Doing A Lease Option As An Investor With A Seller
Hi everybody,
I have a couple of questions I would like to see if anybody could answer.
I have a person that would consider doing a lease option with me (investor), he bought this house from his mother and in 4/03 took out a loan to buy it for 105K. He has moved out and moving in with his girlfriend. They wanted to rent it but when I called and spoke to the girlfriend she told me that they just really need to rent it or sell it as they cant afford both. They were looking for $950. month for rent.
Assessed $100k, sold 4/03 $104,5. Comps are:
1284sf $130,500, 1401sf $128,800
I am pretty sure I could sell it 130K BUT I want to lease option it and get a couple years positive cash flow out.
So my first question is
What should I offer to buy it for after a 3 year L/O (price to buy in L/O contract) (if they decide to go 3 years)?
Second,
Should and if so, how would I put in my corporate name?
Third,
How would and should I construct this deal? Would anybody have a special L/O contract I could use or should I just use one of my standard ones that I use when I lease option one of my houses to someone?
They really seem motivated to get rid of at least the payments. I have an appt to meet them on Friday at 12:30 to see it and talk to the owner. There is also another person they are showing it to at the same time, I think this person may be a renter.
I would have made the appt sooner but wanted to get some advice on constructing this first from you fine people.
Thank you in advance.
Dave
I deal with someone that owns 100's of properties all on the outskirts of Pgh. He L/O them to investors. The properties are worth between 25K-35K. I have Refinanced over 75 of these properties in the last 4 years for his investors. All of the contracts are just like an owner occupied one except they have an addendum stating the property is being sold as an investment property.
The sales price is determined at the time contract is written up. The interest rate, length of contract, ect. is all in there. I refinanced the properties when the balloon payment was due. At that time I treat it like a refinance whether it is a rate and term or cashout.
The buyer is responsible for the mortgage not the renter. If you wanted the renter to buy in three years you could do that by doing the same contract with them and having a "property management" company control the property for the three years. Everything would be verified through checks so make a copy and keep a file.
Lori
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Lori,
Thanks for the reply but you didn't answer any of my questions.
1st question:
You would determine sales price before you sign any papers. Only you and the seller can come to an agreement.
2nd question:
If you want the corporation to own the property then they would be put on the L/O agreement.
PA doesn't require Lease Options or Land Contracts to be recorded. So some people change these agreements at time of actually transferring title.
3rd question:
I get my forms from a book called 301Legal Forms & Agreements. They are generic forms which allow me to put in adendums which my company and the buyer or seller agree to outside of the "norm"
Lori
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