Lease/Option A Lower Monthly Payment Than Seller Pays Bank
Has anyone ever heard of lease optioning from a seller for less than the seller's monthly note costs to pay the bank/mortgage company? If so, why would a seller do this and how would we "sell" this apparently crazy idea?.
Alan[ Edited by fearnsa on Date 02/23/2004 ]
never heard of it but it could be some sort of tax depreciation sort of thing. i don't know just guessing.
Let's say the property is vacant, and has been for some time, 6 months. They have a mortgage note for $800 a month, they have $800 a month negative cash flow, you offer to pay the $700 a month on a lease option. 2nd situation could be they have already purchased a new house with a $1200 mortgage, and now have 2 mortgages, if you are offering a lease option that puts them in only a small negative cash flow position, like $100 a month, it's far better than negative $800 a month. I think it all depends on how motivated the seller is, and as already mentioned, there may be some tax benefits for them as well.
Yes I've heard of sellers accepting less than the monthly note payment. Why? Debt Relief. Especially those home owners making two mortgage payments.
Many thanks. Perhaps it's not outrageous.
Has anyone approached a seller and secured a deal with such an unusual but VERY favorable arrangement?
I've only come across one of these, currently I pay 900 L/O, his payments are 1016, and I receive 1050 from my tenant, a very nice deal with everyone winning
Have Fun!
Ted