Turn a cash deal into a lease option? How is it done?

8 Replies

Here's a slight pickle I'm in. I'd love input.

Has anyone ever gone back to a seller and renegotiated a cash deal into a lease-option?I've got a property under contract right now to wholesale. I would like to rehab it myself and if I were to take it I would do the required fixes to make a rentable SFH. This includes fixing the foundation work, new flooring and paint throughout, and if allowable in the budget I would include updating the bathrooms and kitchen(not necessary as a rental for a family).

Should I approach the seller, the executor of a probate sale, and ask to restructure the agreement to be a lease-option? This way I can fix up to some degree, rent it out, save up for a down payment of 20% and own it. And how do I explain it the seller. Can I come back and say 'sorry mr seller, I'm not able to acquire the proper financing, but I can rent it from you for $700/month and I'll buy it from you in a year'?

I'm going to do magic and try summoning @Brian Gibbons  who simply loves these types of deals.  Take it away Brian!  :)

Geez @Hattie Dizmond you could take it too!

If you position yourself as a problem solver and not a wholesaler to probate attorneys, you may be able to do some joint ventures.

Steve if you are dealing with executors of estates, they have a fiduciary duty to do the right thing by the deceased and their heirs.

You had originally talked to them about an all cash sale. Without knowing numbers here, the only thing I can think of to talk to them about is a joint venture.

"Mr executor, the best way for you to get the most amount of net cash to your heirs is to get a real estate expert to fix it up and resell it.  This is called a Joint Venture.  I'll use my expertise and my funds, and we will both profit."


One you buy the property subject to existing financing and a note payable when the property is rehabbed and resold (no payments til resold)

Two you get private money to fund the rehab

Three you sell traditionally with an agent

Four you pay off the note to the executor.

Using lease options on properties that need work are not advised. Just ask any attorney about lawsuit liability.

My friend @Rick H. knows more about probate and executors than anyone on this board.  Maybe he can add to this.

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@Steven J.   is dead on...HA...dead on...probate....funny to me.... assign and move on..

Thx @john jackson

Thank you all, for the input.

@Matt Reed  I've currently got under contract, and have been marketing to my first couple rounds of who I believe are true cash buyers. They weren't interested. I may have not negotiated a low enough price on this one. I'm amping up my marketing in hopes of getting others on board. 

@Brian Gibbons  I figured since I had the words 'lease option' this thread had a high likelyhood of you finding it. Glad you found it.

So I'm going to recap where I'm understanding your steps and expound on how it might work for me. 

1. Property was owned free and clear. The only payments necessary to make would be utilities and property taxes. Either the PR or myself can make these payments, or we split them 50/50. I write up a note to the PR for the cost of the property payable upon completion of sale of property. Currently is under contract for $75,929 Cash. 

2. I get private financing at somewhere around 10% to do the rehab work budgeted at $28,780. I could acquire this from family, friends, investors, or a website such as lendingclub or prosper. My rehab budget doesn't exceed the $35,000 limit those sites have. As a last resort I could use one of those lending sites.

3. Sell traditionally with an agent. Should I sign them on now? Or wait into the future? I know I'd feel more comfortable having them now so I can hear where the ARV more accurately would be. I caluculated my ARV at $137,250. Subtract 6% for commision and I'm at $129,015.

4. I pay off the note($75,929) to the PR. 

Calculations: $129,015 pocketed money after sale with Realtor. Subtract PR note of $75,929 and I'm left with $53,086. Subtract the borrowed money($28780) and payments ($310 x 3 months) = $23,376 as total profit. 

Conclusion: Hmm... if this is right this doesn't look to bad at all. If the note to the PR is 10% I'm still at $15k for profit. Hmmm...

What do you think? What should the note be financed at?


you can have no interst for 6 months then 8 percent, win win!

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