LEASE OPTION VS SELLER FINANCING

Ok have a investor that is tossing the idea of lease option vs seller financing ... property is paid in cash ..... please let me know pros and cons thanks

I actually WS this property to the investor a year ago and I want to help him capitalize on his investment let me know your thoughts people thanks

Dan Schemerhorn

Real Estate Investor · Elmira, New York

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Sep 23 '11, 04:16 PM

Lease option the seller still retains title to the property. Lease options DO NOT have to be optioned to buy at the end of the lease term.

Seller Financing the seller is acting like a bank.

Pros and Cons depend on which side of the fence you are on. I have used BOTH as a buyer.

Thanks

Dan Schemerhorn
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Edited: 09/23/2011 at 05:10PM by Moderator

Robert Brown III

Real Estate Investor · Orlando, Florida

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Sep 23 '11, 04:50 PM

Dan,

Thanks for your input I will be meeting with my Investor Seller tomorrow. We will go over some different options and find out what is ultimate goal is. Much appreciated.

Robert Brown III

Real Estate Investor · Orlando, Florida

39 posts
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Sep 23 '11, 04:51 PM

*what his ultimate goal is*

Dan Schemerhorn

Real Estate Investor · Elmira, New York

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Sep 23 '11, 06:07 PM

Awesome, Good Luck

Dan

Randy Rodenhouse

Real Estate Investor · Mount Pleasant, South Carolina

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Sep 26 '11, 07:51 AM

If you are selling on lease option the pros are:
1. you get the expenses and interest write off on your taxes
2. you continue to hold the title which is a stronger position.
3. In most states easy to remove person if they don't pay by evicting them (some states consider lease option it equitable interest)
Cons are:
1. You have to pay the property taxes and insurance with the lease option
2. Small down payment (option consideration) with lease option usually 3-5%.

When selling on owner financing the pros are:
1. you no longer have to pay taxes and insurance
2. get a bigger downpayment (8-10%)
Cons for owner financing when selling are:
1. no longer carrying the title since you deed it to the buyer
2. have to foreclose to get the person out of the property

Hope this helps
Randy Rodenhouse

Jeff Bennett

· Wayne, New Jersey

1 post
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Sep 28 '11, 02:20 PM

Whether you sell on a lease option or seller financing depends on your outlook on the economy. If you think it will improve in the next 2 years (easier to get a mortgage and property values stabilize) or you think things are going to get worse. If you lease option and things get worse your buyer will not be able to either get their mortgage or the property will not appraise out. I buy seller financed notes nationwide and find them easier on all parties and allows the seller to gain some needed cash when needed - from the future payments.

Dennis McDonald

· West Allis, Wisconsin

10 posts
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Sep 28 '11, 03:26 PM

One school of thought is that is all depends on equity. If there is little equity, then a Lease Option would be used; if there is a decent amount of equity (20%+) then a land contract would be better. Personally, I don't like the idea that I may have to foreclose on someone as opposed to evict, although that may just come from a lack of understanding of the foreclosure process.