eSignature Licitness for Rent to Own Agreement in United States

How to eSign a document: eSignature licitness for Rent to Own Agreement in United States

[Music] bob is in camden new jersey to start off this hour hey bob how are you uh doing pretty well dave how about yourself better than i deserve how can i help well i wanted to get your take on the idea of purchasing a home with a land lease agreement as being sort of a middle of the road solution between renting and then traditional home ownership so what is the structure of the deal so basically i would be able to purchase a home which would be and a decent quality smaller home like two bedrooms one bathroom for about a hundred thousand dollars which i could immediately pay most if not the entire price and essentially have no mortgage however i would have to pay approximately eight hundred dollars a month for the on the land lease agreement so it would effectively be a giant um hoa agreement and i see that as a middle of the road solution between continuing to rent and paying 1500 to 2 000 a month in rent which i don't really want to do or at the same time buying a traditional home in south jersey which unfortunately the average nice home in south jersey these days you're looking at four hundred thousand dollars which would take on all kinds of debt which and i'm a big believer in the debt is dumb mentality so being a centrist kind of guy that tries to find answers in the middle i was wondering if the land lease agreement might be a happy medium for me uh how long is the land lease um i don't know off hand i want to say as far as i know it would be an indefinite agreement but yeah there is a campaign oh it has to have a cut off if it's if it's approaching infinity it'd be a 50 year but they don't um uh a lease has to have an end date or it's not a valid contract in any state so um gotcha i would have i would have to look into that more more deeply i appreciate you bringing up that point if it is a short lease a short-term lease a hundred percent no okay if it's a long-term lease you can do it and the downside is it's almost impossible for a buyer to buy this from you with traditional financing fha va fannie mae will not write a mortgage on this deal so your pool of buyers when you get ready to sell is going to be small thus you're not going to get much appreciation okay the long-term land lease is almost never used in a residential setting it's typically used in a commercial setting and it's not unusual at all to do like a bill to suit with a long-term land lease and you know a 25-year lease or a 30-year lease and during that time the investor that owns the actually owns the property so you don't own the property uh you because the prop the dirt is not yours you don't you're not purchasing a house you're renting ground and putting a house on someone else's ground and that that that that's the legal position you're putting yourself in so um you know you what i would do if i would use i'm going to continue to investigate it because it's kind of an interesting different concept and try to continue to poke holes in it uh having done 3 000 real estate deals in my life including a couple of them with 50-year leases on commercial deals i would not do this deal because i don't think it's got a good upside resale on the back end even if it's the best of situations because it's such a weird deal it's so unusual that it's going to be hard to get financing hard to get buyers off the back end anytime you have a limited pool of buyers off the back end you're going to get limited appreciation and it's going to make you wish you had just gone ahead and done the other regular traditional deal yeah this sounds like it's better than rent to own but it still has some risks involved yeah because you don't fully own it well it's approaching a condominium situation i mean with a condo you don't technically own the dirt under your condo you may not even own the i mean you may you maybe your condo might be sitting on someone else's condo it could be a my town home i don't own the dirt you don't on yours because the town home is one giant structure yeah so okay you know then that's just a similar situation yeah and so but the the difference is that the that is a traditional deal it's not a lease in that that's a it's a condominium document um or in new york they they will use a different document called a co-op document but it still works very similar to a condominium document but that that you can get permanent financing on yeah not that i want you to get permanent financing but the you want to have something that can get financed when you get ready to sell it because that's going to limit your market otherwise if cash buyers are your only buyer coming back in you you know you're not going to get much appreciation it still sounds like this is kind of a shortcut i would just go ahead and save up a down payment do traditional financing on you know a home in south jersey i would get 20 or 15 on a 400 000 house and yeah do it that way but i also couldn't resist investigating it further just because oh yeah you love real estate i always like getting into weird deals and figuring out what's going on