Lease option and the option deposit?

[defcon]

i agree with Roger.

i was studying bronchick's lease option course but it didnt address the risks and pitfalls which kept me on the fence even longer. im now using gatten's trust strategy where i can simulate lease options and it addresses the common risks and pitfalls of a lease option.

the tenant will be on a triple net lease agreement and will be leasing from the trust.  tenant will get the first right of refusal to purchase at future market value.  the difference is there's no pre-determined purchase price and the title has been separated from the owner and held by a trustee for our benefit.

i dont give rent credits at all. when a tenant asks me "how much do i get in rent credits?" i tell them none.  instead, they're entitled to 100% of the tax deductions based on an IRS code that they can show to their CPA.

i dont apply anything to a purchase price

i make any up front money refundable at the end of the term if they perform to the agreement and bring in new financing when theyre ready and able to do so.

i tell the tenant that the monthly payments are mirrored to the underlying payments which include my premiums (cash flow).  this way if they decide to exercise their right to purchase, there wouldnt be that payment shock when they do qualify for conventional financing.

i dont mention interest rates, balloons, down payments or anything related to a mortgage note. 

in my opinion, rent credits or option fees applied to a purchase means you're giving equitable interest for a tenant to claim.   

[matshingdo001]

OK, THIS IS THE DEAL GUYS!!!!!
Listen to Roger, the dude knows his stuff here!!!
Right on Brother.... I  do the same..........................

I have addressed many topic on lease options with students and a few here, But this is the scoop...
*1# Lease agreement. (explains it self!)
* 2# Option agreement to Purchase, This is where I charge a "Option Fee", They are buying the right ( or this contract) to have the option to purchase the property...

Lets Rap our heads around this, where you make your money is selling the note (the option contract), excluding the positive cash flow per month. You have aquired the Note for nothing, You are Selling the Right to Purchase the home.... (Great consept!!!)

It is a "Fee" for the Option.  There is no equitable interest!!! you sold them a option, a right, they did not put anything down....OK!!!!!!!!!!!!
When you go to homeDepot and you buy a LawnMower do you have Equitable Interest in the Property... NO!!!!!!!!!!.....lol
*Now lets address the rental credit thing...
          I realy like the On time payment thing, as roger has suggested.  Some times I dont do any rental credit, some times I do.  I have a contractual agreement on a "separate" document  the Tenant/Buyer stating if and "ONLY IF" they exercise there option to Purchase I will Credit $XXX back to them...

*About Financing, This is a whole Different ball of wax... this is almost like creative financing now, You are crediting back As a "deposit credit"... For GOD sake do NOT Lower You purchase Price, You will F-UP your Loan L.T.V... You simply instruct your closing agent to credit What ever you need to make he deal work...
Remember that The "language" you use with your "tenant buyer" is different then what you use with the "closing agent" and "Lender"...

If any one has any questions on this, Give me a private Message i will send you my number and speak with you.

Its that simple I have done this 30plus times last year and doing 2 this week... is simple easy, and a  great way to aquire inventor!!!!
Now get out there and stop being an over anilitical scaredy cat and Fricken MAKE some$$$!!!

M