Dmcdonald 0 Report post Posted October 17, 2011 Hello all, I'm looking at a deal currently that involes a free and clear home. The seller mentioned the idea of a land contract and wanted more info on that as well as lease options. I'm going to send some literature his way but was wondering, how do the monthly payments compare for the two methods? Are they usually about the same? Thanks! Share this post Link to post Share on other sites
pilot76180 51 Report post Posted October 17, 2011 Every deal is different, but whenever we've had an owner finance house, the payments are usually a little higher than the LO, because of the interest rate of the note. Not saying it has to be by any means, but that's how it's been for us. We normally request a higher down than a LO, plus there are closing costs such as 1 year insurance etc., but it all comes down to what the owner wants. Share this post Link to post Share on other sites
MichaelC 160 Report post Posted October 17, 2011 Dennis, the devil is in the details. In this case, the specific numbers and terms of the deal. Do you any numbers to work with yet? Share this post Link to post Share on other sites
Dmcdonald 0 Report post Posted October 17, 2011 The seller wanted more info on both methods and I figured I'd send a short offer right away too. I'm having trouble with the numbers as this is the first time I've had to valuate a property. Homes in the area are selling for 130k-150k. As well, there was a recent foreclosure that sold as-is (obviously) @ 85k. The house I'm looking at has still not moved (listed with a Realtor) at 100k because it is outdated and most likely needs many cosmetic fixings. If the monthly income from a lease option and a land contract are roughly the same, I'd probably recommend to this seller the lease option as they are older and do not want a long-term solution. Also, since this is free & clear, I'm still toying with the idea of an SLO since the taxes are $310/month and there are no mortgages to worry about and I could get in a decent position here to make a lot on the front and back end of this deal! Share this post Link to post Share on other sites
<Steve> 82 Report post Posted October 17, 2011 Take it as a SLO, with you having the option to purchase with a Land Contract. Take possession and see how the property performs, then decide what offer can be made with a Land Contract. Love SLOs just place a well screened t/b. Share this post Link to post Share on other sites
Jonathan RexfordFL 8 Report post Posted October 17, 2011 Do owner financing period. Note and Mortgage. No interest. Just straight payments or just straight balloon. Offer to pay more for the house to cover some interest. Raise the money against the house with private money. How about this idea: "Lot of YOU" Home worth 100KYou sell for 110K Lease OptionYou offer seller 100K with 20K down.You raise 25K from private lender.You make payments of $208.00 per month to private lender.You pay seller $200 per month say for 15 years.You take in cashflow on your lease option for 800-900 per month.You take the cashout from lease option buyer in two years.You collect the cash at closing by using a substitute of collateral.You have the right to collect minus what you pay your private lender.You take that money and go buy a house.You continue to pay 208 for remainder 13 years or offer to pay off seller. Share this post Link to post Share on other sites
