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“It’s been awhile. I’ve got two questions. Do you have an attorney contact either where you live or one who’s familiar with laws in other states, particularly Minnesota? I just need some peace of mind that I can protect my real estate license and know that I have an attorney who’s got my back if anything were to come up. I’ve been told over that our Commerce Department hates lease options with a passion, especially if you’re licensed because now they have something to go after and make an example of. However, I haven’t given up what you teach. The biggest thing they don’t like is the fact that we’re making a good amount of money up front from people who will likely never exercise their option.” – Ryan Dybeck
Joe: First, let me say you’re also making money as an agent from people who are selling their property up front before they make any money on it, so if you sell to another investor who has not made any money yet and you make a commission on that deal and you make more commission than he makes as a profit, have you done something wrong? – no, of course not.
Joe: It’s the same situation here – what you’re doing is facilitating a sale, you’re making sure everybody understands what’s going on, you’re disclosing all the problems to them which is one of the things that we have in the lease option agreement that we have everybody sign, so everybody understands what’s going on in the transaction so you’re not going to have this kind of blowback with the commission.
Joe: Also, it’s very legal for a real estate agent to sell a property on a lease option. It’s done every day, all over the country in every state, every city and all over the world actually, so you’re not going to have a problem with that. Now, if you have any questions about lease options and how to do them, then what I would do, if you’re a real estate broker, is call your real estate board’s online broker.
Joe: There’s going to be somebody on every board that you can call up (ours is called the LESA hotline) and we can call that attorney up and we can ask them questions as a broker (I’m a broker as well). ‘Is it legal if I do this? What’s the best way to do this to protect everybody? Do you have any suggestions on this? Would you suggest that I do it a little bit differently? Is there anything that you would suggest that I do?’ So you can do that for free if you’re a real estate agent; they’ll take your questions.
Joe: They want people to comply with the law, and they want to be able to make sure that you have consistent answers to legal questions. Now in addition to that, you can find any good real estate attorney that understands creative financing – if you can find a real estate attorney that understands creative financing, they will be able to tell you whether or not what I’m suggesting is accurate.
Joe: Now, I know that it is legal. I know it’s legal for agents to do it, but you want to make sure that you do it properly and I understand that, so give them a call and get their personal legal advice. Rather than me giving you the name of my attorney, I think you’d be better off finding somebody locally that you can use that understands real estate investing where you’re at.
Joe: It may take you a few phone calls before you find an investor who understands creative financing, so don’t be surprised if it takes you five or ten people to do that. Just to find a CPA that understands how to use creative real estate investing for a Roth IRA for my personal use took me several years to find, so it’s not always easy to find the right person for the job.
Joe: But if you’re going to ask the question, get somebody who’s qualified rather than somebody who just tells you no because they don’t understand it properly, which I something that I see is common in attorneys. If they feel uncomfortable or they don’t understand the process or don’t want to spend the time doing the research and you don’t want to pay them for the research, they may just tell you, ‘Don’t do that.’ and that can cut off a whole side of your business.
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