Purchasing homes

4 Replies

I'm interested in buying homes and then selling with lease option. Do I need to find "great deals" to make this work or is it possible to pay market price for a house and still profit from selling with lease option?

@Don Wortmann

Selling at a small premium like 5 % above comps is ok on an option to buy, watch out for predatory lending.

Dodd frank has stopped rent credits toward purchase price or down payment, can give credit toward closing costs.

@Bill Gulley may want to add

Originally posted by @Brian Gibbons :

@Don Wortmann

Selling at a small premium like 5 % above comps is ok on an option to buy, watch out for predatory lending.

Dodd frank has stopped rent credits toward purchase price or down payment, can give credit toward closing costs.

@Bill Gulley may want to add

 Welcome to BP Don, 

I could go into great depths of doing options and leases, but 3 reasons I won't here;

1. That information is already on BP, you can search by topics and pay close attention to my posts or you can search through my posts.

2. If I were to go into details, I'd only be talking to you and Brian pretty much. The rest of the BP folks probably won't be finding this in the future.....why?

Because your title of this thread doesn't include the subject, "lease-options" so others won't be going to it if they are looking for information on options. 

Having to retype the same information over and over isn't fun or helpful, I doubt you like telling someone something a dozen times just for their immediate benefit because they don't want to put out any effort, forming a detailed question or topic.

If you want the best members to reply to you, you'll need to be more detailed and understand more about your topic, otherwise its just forum chatter and folklore by those without a clue. 

3. IMO, your question indicates some guru tactics, selling for more because you arrange financing options, financing does not add value to any property, so someone is getting screwed. This tactic might be fine dealing with cars, but real property is not personal property and that mind set of how to profit doesn't wash, it's predatory dealing and lending. You add value to real property, many ways to do that but you need to learn real estate before attempting to deal in real estate, you don't learn real estate on BP forums or from gurus, get a text book Realtors use to pass the state examination. That teaches real estate and start at page 1, chapter 1.

Yes, you can buy at market value, add value, then sell with an option or installment contract and then profit. Key part......add value! Good luck :)

  

You can add value to a property simply by offering it as a rent to own. The "value" itself is intrinsic, but you add real value by being able to appeal to a larger audience of buyers... that alone can be accomplished with the lease option method. Anything that makes it easier for people to aquire a home is going to be attractive. So purchasing at fair market price and reselling on a lease option for a slightly higher price is absolutely fair and will always attract buyers... although, if you can lock a seller in at 80 or 90% ARV... all the better!

@Jay Hawthorn  

What @Bill Gulley was saying about predatory lending is "slightly higher price" is like 3 to 7% higher, not 20% plus higher.

Many lease option assignments - cooperative assignments - wholesaling LOs folks try to get too much as an "option fee", where many deals at a fair option fee of 3% will build you a good reputation.

Yes buying at 80% of FMV and selling at 103% of FMV is just fine.

And as long as you understand Dodd Frank and do not use rent credits for down payments or purchase price reduction, only with closing costs (if that), should be good to go.

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