All Forum Posts by: Rob Cee

So no rent credits in LO?  

REC is a Real Estate Contract (aka contract for deed).  From my research I think LO are a better, simpler way to go.  I read a document on REC's last night and they seemed terribly complex.

If a lease-option buyer records the option agreement it can cloud title right?   How do you remove that cloud if the buyer doesn't exercise the option or you have to evict?

I asked a real estate attorney and he said they did not.  It seems like I have read otherwise on this site?  

Does Dodd Frank apply to lease-options? I thought the seller financing you had to worry about was the typical seller financing where you carry back a note on the property and transfer the deed.  A lease option is not technically seller financing, it's a lease with a separate option to buy, the deed is not transferred.  It's just a lease. I talked to a local attorney in New Mexico and he told me a lease option didn't apply to Dodd Frank. Maybe he was mistaken?

 You make some great points.  I would only want to set up a rent-to-own type deal if it is a decent deal for the buyer and a win-win.  Most of the investors I know with integrity set lease-options up so people can win (principle credits, realistic option price, etc...).  John Schaub a guru out of FL who has a lot of integrity and has material on lease-options, when I've heard him speak he says he gives most of the option deposit back to buyers who fail on a lease-option (minus any damages or repair costs to property).   I have also heard that something like 90%+ of lease option buyers fail to exercise the option and get a loan to eventually buy the property.  Setting up someone for failure and keeping a large option deposit is definitely shady.

 Thanks Brent for the suggestions.  I have heard of security escrow and have talked to a title co. about REC.  I need to go to security escrow's site and read their 215 page REC document!  I also have referrals for some attorneys that specialize in this.  But meanwhile the summer selling season is slipping away so I need to make a decision!

Have the folks suggest REC or lease-option ever done one on their own property?  Or just suggesting something they read about?  My worry with these is that a very high percentage of buyers that do REC or lease-option never qualify for a loan to buy the property outright & therefore you get the property back and have to do it all over and don't get rid of the headache.  Also there could be legal issues evicting people for default if they make a claim to ownership (equitable interest).  I think there may be issues to doing a REC when you have underlying financing.

Mortgage payments at $1,061, property tax $160, insurance $50.  The house rents for about $1,200/mo.  No loan amortization as first is 30 yr fixed IO and 2nd is a high rate with very small principle pay down.  Rates were a lot higher 10 years ago.  Unfortunately no loan mod for me because I have no hardship and I'm not a deadbeat and I pay my bills.  All that great low rate load mod & principle reduction stuff only goes to the deadbeats who don't pay their bills.  

The property is in Albuquerque NM.  The economy is kind of in a funk right now from losing Gov't jobs.  The economy has not recovered from the recession like a lot of the rest of the U.S.  Albuquerque never bubbled in price like Arizona, Vegas, CA, FL...it is about 13% off it's peak in 2007.  Albuquerque's economy sometimes lags CA and the a lot of the rest of the U.S.  I think the Albuquerque  area does have hope (unlike parts of say MI, OH, etc... that are losing population and are hopeless to ever recover) for pop growth and future price appreciation due to climate and southwestern location.  Although that is a big IF.

The problem with holding this property long term is it did not have good numbers when I bought it 10 years ago and would have to throw a ton of money at it to pay the mortgage down and refi for it to just have a small cash flow.  And it will need a lot of updates and repairs over the next 3,5,10 years.  I'm leaning towards to taking the big loss and dumping it for a cheap price.