Insurance for Lease Options
Insurance for Lease options
What does this clause mean? From page 109 in the Lease Options book: "Seller agrees to change their homeowner's insurance policy to a non-owner occupied policy and to name the purchaser as an additional insured within three days of purchaser taking possession of the home." Are you talking about the agreement between me and the seller not me and the buyer/tenant right? How do you get the owner to not try to do this themselves after you present it to them?
This clause is for the protection of the owner mostly. It insures they have the right type of insurance for their lease option on their home. If they don't change their insurance and they have the wrong insurance, they might not be insured if something were to happen. You get them to do this by letting them know they NEED to do this to protect their home. Have them talk to their insurance agent to get the right type of insurance for their lease option home. Usually the expense for insurance on a lease option to the owner is minimal if anything, but it is crucial for their property protection.
I am a real estate agent and how would I get paid because I am not sure where the money would go to. Would it got to my broker?
Any commission always goes to your broker, but not the profit on the deal as an investor.
How do you make sure that the owner/tenants are really going to be able to get qualified for a mortgage? Do you get that information up front from a mortgage company about what is needed for them to get a loan. Then put it in their contract that they need to take steps to secure? (I hope you get that)
You never know if anyone will be able to buy or not on an option but if you are talking about a Sandwich Lease Option then you are in the middle. This means they are somewhat "sheltered" from the tenant anyway. Get much longer with the seller then you will need for most buyers. For instance, right now many buyers need 2-3 years so get 5 years from a seller. This gives you the time to put a second buyer in if the first does not exercise. If you are doing a cooperative lease option then the seller will be cooperating with you to select and finalize the tenant buyer.
Clear? Questions? feel free to ask more on this...
This entry was posted on Tuesday, January 18th, 2011 at 3:12 pm and is filed under Lease Option - General Stuff. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.