Who Gets The Rent Each Month In A Lease Option Deal?
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Read Transcript for “Who Gets The Rent Each Month In A Lease Option Deal?”
“When a lease option tenant enters the house and starts making payments, who exactly do they pay the monthly rent option fee to? Do they pay the money into the bank account, the sellers account or my account assuming I’m the middle man in the deal?” – T. LaBuy
Joe: Well, they’re going to pay directly to the seller. What you’re doing is when you go out there and get a lease option memo, you get control of the property. A lease option memo is the right to buy that property on a lease option – that makes you a principal in the transaction. You can then turn around and sell your right to buy it.
Joe: Let’s say you find somebody who wants to sell their property for $150,000. You’re going to take that property for 150, add $10,000 onto that property, and so now you’re at $160,000. You’re going to try to get a down payment of $5,000 or $10,000 and then you’re going to give the rest of it to the buyer, so his buyer will still get his $150,000 when all is said and done. He’s also going to get the first months payments. So the buyer is going to pay the first months payments and they’re going to pay the lease option fee which also applies to their down payment. That down payment comes to you.
Joe: Now the monthly payment is going to be directly to that seller. The new lease option agreement with the new buyer is going to be between the owner (the seller) and the new buyer. You’re going to be out of the deal. So what we’re doing is going in, getting control of the property, assigning your right to buy it to someone else, and then we get paid and we walk away from the deal – we’re done.
Joe: The only reason you need to come back in is to answer peoples questions and to make sure that they get the things that they need and to make sure that they treat each other properly and do the best you can to support both sides so that there won’t be a dispute. The more you do to help them, the better off you are in the long run. You don’t want any disputes to come down where you’re the bad guy, and so if you do everything properly, then you won’t have that problem. So that’s how that’s laid out. Good luck!