Subject To Vs. Lease Option

[IStealHouses 0]

What is the difference between buying a house Subject to the existing financing and a Lease Option Purchase? What are the benefits / pitfalls of each? Thanks!

[Adam King (MI) 1]

Dude/Dudet,

You take title on a Sub to (More responsibility). You take option on a LO.

 

If you cannot make the payments on a Sub To, you're in deep crap.

 

If you cannot make payments on a SLO, the owner gets the property back.

 

Either way, you should be darn ready to hold real estate. You intentions should always be in check with reality.

 

If you want some advice, I'll give it. Learn your market and see which form of investing suits you. There are great advantages over each strategy based on your market. I however don't do too many sub tos anymore because it's just too easy to do lease options. If I'm going to stick my neck out for a property, I'll just buy the damn thing. I think too many new investors think Sub Tos are a way to start with no money. WRONG!!!!!!!!!!!!!!!!!!!!!!!!!

Do some more reading on the subjects and check your bank account before making a decision.

Regards,

Adam

[Guest Guest_Steve_*]

One advantage of the sub2 is that, since you have the deed, the mtg payment (int, taxes, and insurance) are tax deductible. They are not if you are doing a SLO. That kind of sucks.

[MichaelC 160]

One advantage of the sub2 is that, since you have the deed, the mtg payment (int, taxes, and insurance) are tax deductible.  They are not if you are doing a SLO.  That kind of sucks.

<{POST_SNAPBACK}>

Not every creative technique will be right in every situation, or for every investor's need. And each has its pros and cons.

A new investor should probably stay away from taking title. Things can go wrong, and if my experience with new investors is representative, they often don't have the funds to right that wrong. A lease option is a heck of a lot easier to get out of and save your backside than is ownership via Subject To. So while we aren't gaining tax benefits, we do have a greatly reduced risk to reward factor.

[AmyB 0]

One advantage of the sub2 is that, since you have the deed, the mtg payment (int, taxes, and insurance) are tax deductible.  They are not if you are doing a SLO.   That kind of sucks.

<{POST_SNAPBACK}>

Not every creative technique will be right in every situation, or for every investor's need. And each has its pros and cons.

A new investor should probably stay away from taking title. Things can go wrong, and if my experience with new investors is representative, they often don't have the funds to right that wrong. A lease option is a heck of a lot easier to get out of and save your backside than is ownership via Subject To. So while we aren't gaining tax benefits, we do have a greatly reduced risk to reward factor.

<{POST_SNAPBACK}>

 

I concur...BIG TIME...and as a guru always says..."how do you think I know that?!"

[Jason (AL) 1]

If you're in the middle of a deal...albeit a sandwich lease option or subject-to and

any kind of trouble arises, there's no reason to "jump ship".

As Adam already stated, make sure you have the dough if you're going to

do either.

 

Either way, you made an agreement with the seller(s).

I don't see the point in giving a seller back a property (now with more

problems) just because you couldn't take care of business or "something

came up".

 

Both have their advantages and disadvantages.

 

If you don't think you can handle either or aren't interested, then

there's always those ever-lovable CA's.

[Guest kevindean007@hotmail.com]

what is a CA

[transactionsengineer 0]

what is a CA

 

Buy the manual. Learn all about a CA.

 

http://www.naked-investor.com/the_manual.html

[<Steve> 82]

what is a CA

Kevin, a CA stands for Cooperative Assignment.

 

It is a lease option; however, you are working with the seller setting up the lease option deal. When you have placed a tenant/buyer under contract with the seller you are out of the deal with your fee.

 

It's a short term deal with less risk, and a way to quickly get cash reserves in place should you want to pursue longer term Sandwich Lease Option deals.

[MichaelC 160]

Kevin, do a search for both CA and cooperative assignment. You'll have enough reading material to keep you awake a few nights, and you'll end up with a clear understanding of just what CA's are and why we like 'em so much.