Hmm, Lease option ? How to go about it ?

Question

Their is this property that has been on the market for a couple of months, the price is $86,000. its a 2 unit house and a store front. I'm stuck between focusing on making an offer on the house or finding a buyer. I'm so confused which one come first. This house mortgage is paid off, and it needs some cosmetic work.

How does a least option work ?

Eli Hood · Answer

@NedCarey

I knew it was a fee somewhere, im not worried about that.

@NedCarey How do i profit from a lease option deal ?

Ned Carey · Answer

A lease option is basically rent to own. You have a lease where you pay rent and usually a security deposit.  You also have an option to but the house at a specific price in the future. You usually pay  a fee for that option.

Account Closed · Answer

I don't think anyone will allow you to do a lease option without any money when their home is free and clear.  Most lease option deals require 1st months plus deposit, credit check, verified income... If the seller is willing to do a lease option can you prove to the seller you can pay.

Joe Gore

Eli Hood · Answer

So a lease option is not free ?

Eli Hood · Answer

I'm doing it with no money or no credit.

Bill Gulley · Answer

well, first off, it's mixed use and can be a commercial transaction, but check on zoning, so we can avoid the financing issues with the new laws.

Do you have cash for the down payment?

This won't be an easy property to sell, IMO, unless the street is full of similar buildings. It's unusual, I picture an older building that has been converted to provide a couple rentals because a larger store was probably harder to rent, just guessing.

But, it's not a highly marketable property and the seller has to be aware of that. Financing it may not be easy. So, it makes sense for the seller to consider seller financing.

Keep in mind, if it's hard to finance today, it will be hard to finance later on as well, so you need a fully amortized arrangement or a far off balloon to ensure a low LTV for any bank portfolio loan.

I'd not waste my time with a lease option as in order to take the option you'll need financing, just mentioned that issue. So, move in for the kill, take the deed, give a deed of trust and have the seller carry it. Well, subject to a good price :)