Wholesaling a house that already has a lease on it

6 Replies

Hello,

So I came across a seller that is leasing his house to someone else and he wants to sell the house.

My intention is to wholesale the house. I still don't have a lot of info on the terms of the lease, but I am not sure how this process would work or if it is possible since the lessee is technically the buyer of the house. Is there a way I can do something about this?

Another question kind of at another topic but about the same seller. He said that he has 4 points on his insurance. What does that mean? 

Why is the lessee the buyer of the house?  Is it a lease option?  If so that is a trickier situation but I think you could still do it, however you'd need to find a buyer that is okay with buying a lease option house right out of the gate.

Originally posted by @Aaron K. :

Why is the lessee the buyer of the house?  Is it a lease option?  If so that is a trickier situation but I think you could still do it, however you'd need to find a buyer that is okay with buying a lease option house right out of the gate.


Sorry, I am a little confused. Aren't leases always a way to purchase the house unless the lessee decides not to at the end of the leasing terms? What other types of leases are there? 

And how would the buyer profit from it? By simply receiving the payments?


Thank you @Aaron K.  I appreciate your help.

But just to clarify, not all leases have the option to buy at the end of the term?

Would you mind explaining the process of wholesaling this house? 

Let's say the ARV is 80k. Discount 30% = 56k.

Minus Repairs (Estimated 12k) = 44k

Minus wholesale fee (5k) => MAO = 39k

So I would offer to purchase the house for 39k and find a buyer for 44k? A buyer that is willing to purchase a lease option house

@Rodrigo Carrano the vast majority of leases do not have an option to purchase. Without knowing if this one does or not it is hard to say what you should do. Also the 70% rule is going to vary by market, if it has an option to purchase the buyer may want to know how credit worthy the option holder is because it may influence their decision on whether to include repairs in their analysis. The lease option would also have to be set up that a premium on rent is being paid every month for a buyer to be interested in it, also if the option price is too low you may have to lower the offer further. For example ARV may be $80k but if the tenant has an option to purchase for $50k you may be in trouble.

My strong suspicion is that the property is just rented and there is no lease option, you just got a little mixed up.

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