Posted by JoeKaiser on April 15, 2002 at 02:50:38:
Jesse, it goes more like this:
“If I were to step into your shoes and get the payments back on track, would you be able to at least come up with your share of the closing costs?”
Sellers are sometimes hesitant when they hear “take over payments” so you may want to avoid using that particular phrase. I used to say it all the time but try not to hit them over the head with it lately. And then of course, they frequently want something from you ($$$) to get it done. Set it up so they understand in the simplest of terms what you want to do and let them know that you expect them to pay their way out of it.
When it becomes obvious they can’t pay, then you can offer to do so on their behalf to make the deal happen. With any luck, the notion that they walk away with money from you goes out the window.
I have read repeatedly on this site and others that Ron Legrand will no longer deal with lease options in his personal investing (IE- pretty houses in nice heighboorhoods). I am extremely concerned of buying this module if Ron will no longer practice this method himself!
Does anyone know the truth about whether Ron LeGrand is doing lease options or not? If not, then why not? Lastly, why does he continue to market his course on lease option (pretty houses), if in fact he does not believe in it?
Maybe, just maybe he is trying to step up to PACTrust. Looks like it is a safer system, even it is moore complicated at first. Try it to explain it to your potential buyers-sellers, if you do not have 25 years of used-car salesmenship or better yet, operating a carneval-rides… (Legrand`s background) Just an idea… Julius from Oaktown.
it’s more of a natural progression than anything. once you have 20 years of investing under your belt and a six figure bank account you can be more choosey with your deals and you can have the strategy of no deed = no deal.
for people like me who are early in their investing careers, lease options are a good way to start building some income and get experienced. i would never make up someones back payments without getting the deed so with my lease options i am dealing with sellers who are current on there loan and not in any hardship. i sort of screen my sellers much like a tenant…i don’t want to be dealing with any dingbats!
by dealing with higher quality sellers and protecting myself as much as possible (recording option, performance mortgage, deed in escrow) i feel comfortable with my risk exposure.
i know its not as safe an investment as getting the deed but its a start.
as JT would say…just the way i view things.
Legrand says he no longer buys on lease option because it gives him less control of the deal. He (and many of the experienced investors here) are concerned about the risk of the seller not fulfilling the option agreement, putting you in a bind with your tenant/buyer.
So, he says he’ll only buy if the seller gives him the deed and allows him to take the property subject to the existing financing. This puts you in the driver’s seat…you are the property owner and there is no longer the risk of the original seller changing his mind when you want to exercise your option.
Legrand (and many others) still prefer to sell using lease options, so there is a purpose for his lease option course.
Additionally, there are times when a seller will not sign over the deed, but is willing to do a lease option. Although this isn’t the preferred method for buying, it can be used as a second approach to salvaging a deal…you just have to recognize the risk of the seller having a change of heart down the road. (I think Legrand recommends putting a signed deed in escrow in this situation to minimize this risk.)
I see the wisdom in that. Thanks to a few sales pitches gone bad (trying to do a sub2 when there were back payments) due to my lack of distinguishing the L/O and sub2, I learned a little more on how the sub2 works and how getting the deed puts one in a better position of control.
Still working on presenting the sub2 in laymen’s terms:
What I’ve gathered so far:
“Mr Seller, if you could get someone to take over your payments, would that solve your problem?”
I guess I was pitching the ‘doctrine’ and not the solution (via the sub2, of course).