Would You Buy A Lease-purchase Contract?

[JerseyJeff 0]

As an investor, would you pay for a Lease-Purchase contract?

 

Let's say you saw an ad for an LP contract for sale:

3BR, 2BA

Term: 3 year

Purchase Price: $300,000

Rent: $2,200

(###) ###-####

 

Would you call and try to buy it so you could sandwich it yourself?

 

All opinions welcome,

JerseyJeff

[jtlab 0]

As an investor, would you pay for a Lease-Purchase contract? 

 

Let's say you saw an ad for an LP contract for sale:

3BR, 2BA

Term: 3 year

Purchase Price: $300,000

Rent: $2,200

(###) ###-####

 

Would you call and try to buy it so you could sandwich it yourself?

 

All opinions welcome,

JerseyJeff

<{POST_SNAPBACK}>

 

 

IF the contract meets your standards and if the numbers make sense for you. I do not see why not. I think I would.

[JerseyJeff 0]

IF the contract meets your standards and if the numbers make sense for you. I do not see why not. I think I would.

 

I'm looking at it from a different point of view. Instead of me locking in an LP and "flipping" it to a buyer/tenant for a fee, if I were to market it to investors with an ad...

 

Investors Wanted:

Lease-Purchase Contract for Sale

3BR, 2BA

Term: 3 year

Purchase Price: $300,000

Rent: $2,200

(###) ###-####

 

...would they(you) pay a fee for it so they(you) can take it and sandwich it from there for the next 3 years?

 

JerseyJeff

[MichaelC 160]

Hi, Jeff. The answer lies in the numbers, as jt said. If I understand you, you are contemplating the purchase of an existing sandwich lease contract. Is this correct?

I'd say it all depends upon the deal. If the numbers work, it you have an exit plan in waiting, etc. But, sure, it can be done. Remember, a good sandwich lease agreement allows one to buy, sell, or assign the deal.

[JerseyJeff 0]

Hey MichaelC...It's been a long time since I've been active on the board...It's nice to be back.

 

Unfortunately, I must not be explaining myself well because I keep confusing everyone.

 

I'm not contemplating the purchase of an existing sandwich lease contract. What I am proposing is just the opposite.

 

I would find a seller and sign an LP agreement with them. I would then market the contract to investors for them to purchase it for a fee (3 months rent?). I pocket the fee and walk away.

 

If I could lock in an agreement with a seller, would this have value to other investors, ie, would they be interested in purchasing it from me for the fee I mentioned?

 

Thanks,

JerseyJeff

[MichaelC 160]

OK, now I understand...

Sure, there is value in a contract, already signed, sealed and delivered, assuming the terms are marketable.

You would be assigning the contract for an assignment fee, the amount to be determined by a number of factors. First and foremost, the value in the eyes of the assignee. If you have a property locked up for four years, for example, at today's price in a rapidly appreciating market, do you think you could find a buyer for that deal quickly? I'd say so.

Not only might an investor be interested, but also the end user. A potential tenant/buyer might want the deal because the standard one year lease purchase deal they are finding just doesn't work for them. You come along with a three year deal, and they just might be willing to pay for it.

Bottom line, Jeff, if the deal is a good one, and you market it correctly, there will be someone who will want to take it off your hands.

[JerseyJeff 0]

MichaelC,

 

Thanks for the response. I figured there would be interest because all of the leg work would be done already, but I just wanted to confirm my thoughts.

 

Thanks again,

Jeff

[mpine 0]

wouldn't it take the exact amount of effort to just find a T/B? I believe we call this a Cooperative Assignment

 

Mike

[-Tony- 0]

JerseyJeff,

 

long time, whats it been a little over 2 years. If you don't mind me asking, why not keep the deal for yourself? would it cashflow and what is the market value now and estmd in 3 yrs?

[JerseyJeff 0]

Hey Tony,

 

It's nice to see some familiar faces around here. Yeah, it's been 2 years. Some changes were made offline; I'm no longer JerseyJeff but LongIslandJeff now. I moved out here when a good job offer came along when I was looking to leave my last company. The move, new job and buying a home (the conventional way) along with the typical newbie fear thrown in there, has taken me away from here.

 

But, I am trying to get back into it, or should I say, into it at all. So I figured the best place to start was where I left off, right here with the great people of The Naked Investor. Although most of the names have changed, everyone seems just as helpful and cooperative as ever.

 

Now to your question:

why not keep the deal for yourself? would it cashflow and what is the market value now and estmd in 3 yrs?

What I am proposing is hypothetical. I find it might be easier to accomplish my first deal(s) if I know i'm just getting it/getting out (I know this probably sounds stupid). I don't have to worry about the contracts(in so much as if there's a problem, I'll probably be out of the deal already), bad tenants, closings, etc., so I feel I might be more willing to get in the pool. I'll have more confidence after a deal or two, I'll see how things went and what, if any mistakes I made, I'll use some of the profit from the first deal to create the LLC so when I get a SLO, it's not in my name.

 

This sounds dumb doesn't it?

[MichaelC 160]

This sounds dumb doesn't it?

No. Quite practical, actually. Your reasoning is precisely why I tout lease purchasing as the best way to break into this business, and especially Cooperative Assignments.

[-Tony- 0]

here is some motivation

[JerseyJeff 0]

Tony,

 

Let me duplicate most of the responses from that thread and say "Wow!"

 

Congratulations. I guess it was worth the wait. Good for you Tony. Glad to see you're still around.

 

I'd settle for a $3K check.

 

I'd settle for any check.

 

I have all the motivation I need at home. Their names are Ashley, Brianna and Caitlyn. They are 4, 2, and 2 months old.

 

Maybe I'll be able to post a copy of my first check on here someday.