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Guest James Buster

lease/option in expensive areas

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Guest James Buster

In expensive areas like Silicon Valley (median house price: > $450,000), market rents don't nearly cover the seller's mortgage, let alone taxes and insurance. A house that might rent for $2200 might have a PITI of about $2800. Even a *very* motivated seller will laugh at your offer of $2200/month for their $2800 PITI. Do lease-options work in this sort of area, and if so how?

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James,

An unmotivated seller will always laugh at any deal you come up with, however, a truly motivated seller will be more than happy for you to simply take over his or her payments. In the case of Silicon valley anyone looking to rent to own in a hgh priced area for whatever reason will be happy to pay above market rent for the easy terms and will be able to afford the payment. Their reason for leasing from you may not be financial but may be due to not being able to qualify for a mortgage conventionally due to credit problems. As far as the truly motivated seller he will have no choice but to give you control of the property for his payment only or else risk damaging his credit and losing his home. Just make sure to negotiate the longest possible term with the seller and offer no money up-front. His profit will come at closing. Appreciation will be what carries the profit in this deal. Just a thought.

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