Is there a deal here?

Question

Sacramento, CA, rehab short sale.
Good, established neighborhood.
Current value/purchase cost--$125,000
Rehab costs--$25,000
ARV--$175,000
Have lease/option buyer in place. Buyer is a self-employed experienced builder with solid references. Buyer will do all rehab and pay all costs of rehab.
Buyer filed chapter 7 BK five and a half years ago. Buyer's credit payment history across five accounts is perfect since BK.
Buyer's April, 2011, Experian score is 653.

Questions;
Is a two year lease/option a possibility while buyer continues to re-establish credit?
Is there private funding for the $130,000 purchase?
Thoughts? Suggestions?

Rob Gillespie · Answer

hi Rick,
I agree, I think that deal sounds a little too lean for my liking. I would not necessarily throw away that lease option buyer, I would look for someone that is having a hard time selling their home conventionally, but needs to get out of the payments.then I would put together a lease option deal with them, and sell the deal to my new lease option buyer for his down payment money. With the correct paperwork in place there is very little risk on your part, and you will not need to use any of your own cash, credit, or get private funding. In the meantime you will be helping a homeowner unload their home, and you in making a few bucks in the process making someone else a homeowner that would not otherwise have had the opportunity. If you decide to go this route, I would be happy to share the paperwork with you that you will need to make the transaction work. You will still want to run it by attorney in your own state, what I use is great for here Ohio but I am not sure of your local laws. Best of luck!

Greg P. · Answer

Hi Rick, it sounds like a pretty thin deal.. might want to keep looking around.

Greg