Real Estate Investing with Brian Evans Jr
"Potential Questions from Tenant Buyers"
When dealing with lease option buyers, you are going to be asked a lot of questions. Here are some of the main ones that I’m normally asked:
“What if I can’t buy the house at the end of my term?”
“Well, here’s the thing. As long as you're showing good payment history, I have no reason not to help you out and extend this lease, and we will deal with that when the time comes. So why don’t we just move forward with this, and I can just give you my word that we’ll do everything we can to try to help you out. And as long as you're showing good payment history and there are no problems, then I've got to be honest with you, I don’t really have any problem to extend it another year if with have to. Ideally, I want to help you get cashed out, and I want to cash you out and help you get cashed out, but I understand that life happens, so we’ll deal with it if it comes.”
The main thing that's going to allow me to make that decision is are they paying on time, or are they late every month? If they’re that type of tenant buyer, then I probably just want them out. And that's common sense.
“Who handles the repairs on the house?” That's a good question and my response is, “Since you are the lease option buyer, you technically own it, or the right to own it, so you will be doing all the repairs and are responsible for all the repairs. If you're just looking for a renter, if you want somebody to handle repairs, then this is probably not your house. But we want people, such as yourself, who want to be homeowners.” This is exactly what I would say, “We want somebody who wants to be a homeowner.”
“So if anything breaks, you have to fix it. But I tell you what, if something goes bad within the first 30 days, then I'll help take care of it up to this amount of money,” or something. So you can throw that into, too. Everything’s negotiable, but ultimately, in their mind, they fix it. If the toilet breaks, they fix it.
And that's one of the great things. If you have rental properties, that's a big difference from lease option properties. With rental properties, stuff breaks and they’re calling the landlord and property managers, and that's not what we do. That's why I don’t like multi- family homes, because we never get calls, never. And if we do, it’s because there was a huge storm and a tree fell down on something, which has happened too. And that's why you have insurance, and insurance handles that.
“Do I get my deposit back if I can’t buy?” “Well, unfortunately no, this is a non-refundable option deposit. If you were to put a down payment at a bank and you default for any reason, you don’t get that back. It’s the same thing here; unfortunately no. But obviously, you have every intention of buying the property, right? If you don’t have any intention of buying, then we probably shouldn’t be doing business today. So as long as you have every intention to buy, then there should be no problem. But no, it is non-refundable and it applies towards your purchase price.”
“Can I have my attorney look it over?” “Sure, no problem. In fact, is there anything that I can maybe help answer for you that I haven’t answered so far, that is the reason why you want to show your attorney?” Also, I want you to know that when we close, we are closing with an attorney. So, this lease option agreement and everything will be closed with my attorney, 100% professional.”
“Does any of my monthly payment apply towards the purchase price?” “Unfortunately, no it doesn’t, but we do have a down payment assistance program. If you would like to pay some more money over and above your lease payment each month then we can put that towards your down payment which will in turn lower your purchase price.”
“What amount do you require as a down payment?” “Well, that's a good question. It’s case by case and everything varies. What’s the most you can afford to put down?” Notice how I just flipped it and turned it around and asked them a question in response to their question. That's what you want to do. Always answer a question with a question. Everything is negotiable. Do the numbers make sense to you? If the numbers don’t make you excited, it’s probably not something you should be focusing on. And this is simple math stuff. If I see a big spread, I get excited. If I see $10,000 down, if I see a bunch of zeros, I get excited. That little stuff just makes my heart race, because you see a payday.
Again, these are the top questions that I am asked most often from my lease option buyers. Remember that you are free to negotiate and handle everything on a case by case basis. At the end of the day, all that matters is that the numbers make sense and result in a constant monthly cash flow for your business!