Finding tenants for Subject 2 lease option financing?

Question

Hey all, An investment strategy i am pursuing are properties i can acquire under 'Sub-to' terms. I would then want to find tenants i could offer lease option terms to. I'm in the Raleigh, NC market. Besides my local REIA, who else could i contact for info on finding qualifying applicants i can offer rent-to-own options to? Craigslist maybe? I would want applicants would could qualify for a loan at the end of the lease agreement but I guess i would also want potential applicants would can't qualify for a conventional loan because of not so good credit. Does that make sense?

Brad Millon · Answer

Craigslist, Zillow and Trulia.

Folks with bad credit looking to buy a house on rent-to-own are not difficult to find.  Weeding thru the ones to make sure they have money for a deposit and that they will be able to clean up their credit and qualify is the bigger problem.

Andre Vitalis · Answer

Thanks @Brian Gibbons. I agree. This is a very thin deal and i did back away from it. I passed the info onto other wholesalers. I need to grow my capital.

Brian Gibbons · Answer

@Andre Vitalis

You profit when you buy, you may want to JV with the seller.

You offer to buy on seller financing, find private lender money for rehab, give a single payment note for the seller's equity.

Say $100K is a fast sale price, - 70K existing - 10K repair - 10K resale costs with commissions and closing costs - $1K private lender interest....THIS IS A VERY THIN DEAL!

Andre Vitalis · Answer

@Brian Gibbons Thanks for the link. That's some good information.

@Bob B. Right now i do not have the capital to pay off the mortgage and would not want to use any personal funds.

@Brad Millon Thanks for tip. As a new investor in the area that's good information to know.

All, shortly after i posted this message i was contacted by a seller who wanted to sell their property. Wholesaling is the only exit strategy i am comfortable employing right now. My conservative ARV on the property is 101k. The property has an existing mortgage on it of about 70k. The sellers asking price is 100k. The seller is open to me taking over payments on the loan, taking possession of the title to the property and taking back a note on the equity, about 30k. The property is need of some repair, less than 10k. If i had the capital i believe i would take on this property but i'm new and still learning. I don't want to get in way over my head right out the gate. Brad, @Andrew S. would this property be appealing to you or someone you know. Maybe someone here on BiggerPockets might be interested. I don't know. Please advise.

Andrew S. · Answer

Reading through and recalling previous threads, your strategies are tricky in NC as laws have changed.  Look for discussions by

@Karen Rittenhouse

Bob B. · Answer

I assume you have the ability to pay off the mortgage if you need to.

Brian Gibbons · Answer

@Andre Vitalis

Check the laws about lease options and lease purchase in NC.

http://law.onecle.com/north-carolina/47g-option-to...

Sub2 should be used short term, like a buy - fix - resell fast, get the loan out of original sellers' name.  NOT a long term hold.

@Jay Hinrichs

Finding tenants for Subject 2 lease option financing?

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