Flip Using L/O – Exit Plan?
I am working on an offer to a seller involving a one-year lease option deal. First, this property is for sale, under market because it needs work. It is a thin deal, but I think I can make a nice profit if I can avoid closing costs on the buy and sell as well as avoiding a monthly mortgage. The area is very hot, when this property hits the market, it will not be there for long. Properties can go in a week. I say this to make the point that I can not do much more creative dealing beyond the lease option. I’ll be very lucky if that flys.
Anyway, my concern is my exit strategy. When I find a seller, how is the purchase from the buyer and sale to the seller handled? I am fuzzy on this part.
Thanks all!
Paula S.
Paula,
If you purchase/take control of property using a lease purchase like you are mentioning for 1 year... simply assign your contract to the buyer/assignee you procure... collect assignment fee from buyer/assignee, go to bank....
Make sure contract you are using is assignable....
Now as for as the sale its now between the seller and the buyer/assignee you assigned lease option contract to.... buyer exercises option to purchase and they close the deal...
thats the short version of how it goes.... [ Edited by DaveREI on Date 12/03/2003 ]
Thanks. Okay, assign is what I thought.
Lenders (for the buyer) will not have a problem with this?
Paula S.
No they shouldnt (lenders) ....the assignment... its an agreement...
Lenders can treat a lease option as a refi and that helps to qualify buyer... at least thats what i've experienced....