What Forms Do I Need To Use With The “For Rent Method?”
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Read Transcript for “What Forms Do I Need To Use With The For Rent Method?”
“My question is about the paperwork. I’m confused as to what paper is between the seller and the buyer using the ‘For Rent Method’. I know that the lease option memo is between me and the seller and the lease agreement is between the seller and the new buyer but I don’t know about the purchase agreement and the option to purchase. Who are these papers between?” – Trina George, Atlanta, Georgia
Joe: Here’s how we set up. First we have the lease option memo. This is a one page document between you the investor and the seller. What it does is it gives you a principle position in the contract. It allows you to buy that property on a lease option and assign your right to buy to a new buyer; it even states that on the agreement. Once you have that control, then you go out and find a new buyer.
Joe: Let’s say that that seller wants $150,000 for his property. You’re going to go out there and put it on the market on Craigslist and a sign in the yard for $160,000 or $155,000 and you’re going to try to get a lease option fee. Let’s say you put it up for $155,000 and the new buyer comes in. They ask you how much you need for a down payment. You say $5,000 and they give you $5,000 which applies to their $155,000 purchase price, so now they still owe $150,000 to the original seller.
Joe: You’re going to have signed two documents. One is the resident documents, which I created, and basically that’s a lease and an option – it’s a lease on the purchase. It’s usually a three year lease and you can change that for different reasons, plus there’s an option to buy at a specific price within a specific period of time. That’s signed between the seller and the new buyer – you don’t sign the resident documents. What you’re going to sign is an addendum to the resident documents, and what an addendum is is an assignment form – assigning your right to buy to the new buyer.
Joe: So the only thing that you’re signing is the lease option memo to give you control and then the assignment form to assign your control to the new buyer, then the new buyer and the new seller are going to sign a separate document between themselves so that you’re out of the deal; you’re no longer in that contract.
Joe: Now, if you need these contracts, all of my programs have these contracts in them, even in my book on Amazon: “Automated Real Estate Investing” – if you get that book, you can find that there’s a link where you can opt in and it’ll send you a copy of those documents, or you can get into my mentor program or the “Push Button Automarketer” or the “Push Button Method”. Any of my programs have these documents because we use them on almost every deal that we do.
Joe: So get in one of those programs. Even if it only costs you $3 to get the book on Amazon, it’s worth it so that you have the documents and you can take a look at them. But Trina, I think you already got in my program, so all you have to do is download it. If you’ve got the Automarketer, just download it from the contracts page from the Automarketer and then read through it and make sure you understand how it works. You need to be able to define that for the person who you’re working with as the seller and the buyer. Alright, I hope that helps.