I have a house I intended to flip but had some setbacks forcing me to hold. I'm trying to decide to do lease option or Seller finance in a wrap:
Her's the situation:
Current Value: 175k
Invested: 135k (excluding accrued interest)
Can refi with my current private lender from 10% to 6% int only for 3 years making piti approx 825/mo
Mkt rent 1200.
Either scenario cash flows nicely. I want the buyer to qualify to refi in 1-2 years.
So, should I lease option or Wrap? What would you do and why?
I'd use a LO but that's probably just because I'm familiar with LO and I've never used a wrap. One thing that comes to mind though, if they default you can evict a LO but a wrap you probably have to foreclose.
It's very important if you get involved with wraps or subject to that you understand what does it take to repossess the property
Everything depends on you were locality where you live and what the current climate is it landlord-tenant court or foreclosure court
Do not depend on the Guru Materials, invest couple hundred dollars to see an attorney that specializes in evictions am in foreclosures.
Many people don't understand that every state has its own issues, for example Virginia in lease options and in Texas in lease options
@Brian Gibbons just stated info that is so good most people won't recognize the importance....
I want everyone that reads this to print off what he stated...
@David VanSteenkiste you need to determine when you want to be cashed out...if less than 3 years...do a LO...if you like being the bank, do a wrap..
Either way you go be sure to find the lender NOW and ask them how they want to see the deal structured. I have done them both ways and it seems your end game is to be cashed out in 1 to 2 years. (it seems a long way off but trust me it goes quickly) With that in mind you want the underwriter that will be doing the financing to be familiar with what you did so they can apply payments, option fee etc the right way. It is a horrible feeling to have them say, "gee if you only would have done it THIS way we could do it..."
Join the Largest Real Estate Investing Community
Basic membership is free, forever.