Potential Lease Option? What Strategy to Use?

4 Replies

Greetings,

I spoke with an owner of a vacant property who now lives in Florida. This property is 3 beds 2.5 baths 2600 sf. and is in move in condition. This house has been listed on the market for 9 months and has received no offers. The seller is considering pulling the house off of the market since there has been no action. She is asking 295k and comparable properties have sold between 250 and 320k. She owes 210k on the existing mortgage and have been paying the $1800 monthly PITI payments for 6 months now. She would like to move the property but is not hurting for money. The issue is that there is a colonial house on the same street that is 3b 2bath 1500sq on the market for 217k that has not sold in 4 months so this area seems flat. The other concern is that I live about 45 mins away from this property. I was initially thinking sub2 or cfd with the seller holding some of her equity in the form of a second mortgage and finding a tenant for rent to own. But then again an assignable option may be more appropriate since I don't really want to do a SLO. Any thoughts?

Thank you!

I would do a lease option assignment with a 3% assignment fee, I don't know where the location is because of quality house look at quality tenant buyers and find someone who just got turned on for financing, look at buyers agents that just had somebody turn down for FHA loan

What are similar market rents for this size property in this area of town? 

Are you going to try to get it for the 210?

Thanks @Brian Gibbons  I will check in with buyer agents and see what they have. Now with the assignment, once we assign the option we are out of the deal correct?

@Aaron Junck  Market rent in that area in averaging around 1900 per month. I could offer 210k, but from speaking with the seller, she is looking for some equity and her motivation is not to the point where I could get this for what she owes. Which is why I was considering the assignment.

Just a word of warning: Lease options are not what they used to be as they can now fall under the seller financing "rules" of Dodd Frank . Be mindful of how use them and how often.