Subject to, lease options or buy cash

[Jamie Parker]

I received a call from a seller that is interested in selling their property. The seller has recently closed on a new home and are motivated to sell. They also are interested in listing the property if it does not sell within the next month. The subject property is free and clear. As a wholesaler I am interested in picking up 1 or 2 rentals this year. How ever I am early in my investing career and do not currently have the capital to buy the property cash.

2/1 

82x100 lot

R6 Zoning

in a new construction part of town. 

The question is:

1: Lease option the property and sublet the lease option to renter(s) over a period of time with the option to buy in 3-7 years. 

Pros: The seller makes an income on the property. I make an income on the property and gain experience as a landlord. Eventually sell the property to a lease option renter making the difference on the appreciation of the property in the market. 

Cons: I have not rented a property and have no experience. Typical cons of rental properties as I do not have any money saved but have an income paying job. A capital expense(roof A/c, etc.) could effect my ability to properly manage the property and cover major expenses. Not being able to find a renter to buy the property during the lease option period. 

2. Subject to, same as Lease Option but longer terms to pay off purchase price. 

Cons: More risk because of length to also not able to put down huge down pay to get terms low enough to influence cash flow. 

3. Buy cash, In a cash situation I will wholesale to a builder. 

Cons: Not being able to partake in the income flow of a rental property situation. 

Last Question: 

Based on lot size and zoning this property should by purchased around 150k-200k if the builder has a plan for the odd shaped lot. Flat lots in the same area are 50x150 are selling for 180-230 in the area. 

Subject to/Lease Option as a rental what would the price range be. (commonly Landlords can pay more). 

Any help would be beneficial.  I walk the property next week and plan to present an offer. I thought it best to not negotiate before at least taking a look at the property. 

Thanks