Original message
| Will
  |  "Jackie's response to Tarun"
, Tue 10 Apr 11:53: 
Jackie brought up some excellent points about L/0 closing issues.
I only did one sandwich lease option and ended up exactly in the scenario she described: lender refused to fund the deal.
I ended up stepping out of the deal in exchange for a fee and the closing took place between the owner and my buyer.In the process, my 17k spread was reduced to 4,800 but I was glad that I solved a situation that seemed nonresolvable (that was the ONLY lender that approved the buyer).I have no doubt that the buyer would have sued me.
No wonder that most experienced Dealmakers prefer to be on the title in order to L/O.
So my question is:
1.What are YOUR toughts on Jackie's response AND
2.has anyone closed RECENTLY on a sandwich L/O and everything went by the book?
Ben, what's your experience? (if I'm not mistaken, you did quite a few L/O's)
[this message was edited by Will on Tue 10 Apr 11:56] |
| Replies:
|
| ScottS
| "Re(1):Jackie's response to Tarun" , Tue 10 Apr 12:44
I do my share of L/O's the key is to take the precautions Jackie has spoken about.
Your best safety when you are in a Sandwich position on a L/O is to make sure you have the Perfromance Mortgage on public record. This is basically a second mortgage on the home securing the sellers performance on the contract.
Also as Jackie pointed out. Escrow all documents and have your contract spell out what happens.
This isn't to say things won't go wacko when a lender gets involved but with that Performance Mortgage in place there won't be much reducing until I say so.
L/O's are still very viable approach, you just can't be half stepping and slamming them together just to put some green in your pocket.
ScottS
"How Big Would You Dream If You Know You Couldn't Fail" Robert Schuller
|
| Bryan
| "Re(1):Jackie's response to Tarun" , Tue 10 Apr 12:01
This is the kind of situation where it would be worth it to create "owner financing" and sell the note at closing. That's one potential solution.
Bryan
|
| | Jackie
| "Re(2):Jackie's response to Tarun" , Tue 10 Apr 19:30:
Actually selling a note is NOT a solution.
First you would have to take a discount on the note sale
And most importantly, unless you got the deed put into escrow AT THE TIME you signed the lease option paperwork with the seller - you are still trying to sell a house that you don't own.
Selling a house you don't own won't fly with a note buyer anymore than it will fly with a lender.
Just because you have an "option" to buy the house does NOT negate the fact that you'll need to get the title transferred to you for you to be able to sell it.
This could be done with a simultaneous closing if you have the Warranty Deed in escrow - otherwise, you would have to get the seller to come into closing which could create a sticky situation.
The performance mortgage is to protect your equity position.
Jackie
[this message was edited by Jackie on Tue 10 Apr 19:33] |
| | Bryan
| "Re(3):Jackie's response to Tarun" , Fri 13 Apr 14:35
quote:
First you would have to take a discount on the note sale
That's true. But the deal gets done where otherwise it might not have.
quote:
And most importantly, unless you got the deed put into escrow AT THE TIME you signed the lease option paperwork with the seller - you are still trying to sell a house that you don't own.
That's true too, and that's why creating a note and selling it at the closing table is a workable solution to the problem.
quote:
Selling a house you don't own won't fly with a note buyer anymore than it will fly with a lender.
I'd have to disagree with that. Never done it myself, but I've got several friends who have done several simultaneous closes exactly like this. Have I misunderstood your point?
quote:
Just because you have an "option" to buy the house does NOT negate the fact that you'll need to get the title transferred to you for you to be able to sell it.
True again. My suggestion was merely that creating a note to be sold at closing would be a solution to the lease purchase problem. I guess I thought it would be implied that the lease/purchase transaction was done properly to begin with (including performance mortgage).
quote:
This could be done with a simultaneous closing if you have the Warranty Deed in escrow - otherwise, you would have to get the seller to come into closing which could create a sticky situation.
Agreed.
quote:
The performance mortgage is to protect your equity position.
As I said before, my suggestion about the note sale was made under the assumption that the lease/option was done properly to begin with, and in that context, I'm quite confident that selling a note would be a very viable solution to the problem. But I'm definitely willing to be further educated if you know something that I'm overlooking here.
Bryan
|
| | wgreau
| "Re(4):Jackie's response to Tarun" , Tue 10 Apr 22:27
I was listening to some Ron LeGrand tapes today and he said the same thing that Jackie is saying.
William Columbus OH
|
|
|