Mini Developer Lease Purchase Program
Hello everybody and happy new year, I am new to RE investing as well as this forum. My RE experience is limited to the purchase of my own home and a couple of residential lots in SW Florida. A friend of mine had told me about a Lease Purchase Development Program in Which i would become a "mini developer". I have listed the details below. Before I decide to invest in this I was wondering if some people could give me insight into this type of program and it's legitamacy and if you think it is a good opportunity.
any feedback would be highly appreciated.
thanks
tony
Program Details **----------------------------------**
This program works with banks, builders and land management companies, all of which take an active role and have a vested interest. They all work in harmony to make this project work! A qualified candidate can apply to secure up to 5 lots with a transaction fee of 3K each for a maximum of 15K for 5 transactions. FICO scores must be 650 to 680 with 680 and higher preferred. The candidate, once qualified, must have 10-20K in stated liquid and verifiable assets per lot purchased.
The candidate is applying for a one-year interest only construction loan. Once approved, they procure title to a lot and the construction loan and have a builder assigned to their lot with a specific model home to build. All the prep work and approvals, from permits to certificate of occupancy, are done for you. Your TEAM does all the work.
The builder builds the home and draws down on the construction loan and pays the interest (no money from the investor). Thirty days prior to completion of the home and C.O. (certificate of occupancy), the land management company provides a prequalified person that wishes to lease the home with the intention to own it, within a year of the lease. In order to become a tenant, they pay a non-refundable deposit to the owner/investor in the range of $2,000 to $8,000 depending on their credit score. They also pay a rent that includes all the cost of the construction loans; taxes; homeowners insurance; management fee and the balance to the investor/owner. The balance will be approximately $200.00 per month of positive cash flow. When the tenant secures a mortgage during the first 12 months, the investor/owner receives a minimum of 10% of the sale price of the home, receiving the difference of the price paid at time of inception and the newly appraises value. It could be as much as 30k per home! Therefore, the transaction fee of 3K yields approximately $20, 000 to $30, 000. For 5 lots (or 15K in transaction fees), the return is $100,000 to $120,000 in two years or less!
I will be happy to provide any additional info regarding this program. I am really just trying to find out if anyone has heard of a lease program like this.
Like I said i am sitting on the fence regarding doing this so any help or advice is greatly appreciated
thanks again
tony
How did the transaction go? Additional details would be appreciated.