Re: Hmmmmmm . . . - Posted by Brad Crouch
Posted by Brad Crouch on July 15, 1999 at 14:00:12:
Joe,
The first thing I read from your lease option materials, was that in the past (your past), you had always believed that initial option consideration ought to be paid in the amount of at least $1,000. So you freely offered this amount on all your lease option deals.
Then one day, you woke up and realized that you had been costing yourself much more than was necessary, and decided to discontinue the practice of offering initial option consideration on your L/O deals.
I believe it was you (could have been Bronchick) who first presented the idea (through course materials) of countering an initial option consideration request by the seller with an offer to “pre-pay” a few months rent, instead. The theory being that the seller could get his cash requirements/needs met while the amount from the investors pocket, would soon be replaced.
This was expanded to include “security deposits” on the newsgroup . . . the whole idea being about having the ability to negotiate, and not assuming a stance of inflexibility and rigidity.
As for your current statement about $100 for investor option consideration . . . I think you’re just having some fun while at the same time pointing out a “possibility” if a judge should ever become involved. Maybe a similar event has recently happened to you?
You are most likely correct about a judges decision (in my opinion), in the event a lease option deal ever went that far. But we are supposed to know the risks and how to minimize them.
I believe that if you do deals honestly and without deceit or sneaky intentions, you have very little chance of getting as far as a courtroom. But I don’t have the experience behind me that you have, either.
With all that being said, as I think about it, I don’t really think it is such a bad idea to offer $100 as a “standard” amount to include on all L/O deals. A certain peace of mind would be achieved, maybe, and you would “be protected” against that one in a thousand cases where you actually would need it.
Also the seller would now be thinking of “smaller amounts” rather than into the thousands. Kind of a “lowering expectations” tecnique of negotiating.
If you figured just the money on this . . . how much you would be putting out of your pocket on collective deals, against how many times that money would turn out to be “well spent”, you’d probably be better off not to offer anything at all. But, yes, this would raise the risk level a bit.
But the “no money out of pocket” crowd would probably start screaming . . .
One of the ways to avoid all this “court stuff” is to use a PACTrust. It really is a pretty good legal shield that protects all parties involved in an owner carry situation. I mention this in passing, not because I’m “selling” anything. I don’t make a dime . . . .
Anyway, I think that if you HAVE the hundred, it wouldn’t hurt anything to offer it. But if you have nothing, then it would be best not to offer anything.
That’s how I see it.
Brad