Posted by Rodrigo Rodrigues on January 01, 2002 at 10:27:57:
thanks jim , yes i’ve read that article, and when comes from john boy is unforgettable and remarkable…
t/buyer exercising the option, strategy… - Posted by Rodrigo Rodrigues
Posted by Rodrigo Rodrigues on January 01, 2002 at 24:58:23:
ok, some people say the 80% of the tbuyers dont exercise the option … other say that 65% dont do it…
so let;s just forget these numbers and focus on what (could work) ,i personally would offer 25% of the equity to the t/buyer that might sound ridiculous, but i rather work with high quality tbuyers and give them an incetive(loose money) than deal with poor quality t.buyers and loose the whole equity …
and i would probably choose a t/buyer with excellent credit who doenst have enough money to put down in the house than a tbuyer with so so or bad credit…
what you guys think?
what personal strategy you use to have t/buyer exercising the option…
any screening thequiniques or discrimination(i’m not talking about race, religion etc…)
any comments will be appreciate
thanks
Re: t/buyer exercising the option, strategy… - Posted by Scott
Posted by Scott on January 01, 2002 at 19:23:51:
See my post called: Getting T/B finances under control to qualify. It’s just above yours.
Re: t/buyer exercising the option, strategy… - Posted by YarmenT.
Posted by YarmenT. on January 01, 2002 at 07:13:47:
Rodrigo,
In my area, and I believe this is pretty common now, potential buyers with good credit but little cash really have very little problem finding funding. The financial market seems awash with oddles of cash for people who demonstrate that they will repay.
90%, or even 100%, loans are readily available to people with good FICO’s , so you may need to adjust your marketng plans.
And as Jim pointed out you really aren’t risking the lose of all your equity if the LO doesn’t strike. In a properly constructed LO you shouldn’t lose any. In fact, many investors hope and pray that the option isn’t exsercised figuring that then they will be able to place another LO in the property, of course after the investor has again picked up another wad of option cash.
YT
And I realize that this isn’t an English, spelling or grammar course, but could you please proof your posts just a little bit? You might get a few more responses if your initial post was a bit easier on the eyes, or should that be “I’s”?
Re: t/buyer exercising the option, strategy… - Posted by BR
Posted by BR on January 01, 2002 at 07:08:25:
Rodrigo,
Buyers with exellent credit can get low intest money with little down. They don’t ‘need’ you! Focus on buyers with minor credit issues that can’t get the low interest money. They ‘do’ need you!
Re: t/buyer exercising the option, strategy… - Posted by Jim Kennedy - Houston, TX
Posted by Jim Kennedy - Houston, TX on January 01, 2002 at 02:49:22:
Rodrigo,
You wrote:
“. . . i rather work with high quality tbuyers and give them an incetive(loose money) than deal with poor quality t.buyers and loose the whole equity …” (sic)
How are you going to lose the whole equity? The only way that’s going to happen is if you haven’t structured your deal correctly or if you’ve lost control of the deal.
I’ve got a question for you and please don’t take this the wrong way. Have you bought and studied a course on lease/options? If not, I would strongly suggest that you do so. If you have, I would strongly suggest that you go back and review the course again, because apparently you’ve missed some very important points. There are some excellent courses on the subject offered through this web site. You can find them at:
http://www.creonline.com/m_option.htm
Hope this helps.
Best of Success!!
Jim Kennedy,
Houston, TX
Re: t/buyer exercising the option, strategy… - Posted by Rodrigo Rodrigues
Posted by Rodrigo Rodrigues on January 01, 2002 at 07:28:42:
my apologies,yes i’m aware that most investors hope and pray that the option isnt exercised , i just want try to manage risk , by having the tbuyer exercising the option , i’m talking about the risk of the seller getting jeaulous on the long term , after i renew the contract with the same t/buyer or a different t/buyer…
the bottom line is , i’m trying to manage risk as much as i can…i mean seller getting jealous and try to get the property back, i’ve read some stories…
thanks
Re: t/buyer exercising the option, strategy… - Posted by Rodrigo Rodrigues
Posted by Rodrigo Rodrigues on January 01, 2002 at 06:48:56:
what i meant was that i would loose the opportunity to cash out the equity , and would have to get a another t/buyer , so i guess i made my self clear now , regarding the course i got the bronchick course already which is very good…
thanks jim
Re: t/buyer exercising the option, strategy… - Posted by YarmenT.
