Question on lease option and subject to

1 Reply

Anyone out there,

I got a question. I'm a single mom and trying to do a subject to and lease option. I need some guidance here.

I know I filled the purchase agreement, deed contract, and assume to pay the seller's mortgage. The deed contract, will I closed at a title company? I'm looking to rent that property within the next 3 years and sell it to another buyer.

How do I profit that? or have a smooth transition.

Now lease to option. I'm reading a book from an investor who wrote it. I have some questions. If the seller sold $100,000 and still have equity, I accept her/his offer, paid $1,000 option to buy. Let's just said I found a tenant buyer and offer the selling price to her for $160,000 and he/she paid $5000 option fee for 18 months.

My question is how to the seller gets paid when she sold $100,000 to me and how do I get paid when I sold $160,000 to the tenant buyer.

I know it sounds confuse. I would like an mentor if anyone can help. I went to the flip men TV show workshop but not willing to pay $41,000 on doing these deals. If I can find a mentor that of course is affordable but not too expensive like those workshop, i'm willing to pay.

Thanks,

Amanda

Originally posted by @Amanda Herr :
Anyone out there,

I got a question. I'm a single mom and trying to do a subject to and lease option. I need some guidance here.

I know I filled the purchase agreement, deed contract, and assume to pay the seller's mortgage. The deed contract, will I closed at a title company? I'm looking to rent that property within the next 3 years and sell it to another buyer.

How do I profit that? or have a smooth transition.

Now lease to option. I'm reading a book from an investor who wrote it. I have some questions. If the seller sold $100,000 and still have equity, I accept her/his offer, paid $1,000 option to buy. Let's just said I found a tenant buyer and offer the selling price to her for $160,000 and he/she paid $5000 option fee for 18 months.

My question is how to the seller gets paid when she sold $100,000 to me and how do I get paid when I sold $160,000 to the tenant buyer.

I know it sounds confuse. I would like an mentor if anyone can help. I went to the flip men TV show workshop but not willing to pay $41,000 on doing these deals. If I can find a mentor that of course is affordable but not too expensive like those workshop, i'm willing to pay.

Thanks,

Amanda

Hi Amanda,

You are a single mom and you want to do a "subject to" and a lease option. I highly recommend you get an attorney for your paperwork.

It sounds like you try to do a sandwich lease option, where you are sub-leasing and sub optioning after you lease option the property from a seller. If you are broke with little cash I would not do that.

You are an essentially guaranteeing a payment to the seller, and if the tenant buyer who you are renting to does not pay you, you still have to pay the seller. Sandwich lease options cannot be done without some kind of reserves of 2 to 3 months.

An alternative is to buy sub2 and a note or deed of trust for his-her equity.

Subject to existing financing or sub to, I believe you need to be careful. The alienation cause or due on sale clause is a clause in the mortgage that allows the lender the option or choice to call the loan due and payable. This "due on sale clause" can get you in hot water if you're not prepared to refinance with either conventional financing or private financing.

You say you're reading a book on lease options.

If the seller lease optioned for $100,000 and still has equity, and you enter into a lease option to buy with $1000 in option money with the seller, is that right?.

But say you found a tenant buyer and offer the selling price $160,000 and she paid a $5000 option fee for 18 months.

That's a mistake.

Use renewable 12 month lease terms are you have a due on sale clause violation in the lease option.

Regarding mentors, there are many articles here about gurus and overpriced courses. I'm real estate coach and I'm not ashamed about it. But I am far from a "guru".

See this link about hiring a mentor and finding the right one.

http://www.biggerpockets.com/forums/12/topics/77458-j-scotts-faq


Amanda, there are 20 million houses out there that have very little equity. I just wrote a business plan on this link for low equity deals. For free.

http://www.biggerpockets.com/forums/87/topics/128458


BP nation is all about helping people find answers without gurus. I would like to advise you to make your question specific and simple, because this post is far from specific and simple. Go to this link to find the most appropriate form to ask your question.

http://www.biggerpockets.com/forums/categories

And I wish you the best of luck.

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