Thread: Contract help, please

Hi everyone,

This is my very first thread, any help would be appreciated. I am going to start investing in RE using lease options. The question that I have is.......if a home owner agrees to do a deal with me and actually signs the lease option contract..............WHAT IN THE WORLD TO I DO WITH THE CONTRACT (PAPERWORK)???? Do I have to turn it in to a 3rd party of somekind? Do I just file it at home? I have absolutely no idea. Who do I send it to? or is it just a contract between me and the seller?

Thank you very much,
BI

You will not get very far investing in real estate without the help of qualified professionals. For a start, get a real estate lawyer before you find a seller who knows more than you do.

Well, hmm, I guess I need to get a better understanding of what you are looking at:

Are you Lease-optioning from the homeowner, or are you providing a lease-option to a prospective tenant?

What is your exit strategy with the property?

I do think that once you are ready and understand the process, it would be good for you to have the documents looked over by a legal professional, just to make sure you are doing it right the first couple of times. Lease-options are pretty straight forward, and once you understand them you will be "an expert."

Maybe this (lease options) would be a great subject for one of my newsletter articles... I'll throw that in my list of subjects.

First, let's get a good understanding of what you want to accomplish, and I can help you get a grasp of how to get there.

Later!

Thanks Mike,

I am trying to call "for rent" add from the newspaper and asking if the owner would be willing to give me a 5 year lease with an option to buy. Assuming that he does, i would try to get a tenant-buyer to lease from me at a higher amount and give the tenant-buyer an option to buy from me at a higher price.

I am brand new to REI and just didnt know what to do with the signed contracts, once i have them.

I am a CFP and my background is in financial planning. Everytime i would make a trade or open a new account for a client, i would have to send the paperwork to a third party. Evidentially, in real estate, you just keep the contracts in a home file? I am assuming that if there is a sticky situation down the road, you would just have an attorney look over the original contracts?

Thank you,
BI

Originally Posted by iannacchione

I am trying to call "for rent" add from the newspaper and asking if the owner would be willing to give me a 5 year lease with an option to buy.

Interesting target list... "For Rent"... Hmm, well let's see what I would do with a call like that. I wouldn't be open to something like that, due to several factors as a landlord.

1. In WI, you have just given away any of your rights as a landlord by signing a lease over 1 year, so that would not happen

2. I am not motivated to sell, therefore sure I will sell, but at a price that you would not like. If I find a sucker (umm, I mean fool, umm, I mean buyer) to pay my price. Woohoo! I am not saying that using your strategy won't find motivated sellers (burned out landlords) but you will have non-motivated landlords in the mix (waste of you time and money.)

3. Unless you came up with a very good script to ramp into that "5-yr option" I would know that you didn't know ANYTHING about the business, and that you are a recent graduate of the late night infomercials. And oh, the fun I would have with you.

Man, I feel a training opportunity developing... Ok, enough on that part of the thread...

Originally Posted by iannacchione

I am brand new to REI and just didnt know what to do with the signed contracts, once i have them.

Contracts are agreements between you and another party, so it would make sense that all parties involved with the agreement (contract) would have a copy. No other party/organization would need a copy.

Originally Posted by iannacchione

Evidentially, in real estate, you just keep the contracts in a home file?

Just answered that question above.

Originally Posted by iannacchione

I am assuming that if there is a sticky situation down the road, you would just have an attorney look over the original contracts?

No, I suggest BEFORE you write a contract you either understand the contract back, forth and sideways (if they are STATE APPROVED documents) and if you write your own contracts that you have an attorney look them over, so that you are assured that you did not write anything that could negate the contract in full. Contracts are not hard, you just need to understand them.

As a note: in commercial contracts ANYTHING goes (no one is innocent,) in residential contracts, the state government steps in to "protect" the innocent, which usually is NOT YOU (no matter which side you're on.) So, be sure you have an enforceable contract before you need to test it in a court of law.

The lease option would be a contract between you and the seller. It is simply an agreement for between you and the seller that states that you have the option to purchase the home. Because it is not a formal sales contract it does not need to be filed with a mortgage or title company. However you may want to file it with your local records office so that if there are any future buyers interested in the property they are given notice of your option to purchase the property. You want to make sure that both parties have a signed copy of the agreement and that they are filed in a secure location.