Been doing this strategy for over 20 years. Did Kevin Choe first deal using this strategy 3-4:years ago. I even do cash out refi for the seller to use cash to purchase their next property
@@ampthegamergod2223if the seller needs cash to buy their next house. I've had the seller pull cash out of the house in a form of refinance or a second lien, just need to make sure your monthly cash flow works
Brilliant, Pace! 🧐 ... We actually are doing this with a deal we're negotiating right now ... Question though 🤔 ... How do you handle the time between signing the Lease-Option (and making payments) and the time the seller actually moves out of their house (considering they aren't able to move out until their new loan gets approved and they buy their new place)?
hey there, I'm in pace's awesome subto group so let me share what I know. once lease option is drafted to suit underwriter's needs, quickly signed, 2-3 months payments for lease sent upfront within likely 24-48 hours. You then show underwriter proof of paid funds and then underwriter can approve for loan. this process is very fast if everyone is doing what they should. then, after new mortgage is approved, option is initiated and converted back into nice subto
@@REIwAlexY Hi Alex! Okay gotcha. So what about that "in between time"? The time between you executing your option to buy the house, and the time they actually move out of the house and it's yours to do something with? (Because even if they get approved for the loan, it's going to take time to find a new house to move into, or at the very least, close on one they like and move everything over to the new place, right?)
@@dr.jasonbaca ah I gotcha. Well there are a few possible solutions. The best case scenario (like shown in this video I believe) is the seller already has a house they are purchasing. So there would essentially be little to no down time. But in the case there isn't a home already picked out, the most common is people move stuff into storage and then get a temporary place like a short/mid term rental or with family as they now don't have to worry about mortgage and have down payment/upfront payments made to utilize. And the thing to keep in mind is that all the money you are paying them during the lease part is money that will decrease your option price when they finally do move. So all your "expenses" during the lease period are actually just increased down payment essentially towards the option price. Does that make more sense now?
@@REIwAlexY Hmm, okay, yeah that makes a lot of sense ... I know investors who are really big on NEVER closing on a house while the person is still in it ... And others who NEVER give them money (even in the form of a lease) until you have the deed/keys ... So I'm just trying to picture this scenario in my head to see how risky it seems to close while they are still in there or to be spending money before you actually have ownership of the house. :) But your answer has been very helpful, Alex!
hey there, I'm in pace's awesome subto group so let me share what I know. this idea IS legal in ALL states. the only difference is the exact name and type of documents needed. for your specific example of Texas, this would be called an executory contract instead of lease option but its basically same thing.
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Been doing this strategy for over 20 years. Did Kevin Choe first deal using this strategy 3-4:years ago. I even do cash out refi for the seller to use cash to purchase their next property
What does that mean? You refinance the home and give the seller a portion of it back to keep?
@@ampthegamergod2223using equity in the house as down payment
Amazing man!
@@ampthegamergod2223if the seller needs cash to buy their next house. I've had the seller pull cash out of the house in a form of refinance or a second lien, just need to make sure your monthly cash flow works
Can you explain a bit/give an example of the cash out refi situation? Haven't heard of that strategy yet
Brilliant, Pace! 🧐 ... We actually are doing this with a deal we're negotiating right now ... Question though 🤔 ... How do you handle the time between signing the Lease-Option (and making payments) and the time the seller actually moves out of their house (considering they aren't able to move out until their new loan gets approved and they buy their new place)?
hey there, I'm in pace's awesome subto group so let me share what I know.
once lease option is drafted to suit underwriter's needs, quickly signed, 2-3 months payments for lease sent upfront within likely 24-48 hours. You then show underwriter proof of paid funds and then underwriter can approve for loan. this process is very fast if everyone is doing what they should. then, after new mortgage is approved, option is initiated and converted back into nice subto
@@REIwAlexY Hi Alex! Okay gotcha. So what about that "in between time"? The time between you executing your option to buy the house, and the time they actually move out of the house and it's yours to do something with? (Because even if they get approved for the loan, it's going to take time to find a new house to move into, or at the very least, close on one they like and move everything over to the new place, right?)
@@dr.jasonbaca ah I gotcha. Well there are a few possible solutions.
The best case scenario (like shown in this video I believe) is the seller already has a house they are purchasing. So there would essentially be little to no down time.
But in the case there isn't a home already picked out, the most common is people move stuff into storage and then get a temporary place like a short/mid term rental or with family as they now don't have to worry about mortgage and have down payment/upfront payments made to utilize.
And the thing to keep in mind is that all the money you are paying them during the lease part is money that will decrease your option price when they finally do move. So all your "expenses" during the lease period are actually just increased down payment essentially towards the option price.
Does that make more sense now?
@@REIwAlexY Hmm, okay, yeah that makes a lot of sense ... I know investors who are really big on NEVER closing on a house while the person is still in it ... And others who NEVER give them money (even in the form of a lease) until you have the deed/keys ... So I'm just trying to picture this scenario in my head to see how risky it seems to close while they are still in there or to be spending money before you actually have ownership of the house. :) But your answer has been very helpful, Alex!
beautiful explanation. Thank you.
Glad it was helpful!
Pace, if I'm in a Sandwich Lease Option w/the seller and my Tenant Buyer is ready to buy, how can I sell a house if I'm not on the deed? Thanks!
Can't sell what u don't own
genius at work
Thank you, thank you very much
Talk to me about doing this in Texas please! (I know it's not legal, but it's a way to still legally get it done) Thanks
hey there, I'm in pace's awesome subto group so let me share what I know.
this idea IS legal in ALL states. the only difference is the exact name and type of documents needed. for your specific example of Texas, this would be called an executory contract instead of lease option but its basically same thing.
Ya TX has alot of regulations around this
Texas Property Code 5.072 does not allow oral executory contracts.
@@alankalupa7585 yep, that's why you don't do oral ones. Everything in writing or it didn't happen
@@Mark.Monroe yep! After 2005, a whole lot more got steadily added sadly
ok ok ok but wait...I don't have $100k or proof of funds to show the underwriter. What then? No SUB2's to for me!
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@@PaceMorby tu eres el hombre Pace Morby.