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Learning and Burning

Lease option vs Owner carry paper

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I met with a homeowner the other day and when i asked him how long he'd consider the term for, i asked for 5 years and he said sure. Also, said he would carry the paper for a percentage. So now the question, is one better then the other? If given the option which would you do? and of course why? Flexible seller own's free and clear would also lease/sell fully furnished.

 

 

 

 

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Pros and cons to both approaches. For example, with seller financing I'm assuming the owner will want a sizeable chunk of cash down. Has this been discussed? With a lease option, the option consideration will be considerably less, or at least should be.

Other factors come into play: the homeowner's tax situation and how a sale vs a lease affects this; what is it you prefer to do?; all of the numbers in the deal, etc.

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He does not need or want big up front money. He has agreed to a lease option with first months rents down. He is flexible owns all outright and is a single man who want to travel and not have the house hold him hostage. Because all i am familiar with is the lease option i push for such. But if the owner carry scenario is more beneficial and gives me more flexibility i would consider going this route. I want to learn more about him carrying as to add to my tool bag for closing these deals.

Sale price $190,000 Lease option agreement @ $1300.00 with $300.00 rent credit and a balloon in 5 years is the deal.

I feel the market will support these numbers for a lease with option. With the owner carry scenario and an agreed upon interest rate could i get better terms and still give him security?

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Given the choice as you described, either deal appears a good one for you, but I suggest you give strong consideration to his offer of seller financing. This gives you title and all the benefits of ownership. That said, if you were to tell me you decided to go with a 5 year sandwich lease, I wouldn't say you screwed up. That's also a good deal for you. Crunch the numbers, Mike, make your decision, and lock it up one way or another. Sounds like a good deal and opportunity.

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Hmmmm....

So with this i would go on title and be able to refinance and taxes etc would come to me? In essence id be buying the house from him and all would be filed as such.? Then when my t/b exercised there option i would have to sign off? Is this only possible if owned free and clear? How would this be done as far as paperwork? Would i need another party involved? I have been presented with this in the past and now i feel like i'v left money on the table... No Bueno....

I'm soaking this stuff up and again want to say. Thanks for the help.

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Yes, you would be the owner of record, with all rights and benefits of such ownership. The primary difference being the seller is your bank, as opposed to Bank of America. You could certainly refi if you wanted to if the numbers made sense to do so and if there is nothing in the seller financing that prohibits a refi.

If you did a Rent To Own and your t/b chooses to exercise their option to purchase, then they go and obtain their own financing and pay off your underlying obligation to the seller.

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