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Wednesday, July 14, 2010
A Lease Option Agreement should contain the following......
What should be in a Good Lease Purchase Agreement ?
BY CLAUDE W. DIAMOND J.D.- http://www.ClaudeDiamond.com
Lease Purchasing is one of the most profitable and practical ways to be in real estate. You don’t need a bank or a pot of gold to get started. There is an absence of Tenant & Toilet problems (if setup correctly)! It’s creative and even fun !
Lease Purchasing can also be a nightmare if you do not have the foresight to have well designed, strategically written contracts.
Recently I was asked by a reader (via our Web site www.claudediamond.com) where he could find good generic Lease Purchase contracts. To me that is like asking a neurological surgeon if he can recommend a do it yourself brain surgery kit and combination salad maker!
I advised the reader that there are generic contracts from several sources. One such source is your local real estate agent or office. They have the multi-purpose fill in the many blank type forms.
The question remains, however, are they any good or even WORTH THE PAPER THEY ARE WRITTEN ON ?
My handy Law Dictionary defines Generic as follows: Something not specific or not referring to a specific thing.
Generic contracts are just that generic. They are designed with the one size fits all concept. In reality, they are not designed to protect you or your interest in the particular Lease Purchase transaction with which you are currently involved.
I have collected many of these so called generic Lease Purchase contracts for years. Not only have I gotten contracts from Realtors and stationary stores; others came from the get rich quick, while staying in bed all day, books and seminars. They all have one thing in common. They’re garbage ! They are poorly written and lack the necessary clarity and/or specific verbiage inorder for the contract to be enforceable.
I have designed and utilize six specific contracts for my own Lease Purchase deals. Which one I use is determined by the hat I am currently wearing at the time. Am I the Landlord/Seller, the Tenant/Buyer or the Assignor/Assignee? Will I be Subletting, Assigning, Sandwiching, Pure Optioning or just quick flipping ?
TIP: I always carry a couple copies of my Lease Purchase Contracts in my car’s trunk right next to my earthquake emergency kit* compartment. An investor is always prepared !
Here are a few suggestions for items that should be contained in any Lease Purchase Agreement. Some of these may seem like obvious inclusions. Having been involved in Lease Purchasing for many years now, I can tell you that the obvious is not always so!
1. Identify the principle parties: Who is the Tenant/Buyer and who is the Landlord/Seller?
It might even be a good idea to do business as a corporation.
2. Location of the property: Use the parcel identification number (PIN) and the street address.
There should be no mistake about which property you are dealing with.
3. Date and Signature: Make sure all the owners sign the contract. This includes spouses, partners or anyone who has ownership or an equitable interest in the property.
Big problems can occur with a Lease Purchase if you don’t have all the owners sign. Better yet, check the title, loans, etc.
4. Term: Be specific on the length of the contract.
Strategy Tip: If you are negotiating with the owner make the contract for as long as possible. If you are the owner or are subletting the property, make the contract no longer than one year.
5. Be Specific: All the terms, including Price, Rent Credit, Closing Costs, Option Consideration, Financing and Escrow should be included. No term should be ambiguous. Be specific !
6. Right of Assignment:Be sure that you have the right to sublet-transfer and convey the property to a third and in some cases a 4th Party.
Generic Contracts, YUCH !!! I would recommend that you never use a generic contract! If, however, you choose to do so, have it reviewed by a competent attorney who is either a real estate investor or who specializes in real estate law. (Sorry, it’s the Perry Mason in me!) Better yet have him design an agreement that meets with your needs, expectations and of course, PROTECTS YOU.
P.S. Without sounding too legalistic make sure your agreement also includes-Indemnification-disclaimer-notification and Force Majeure clauses too. There are several other clauses that can be also included to maximize your profits and decrease your expenses. Give me a call and we can discuss
Free Newsletter-The Lease Purchase Times © just call 800 324 4652 or go to www.TheLeasePurchase.com
Monday, June 14, 2010
The Best Home Business in The World
The Best Home Business in the World (or Welcome to the World’s Second Oldest Profession)
By: Claude W. Diamond J.D.
I just read read through a very hefty entrepreneurial type magazine web page, checking out the so called “business opportunities”. Lately, it seems that everyone wants to quit their job and become part of the free enterprise system. They want to be their own person and have the satisfaction of running a business that will guarantee them the freedom to pursue their dreams and to create a high income*.
There seem to be more ways people can enter the world of entrepreneurship (and lose money) than one could ever dream of. The glossy enticing pages offered by many companies are just waiting to show you all the different ways in which you can become part of the American Dream.
It’s not just chicken and flipping burgers anymore folks. Why just for going $100,000.00 (and more) into debt, you too, can become part of a franchise that cleans houses (yuck), you can bake cookies in a hot oven all day in the local mall or you can sell Jalapeno flavored gourmet jelly beans to weary travelers at airports. While these opportunities may tantalize the heart strings of some, I am still a fervent believer in the world’s second oldest profession, Real Estate.
Note: As a kid, I worked for many years after school and on Saturdays in a Grocery Store/Deli in New York City. Believe me when I tell you that the only things you get from a retail business are very long hours and remarkably little pay! (Especially when it’s your Mom and Dad who run the business).
None of the opportunity type publications explore the possibilities of the best home based business in the world; a Creative Real Estate Investment Business.
Just think about it for a moment. What if I told you that you could operate a very profitable, stimulating, creative and fun business from your own home. Imagine no more commuting or car pooling every morning! You would need a telephone and a yellow felt tip marker (fax & computer are helpful, however, they initially are optional) . Employees are not a necessity nor is an expensive retail location required. There are no high priced franchise fees or royalties to pay to some strange company located in an ivory tower in New York or Chicago. Best of all you can do deals in real estate without having been born with a silver spoon in your mouth.
If you have the need to feel like Albert Schweitzer you can rest assured that you are helping your fellow Americans get rid of their problem properties or possibly you are aiding another to get into a dwelling they might own someday with a creative Lease Purchase. You would be in control of your own business and would have a hand in determining your income goals. Sounds great doesn’t it ?? Uh Oh ! There is a catch, however. The following are required to make the above occur:
A. Specialized Knowledge: It takes very specialized knowledge to make money in this business. Read, study, join an investment club or just find yourself a Mentor. Someone who has made it and is willing to share his knowledge with you.
B. Implementation: The Implementation of that knowledge. (The world is full of people with lots of degrees and who have no money!) It takes guts to take that first step and make something happen. If you have gone to the trouble, time and expense to learn something, take a chance at greatness and make it work. If you don’t Succeed the first time, learn from your mistakes and try again.
*Reality Check: I’m told that statistically very few actually make it. I have an acquaintance who left his safe & secure 40 hour/week job and opened a mail box type franchise outlet. He, his wife and daughter all consistently work 70 hour weeks, have less free time and he makes the same amount of money that he used to working 40 hours/week!
C. Hard Work: Sorry folks, I had to use those four letter words! It takes HARD WORK, but it’s the only job you will ever love.
D. Desire: As my Mentor used to say “It ain’t going to happen unless you want to make it happen.” You must have the desire to want to make it in this business. You must have the ability to constantly motivate yourself, to keep making offers on properties and to constantly educate yourself. Only you can make yourself successful!
“Hey, if it was easy , everyone would be doing it!”
In the final analysis, when you add it all together; working at home, low investment, high rewards, job satisfaction, working part time or full time and making the kind of income you feel you deserve, a private Real Estate Investment Enterprise is truly the Greatest Home Business in the World.
Wednesday, March 3, 2010
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