Wholesaler · San Antonio, TX · Member since 2015 · 10 posts · 0 votes
Owner has this property on the market FSBO for 362.5k, he will sell for what he owes 352k. Property is worth 390K. Payments and taxes are current. Mortgage payment is $2,310 PITI No repairs needed. He needs to sell as soon as possible since he is getting relocated for work. Initially he is open to Lease option to buy within 6 months of lease. He doesn't want to pay commissions nor closing cost. House has been 21 days on the market already.
I'am thinking to offer Subject to or owner financing for what he owes. (I understand in Texas you need to own the property to be able to offer a lease option on the exit). I would be asking for at least 3 to 5 years terms with 0 down with a balloon at the end of term.
The exit I am thinking is looking for a Tenant/Buyer asking for a sales price of 390k with 30k down non refundable deposit. 3k worth of rent and a balloon at the end of the term I get?
This would be my very first deal. I would really appreciate thoughts and ideas.
Tom, thanks for your input it brings some valid points.
1.- My mistake about the down payment since he is willing to sell for what he owes.
2.- Texas has a very unique market. You have foreign nationals moving here that can't qualify for a bank mortgage, yet they have the cash for a down payment in that neighborhood. Also I figured I could take less if that is the case.
3.- About the due on sale clause I have encounter different opinions on the subject, but if worst come to worst, I'll pay the bank up.
I like your exit strategy but your term for your tenant buyer's buy-in is a little scary. There is no such thing as a 'non-refundable deposit'. The term for the $30k from your t/b is "option consideration." Suttle but very important distinction. Not deposit, not down payment.
*** This is not legal advice and I am not your lawyer. **
Do not sell on a lease option in Texas. Do not. Too many legislative landmines and severe penalties for Landlord-Sellers who don't jump through all the hoops. I don't do lease options any more.
Selling on a wraparound mortgage is much safer and foreclosing in Texas, if it comes to that, is the easiest in the nation.