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when working with a lease option, when does the option consideration have to be paid to the owner of the house

i'm having trouble with this, if I get a house on a lease option, and want to lease it to somebody else, do i give the owner the option consideration money as soon as i get the house, or as soon as i get the tenants in?

Public Comments

1. I believe it's upfront, when your lease starts, not your subletter's lease. Remember you need your landlord's written permission to sublet. Why would you want to risk losing the house by subletting? If your tenant messes up, you might lose the house.
2. When you have a lease option IT IS IN WRITING; it spells out exactly how long the option lasts; when it expires; when you have to exercise it; etc. if you don't have it in writing; you ain't got nothing and you had better get an attorney
3. The lease option is between you and the owner, so you have to give him the non-refundable option fee as soon as the contract is signed. Then you assign your contract to the new tenants for a higher option fee and higher lease terms and collect from them a non-refundable option fee. In California, this is a high risk way of making money because if the option fee is higher than one month's rent or if any of the monthly payments get applied to the purchase price of the home, you simply cannot evict the tenants if they stop paying rent. Then throw in the possibility that the owner doesn't pay his mortgage and the bank starts foreclosing. Lots of fun! All this real estate investing education is just another way of being an unlicensed real estate agent. For example, as a licensed agent, I would approach the seller with renting out his house for 6% commission and then another 3% if the tenant buys in some time in the future by using a lease purchase option contract. There is no risk on my part and I still made money. You're basically doing the same thing I am, but obligating and risking your money in the process. Regards