Do You Prefer To BUY On L/O Or CFD?

Just looking for some feedback on how some of you prefer to buy, if given the choice. My attorney tells me to buy on land contract (so I get the deed and all writeoffs) and sell on lease option (so I can evict instead of going through foreclosure process).

It makes sense but I know many properties are bought on L/O and I like the idea of reducing my risk , the capability to change my mind, and let the owner pay the taxes and insurance. But I don't like the idea of the owner's capability of continuing to borrow money against the property and possibly owe more on it than I agree to pay them. I suppose it can all be addressed in the contract.

What pros and cons take priority when choosing which way to buy?

Comments(4)

  • jeff1200218th July, 2004

    All other things being equal, I always prefer to choose the method that gives me the most control of the deed. I agree with your attorney when these two methods you listed are the only acquisition choices available.
    Personally I prefer to acquire properties via "Subject 2" the existing financing.
    Good luck,
    Jeff

  • commercialking18th July, 2004

    For me the big advantage of buying on LC is that when you get ready to move to conventional financing it is considered a refinance and therefore is underwriten as a refinance (appraised value rather than purchase price)-- A L/O is considered a purchase and therefore will use a LTV based on the purchase price or appraised value whichever is less.

  • LeaseOptionKing27th July, 2004

    The problem is that it's easier finding the L/O deals than the sub2 and L/C. Most won't sell under sub2 unless they are behind.

  • LeaseOptionKing27th July, 2004

    Depends on the bank and what your Contract states. You could make a good case for anything above market rent (best to pay in a separate check and call it additional Option Consideration), but 100 percent? I would say doubtful.

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