Selling a home you DON`T own?

[hanwellboy]

I have been reading up alot on RTO and Lease purchase. It seems like a win/win/win situation. You get to help out the homeowner, you get to help put a tenant/buyer into a home, and you make some money doing it. The way I understand it is that you sign a lease purchase agreement with the homeowner for say 5 years. You then go out and find a tenant/buyer who is willing to sign a lease with you for say 4 years. Anytime in that 4 years, the tenant/buyer can exercise his option to buy. Here is my question: If you don`t own the home, how can you sell it to him? I am really fuzzy on this. Has anybody had any experience with this? I look forward to any input, thanks.

Aaron

 

[RedlineBrett]

Quite easily - you negotiate an `option` to buy from the landlord/seller. This gives you an interest in the property and you can do deals provided they fall within the legal extent of this interest.

Once you have this you can then plan for an exit to either do a simultaneous close or you can register your interest (the profit you`d make on the eventual sale) on title of the property as a second mortgage and then broker a deal between the landlord/seller and the tenant/buyer. Then you get paid out like any bank would once it closes.

 

[GoRentFreeFast]

QUOTE (hanwellboy @ Sep 28 2009, 03:37 PM) I have been reading up alot on RTO and Lease purchase. It seems like a win/win/win situation. You get to help out the homeowner, you get to help put a tenant/buyer into a home, and you make some money doing it. The way I understand it is that you sign a lease purchase agreement with the homeowner for say 5 years. You then go out and find a tenant/buyer who is willing to sign a lease with you for say 4 years. Anytime in that 4 years, the tenant/buyer can exercise his option to buy. Here is my question: If you don`t own the home, how can you sell it to him? I am really fuzzy on this. Has anybody had any experience with this? I look forward to any input, thanks.

Aaron


Hi Aaron,
The method of LTO (RTO) you`ve just described is effectively a sandwich lease option whereby you would negotiate an option to purchase with the homeowner first before looking for a LTO tenant to put into the property. At the end of the tenants lease term they evoke their option to purchase from you as you evoke your option with the property owner...MESSY!

We do tenant first LTO`s which is much cleaner, smooth and simple. Considering we do anywhere between 2 to 8 LTO deals per week for our investors we need smooth and easy...I encourage you to look at some of the TV interviews and information sessions I`ve done regarding LTO deals posted on our website`s `Who are we` section.

Regards

Philip

 

[hanwellboy]

QUOTE (GoRentFreeFast @ Sep 30 2009, 01:49 PM) Hi Aaron,
The method of LTO (RTO) you`ve just described is effectively a sandwich lease option whereby you would negotiate an option to purchase with the homeowner first before looking for a LTO tenant to put into the property. At the end of the tenants lease term they evoke their option to purchase from you as you evoke your option with the property owner...MESSY!

We do tenant first LTO`s which is much cleaner, smooth and simple. Considering we do anywhere between 2 to 8 LTO deals per week for our investors we need smooth and easy...I encourage you to look at some of the TV interviews and information sessions I`ve done regarding LTO deals posted on our website`s `Who are we` section.

Regards

Philip


Philip,
thanks for the info. I have actually considered going the purchase and then find a tenant/buyer route. But I am just starting out and really would prefer to break into the business with less money. I am thinking of either consulting or doing cooperative assignments. I still have a lot of research to do before I get my feet wet. Thankfully there are great people on this forum who are glad to help.

 

[GoRentFreeFast]

QUOTE (hanwellboy @ Sep 30 2009, 05:26 PM) Philip,
thanks for the info. I have actually considered going the purchase and then find a tenant/buyer route. But I am just starting out and really would prefer to break into the business with less money. I am thinking of either consulting or doing cooperative assignments. I still have a lot of research to do before I get my feet wet. Thankfully there are great people on this forum who are glad to help.


Hi Aaron,
The process whereby we prepare the complete LTO deals for our investors has come about after six years of doing these deals...a lot has changed over those six years.

Please feel free to drop me a line PBradley@GoRentFreeFast.com and I would be happy to guide you through our process so that you may avoid some of the challenges we faced when we started...or if you`re in Oakville any time please feel free to stop be our offices.

Regards

Philip

 

[Dan_Eisenhauer]

I have not read each entry in this thread. But, there is another method you can use, just in case it was not mentioned.

Once you have an accepted offer, even with conditions, you can assign that offer to a third party. If you want, and the numbers warrant it, you can even add a finder`s fee, or assignment fee for yourself in that side of the deal.