Posted by YarmenT. on January 01, 2002 at 07:47:19:
If you’ve worked out the deal correctly even if the LO doesn’t bite, and therefore you end up not biting and the original seller gets the house back, you should have already made some money. Perhaps not as much as if the deal went through, but enough to cover your expenses and maybe even put some profit in your coffers.
BTW I, for one, will no longer read or respond to your posts. You sound as if you have some education in your past, but choose not to exhibit it in your posts. Instead you expect those whose help you are seeking to do all the work, including deciphering what you’re attempting to ask. It takes just a few second to capitalize an “i” and proof a post, but it can take several minutes for someone to respond in a clear and intelligent manner. If you can?t take the time, neither can I. Dealing with your self-indulgent writing is just too painful.
Furthermore if you take the same lazy, selfish, attitude with potential sellers and buyers, I?m willing to bet equity to mortgages that you will not get very far.
Again this isn?t the Great American Novel 101, or even English 101 for that matter, but it is a public forum and therefore clear communication benefits, and is much appreciated, by all.
Good luck in 2002.
Re: t/buyer exercising the option, strategy… - Posted by Jim Kennedy - Houston, TX
Posted by Jim Kennedy - Houston, TX on January 01, 2002 at 09:05:50:
Rodrigo,
Yes, now that you’ve made your concern clear, I would say that both BR and Yarmen are correct. If your buyer is credit worthy, you don’t need to use a lease/option. Just cash out of the deal immediately. However, the purpose of offering a lease/option as your exit strategy is to make a quick sale, albeit a deferred closing, by opening up to the large pool of potential buyers with damaged credit.
If your first tenant/optionee doesn’t exercise his or her option, for whatever reason, you have several courses of action available to you. You can simply extend the option period to your tenant/optionee and continue to collect the monthly cash flow. You can renegotiate the terms and collect some additional option consideration for extending the option. Or as Yarmen pointed out, you can find another tenant/optionee and collect another non-refundable option consideration.
In one of your responses to Yarmen, you wrote, " . . . i’m aware that most investors hope and pray that the option isnt exercised . . . ". (sic) I don’t agree with your statement. I believe that you are merely speculating, as I doubt that there is any empirical data to support your contention.
Recently, there was a very interesting but lengthy (over 40 responses) thread concerning lease/options. The thread starts with a post entitled “Are lease options ethical or just for predators?” You can find it at:
http://www.creonline.com/wwwboard/messages/62482.html
In it, JohnBoy points out several of the reasons why a tenant/optionee might not exercise his or her option. And Bill Bronchick shares his views cultivated over more ten years of experience with lease/options.
If you’re concerned about mitigating risk, again, look to the structure of the original deal. While you haven’t come out and said so, I’ve surmised that you’re probably referring to a ‘sandwich’ lease/option, wherein you lease/option the subject property FROM the seller and in turn lease/option it TO your tenant/buyer. One way to minimize risk is to negotiate a ‘subject to’ transaction with the seller. I know a few investors who will only do a transaction that way. They won’t use a lease/option as an acquisition strategy.
By the way, on the last four lease/options that I’ve done, I’ve ‘pre-negotiated’ an extension with my tenant/buyer. If they don’t exercise prior to the end of the first year, they have the right to automatically extend their option by paying additional non-refundable option consideration.
Hope this helps.
Best of Success!!
Jim Kennedy,
Houston, TX
thanks for your advice, but… - Posted by Rodrigo Rodrigues
Posted by Rodrigo Rodrigues on January 01, 2002 at 08:00:44:
if i bother you , you’re more than welcome to pass up my questions…but please dont call me lazy or selfish because you dont know me…i’really appreciate your replies , but you didnt have to get personal…