| I met Gerald Czernohorsky at my Montreal RE Investors Group. We got together for coffee the other day and he was telling me about his lease option formula that he’s built his business on. I was intrigued because I know there are people out there who have money to buy real estate, however the banks won’t lend them the money because their credit score is too low or perhaps they are a new landed immegrant. If this is the case for you, Gerald has a solution. Partnering up with him will allow you to create a win-win situation and buy your dream home.Let me say from the beginning, working with Gerald, you will end up paying a little extra then getting a tradional mortgage, however saving a lot more then what a B lender would offer you and at the same time, building your credit. The way it works is like this: 1) Call Gerald Czernohorsky and discuss your situation, your wants and needs. 2) From there, you can show him the house you would like to buy or ask him what he has available. 3) He will qualify you by means of a credit check. 4) Go over his agreement with your lawyer, to make sure you are well informed of all the pertinant details. These documents are create to protect both parties. 5) You will need a downpayment, minimum $10,000, which is 100% refundable if you end up buying the property at the end of the lease. 6) Make monthly payments in two cheques. First Cheque: The “PITI Payment”, Principal, Interest, Taxes, and Insurance. This portion is non-refundable. Second Cheque: “Option Consideration” This portion is refundable only if the “Tenant/Buyer” their option to purchase the home. Usually $200-$300, depending on the value of the home. 7) If the Tenant/Buyer cannot afford to pay more than the “PITI Payment” then most likely he will not do the deal. 8) All the paperwork is documented for build your credit score. 9) At the end of the “rental” term, the idea is to go to the bank and get a real mortgage…now that you’ve built up your credit score. 10) As for the selling price it is always set in advance and is clearly stated in the Purchase Option Agreement/Contract. |
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The “Lease Option Agreement” will give you an option to buy in 3 or so years, depending on your agreement. Initially the home is bought by Gerald or one of his investors, and the title will be in their name. The “Tenant/Buyer” will just pay rent. The “Tenant/Buyer” will also take care of any maintenace and repairs up to $500. Anything above that, Gerald will absorb the costs. Buying of the house will be closely scrutinized by a building inspector to make sure the house will not need any major repairs. The tenant can also remodel and do any renovations he sees fit. After all, the goal is to buy the house at the end of the agreed upon term.
As for real estate investors wanting to get into this business, this is a low risk option with some monthly management involved. Getting your paperwork in order is the most important part to protect yourself if the “Tenant/Buyer” does not pay up. If the deal falls null and void you will have to find a new buyer/renter.
To contact Gerald Czernohorsky 514-926-4500, gerrycz@videotron.ca
