Contract for Deed - Can a list it as a Lease Option?
I've recently purchased a new investment property through a seller financing/lease option hybrid. Here are the details;
Purchase price: $60,000
3 bedroom, 1 bath
2 car detached garage
Financing
- $5,000 down payment
- 0% interest (not a typo)
- $450/month payments for 6 months, then I will be purchasing the property. No option, I will be purchasing it. Terrible cash flow for 6 month, I know. See below.
- All payments go towards premium
- No early pay off penalties
I am currently seeking at tenant at $650/month. We are in a college community, and I took possession of the property during the middle of the semester. It'd typically be a $700-725/month house.
QUESTION: Can I lease option this property? Could I sell it prior to actually purchasing it? If I did <$2,000 worth of work (new kitchen & bathroom flooring, painted finished basement, and a few little things), I think could sell this property for $75,000.
*Explanation of cash flow & financing*
While it's not great cash flow, the 0% interest for 6 months won me over. At the end of 6 months, the principal amount will be $52,300. Even if the house only appraised for $60,000 when I finance it, I will only have to come up with $1,300 + closing costs while having tenants pay for $2250-2475 (5-5.5 months) of my down payment. The bank I use finances 85% of the appraised value of the home, not the purchase price, which should leave a $340 mortgage on the home.