Investor · South Padre Island · Member since 2016 · 83 posts · 17 votes
Hi All,
I was analyzing a property(condo with HOA of $150), where I see the county is valuing the property at $39000. The Current Market Value is around $140K. The owner is in distress and wants to get rid of the property. I see that the numbers go haywire as soon as the county values the property at market rate and the taxes go up to $2000. This number is confirmed at I see some similar properties having this rate. The current owner only pays $100.
I was thinking of striking a creative finance deal
- Lease option for 5 years at around $700 - 800 per month and sub lease it at $1350.
Will this trigger a raise in Property tax? Do you typically record Lease Options with the County?
Also since this is a Condo is it typical to pay HOA and or Taxes on Lease Options?
Professional · Memphis, TN · Member since 2015 · 70 posts · 49 votes
9y
Yeah I can see that thought running in your mind. One way to be safe, offer a little less than what you were willing to offer for the monthly payment if it does go up. If you are comfortable were you are at... than dont worry about it. I would do it just in case because the numbers you are giving are dramatic differences. If it was just a little bit... no worries but $2,000 makes your monthly expenses go up by $167/month!!!!!
Another caution area is that association because it is a condo. Associations is one major reason I either sell my property wholesale or retail. I have that luxury where I live... Tennessee. Not everyone does though. Make sure you are in the clear with leasing out the condo.
The good news is... I think you are going at it the right way with a lease option though. It doesnt transfer the deed so no flags will be raised to trigger property taxes getting higher. Now, the assessor may catch on after a while that the taxes are to low... Thats why you buy it right ahead of time just in case they adjust it.
As far as recording the lease option at the court house. You can. I dont unless I feel shaky about the seller. For the most part, I just hold on to the documents myself. If I believe that the seller is trying to pull a fast one on me... Ill go straight to the courthouse and record the documents so I will pop up on a title search. Have the lease option documents notarized really helps with this process by the way.
Not recording is the way to go though if everything is smooth. Lets say you give the property back to the seller. If you recorded the Lease Option look who will have to sign some documents later when they go to try and sell the property. Lets say they cannot find you... Than the seller cannot convey clear title and they will have to go through a suit to quit the title just to get you off title (Chances are they wont even know how to do that) In this case, you are causing a problem without meaning to.