Lease Option Deal feedback

5 Replies

Greetings all. Can I please get some feedback on a possible Lease Option deal? This will in essence be my first deal and I don't want to jump on it just because its there. Your opinions on this would be greatly appreciated.

3bd/1bth/1 car driveway

961 sq ft

The owner paid $200K in 2006, market value now is $150K-$160K

PITI is $1,100.00

My thoughts are to get a 4 yr lease option with a purchase price for today's current market value. Monthly rent will be the PITI. Then sublet for $1,600.00. Rent comps in the area run $1,200.00 - $1,500.00 for regular tenants but Section 8 runs $1,600.00 so that too is another option.

Any thoughts or feedback would be appreciated.

First question have property values started to rebound there?

@Jeremy Tillotson  

It's more like the values have stopped dropping. There's been a 1.9% increase over the last year in property values in that area.

whats the current owed on the loan? I am not sure I would do this, thats a large payment to cover if you are vacant. You also dont want to get to closing and have more due on the loan that the deal is worth.

@Jeremy Tillotson  

He claims to owe approximately $185K. I don't have the definite number yet. This deal is not in stone but this is the initial. I am wondering if I should continue to look deeper and get more info or just to let it go based off the basics he gave me.

if you can make the pay down and appreciation work in your favor and you are comfortable with it, then sure. I haven't done deals like that but plenty of people have and have done good. Markets are coming back strong here, so say 3-5% appreciation comes it might be great. We are at 3% already.

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