money a "tenant buyer" would put down and how best to apply towards the down payment. I now have the answer. I should have just asked a real estate attorney in my neck of the woods. However, this thread could help others. 

Lease Options are usually a tool not used, but done correctly can benefit both the seller and the tenant who needs time to clean up their credit. At the end of the lease, the tenant could exercise their option to buy and close with a title company or attorney's office who handles closing. Each state is different and I am not an attorney. However, I can advice the seller where to go to get expert advice on legal issues.

My real value to the home seller comes from marketing the property and I have a whole process for that.

And I hope you do realize that people other than attorneys and realtors can engage in real estate transaction or as consultants as long as they don't represent the seller or buyer as either agent or attorney. Investors come to mind. 

@Jenifer Levini - I'm amazed you're an attorney and I don't appreciate your veiled threat about other realtors reporting me. I was simply asking a question. Seeking knowledge about how best to insure the buyers non-refundable deposit can be put towards the down payment if possible.

So what am I that prompts the lawyer to conclude I represent the seller? I give advice to the home seller on all the steps it takes to complete a lease and an option to buy. I do not pretend to be a lawyer and therefore tell the seller they need a lawyer to go over the contracts to see if my contracts need to be modified or use whatever the lawyer deems appropriate for the lease / option transaction.

I do not in anyway shape or form speak on behalf of the seller. The seller speaks with the tenant who wants to lease and then possibly buy the sellers home. The seller does everything in the transaction. They do the marketing, they screen the tenant (well, the mortgage broker really handles this), they negotiate the terms of their transaction and then they get a lawyer or title company to close if the tenant exercises the option to buy.

Trust me Jennifer when I tell you this. Realtors are not huge fans of investors and all of my agreements have been check over by my attorney because I have to protect myself. 

As an investor, I use to make 5-10k from a lease option transaction. The whole reason I wanted to teach the seller what was taught me is because I want to the seller to make that money.  I like to teach and I want to get paid for it sure, but I believe I bring value to both the home seller and the tenant who needs time to repair their credit. Just don't make the mistake that just because the seller is paying me for my opinion that somehow I am in anyway part of the transaction. 

Let me say a word or two about decorum, Jennifer. Maybe if you seek out the better angels in all of us then you won't be quick to accuse me of a crime for heavens sake. I take offense to that as a gentleman who only wants to help not hurt.

@Chris Mason - I want to be a consultant. This does not mean I represent anyone as an agent.

I want to give the home seller advice for how to get the most money upfront for a lease purchase transaction. I would get paid as a consultant. So I would not receive the option fee or earnest money.

My dilemma was how to best give the up-front money from the "tenant buyer" to seller and have it count as a down payment if the tenant exercises the option to buy. My goal is to make sure that the seller realizes the non-refundable money upfront and still have this money count as a down payment.

This is the scenario I'm trying to answer and still sleep at night.  

@Chris Mason. Is it possible that the EMD be released to the seller once it's given to the title company? It's non-refundable anyway.

My over arching goal is to consult the seller how to make the option fee. I would get a consultant fee for showing the seller how to do a lease option.

@Wendy Patton. That is what I will do today. I am going in a different direction because I want to focus on being a consultant. I may drop you a line.

@Mike M 
... and I'm a little dubious of your claim. How do you state your option fee on the HUD-1? It baffles me. We're talking FHA guideline. Please point me somewhere so I can validate your claim. Not that I don't believe you, but the lenders I deal with say the option fee cannot be counted towards the down weak.

From speaking with a couple of mortgage brokers, the option fee cannot be used as "an acceptable source of borrower funds" as stated by HUD.

Could the the tenant / buyer sign a purchase contract with a non-refundable earnest money deposit? The reason I ask is that earnest money deposits can go towards the down payment. I'm trying to set the tenant up for success when they go to get financing. Please chime in if you have any success in getting the tenant / buyer to the closing table. 

Great story Matt. Educational too.

I have two mentors that are reasonably price. Michael Carbonare and Joe Bodek. Both are priced to where anyone can learn and do the lease option business. I've had it with over-priced gurus and I'm a little miffed at BP for letting those leetches here on this site.

@Vijaianand Thirnageswaram You are an extremely rare person. Thank you.  

As a newbie with little money, I am involved in a wholesaling course from a guru in south Florida. I paid a big chunk down and I owed a big chunk. My car broke down (country song coming) and I couldn't pay the other chunk. However, I'm beginning to realize that I had enough knowledge and what I over paid for was confidence. Many a newbies have the knowledge, but lack the confidence or are overwhelmed with too many "How To's" and that's why gurus are making money hand over fist. Even bigger pockets has so much information that it's too much. 

If I were a guru, I'd make a website where a baby guru with some experience trains up a newbie for a percentage of the deal. Let the guru prove his worth and be very committed to the students success.  Guys, $5,000 is too much money and many will slap that debt on a card and then have no money for marketing. For me, I like lease options and that is my focus given my lack of marketing money. Someone out there please make a "Pay it forward" real estate website.