sumultaneous closings?
i have read a lot lately about lease options. my question is if a TB exercises the option, how could you close with the TB before you close with the seller knowing you need the money from the TB to close with the seller?
I am a little confused on this part. any help is greatly appreciated.
thanks.
vac 
This is a good question and just wanted to bring it back up to the front.
L/O experts ATTENTION....Need a good answer.
While we're waiting, I'll try to get in contact with an investor friend who does L/O purchases and find an answer.
good luck
Roger
I appreciate the help. I was beginning to wonder if I would get an answer.
thanks again.
Spoke with the L/O investor, and yes you would have to do a double closing in order to sell the property (another downer for L/O's, IMO).
A double closing is complicated, and doesn't work quite like the guru books teach. You, the middle buyer/seller, will have to have separate funds from your buyer in order to close your deal. Your buyer will have to either have 1)an owner financed deal (your the bank) 2) cash (doubtful) or 3) qualify for a ''no seasoning'' loan (probably difficult for the type of buyer in a l/o deal).
With that said, if you still want to pursue this method of REI, good luck and make sure that you have your whole plan laid out before you obtain your first one.
Roger
Simultaneous closing isn't the only way to resell a lease-option. In fact it's probably the hardest way...
...The better way is to file a mortgage against the property at the inception of the lease option, then sell the property to your end buyer on behalf of the actual owner via power of attorney...
...You get paid off because you've got a lien against the property, your buyer is not restricted to non-title seasoning loans, and the actual owner of the property gets what they want - a sold house. All this without ever taking title to the property.
Works like a charm...and better than the simu closing route, though there are ways to make the simu route easier than described above (under certain conditions).
Bryan Ellis[ Edited by BryanE on Date 06/21/2003 ]
Interesting concept, Bryan
Could you elaborate some more on how this is actually accomplished?
I would also like to know an easier way to do a double closing, too.
Thanks,
Roger
Another question I have then for bg or Bryan,
When would you get the seller/landlord to give you a POA for the property, and why would they be willing to do it? In other words, what protection is their for them that you won't use the POA 'unethically'?
Roger
When would you get the seller/landlord to give you a POA for the property, and why would they be willing to do it? In other words, what protection is their for them that you won't use the POA 'unethically'?
Good question rajwarrior.
You need a motivated seller. Keep in mind, some people think sellers are crazy for giving the title to a investor and keeping the loan alive (Sub to deal). Happens everyday. Just make it part of the paper work and it won't seem ackward.
There is no POA. Remember , you don't own the property, just controling it. The performance mortgage is a lein on title that is based on the lease agreement. If the landlord defaults you could foreclose on him.
Bginvestor.
With the POA, I was referring to what Bryan had posted,
"then sell the property to your end buyer on behalf of the actual owner via power of attorney"
Just curious actually where it would come into play during a L/O since you don't own the property.
Thanks
Roger
Regarding why the seller would agree: The POA Only authorizes the investor to sell the property under certain conditions. The POA is only good for a specified period of time and for a specific price so there's really no risk to him. An advantage to the seller also is the fact that he doen't have to attend the closing. (This is an advantage for the investor also in that the seller will not know what the TB paid for the property.)
I did this for the first time last week. The buyer is actually buying directly from the seller and I made my profit as a consulting and administrative fee for which I provide an invoice to the closing agent. The invoice amount appears on the HUD 1 statement as a line item subtracted from the amount due to the seller.
I would like to hear about the experience of other investors also.
BryanE or UncleJaz,
Have you done a sandwich lease deal with a POA? I'm not sure exactly how the POA comes into the deal. Can someone please explain.
Questions:
1) If using a POA, do you need to assign your option to the tenant/buyer if the tenant/buyer closes with your landlord/seller?
2) Is the POS activated when you excercise your option?
3) You still need a performance mortage or deed of trust attached to the property, correct?
I'm confused.
Bginvestor
I think that there may be a possible problem with the POA when performed as UncleJaz mentioned. The 'administrative and consultation' fee could be construed as 'acting as a RE agent without a license' which is illegal. Just my thoughts.
Roger
Just curious! Couldn't your option be assignable for cash to you at closing? It seems to me that your option should be worth something. Like maybe the difference between what the seller has agreed to sell the property for, and what your t/b has agreed to purchase the property for, less of course deposits, and other credits? If I'm way off here, be gentle, I'm just a newbie trying to learn.
I'm with Roger the Warrior on this one...
Fees for services for procurring the sale of RE is brokering. You must have a license for this. You may be seeing a "Cease and Desist Order" from your state's Real Estate Commission.
"Advantage for the seller because he doesn't have to attend the closing"???
I'm not sure how to spell this, but, "whooped diddity doo da."
My advice to the original questioner, is to seek a reputable lawyer\title agency that will explain each step of the way, before you seek this type of transaction.
Make sure the seller and your buyer are all understanding what is going on. Keep it legal and most importantly, ethical.
Get a bad reputation for shady deals and eventually you won't have any deals at all.
Good luck in all your RE dealings,
Ohhouse