Do Foreclosure Buyers Tend To Sell Via Lease Options?
This is more of a survey as it's my first contact of any kind regarding real estate since studying the Carlton Sheets course, researching the net, and asking questions of friends and family on subjects ranging from credit to creative financing. This is the best site I've found.
I'm of the opinion that I would be a good candidate (as a lease/optionee) for a seller and would like to ask for open input on my viewpoint.
First, I'll give the negatives and then the positives.
My credit score is very bad per my 3 in 1 credit score. But having several people look at it, they say it's not bad at all because I owe so little, some are of age, and I have several years of a credit card history with no late payments and very low usage ratio. Another credit card is should be showing on my credit report soon with no late payments.
I'll tell you what's on my report briefly, but first want you to know that I don't want to settle any of these. In fact, I would be thrilled to pay over and beyond and try to get them removed through honor rather than put them into a corner to accept less than what is owed.
I have a $900 civil judgement that I will pay off soon. I also have two CA quarterly payroll state tax liens (released) that are over two years old. I have a 1999 Quarterly of about $600 that popped up onto my report in 03 for the year 1999 which I will pay soon.
I have a line of credit for a mall booth credit card machine that was never delivered for use that is about $2500 that I would feel fine about settling. There are no foreclosures, never had an eviction (which I know would not be on the credit report), no BRs, a few other small things which I will handle soon.
My car is paid free and clear, I have only $1300 CC debt on a $7500 limit, plus another $7,000 limit with about $500 used; both with no late payments ever.
I currently rent a bedroom, office and bonus room in an 8 yr old model home - 2,000 sf, 4b/3b, 3 car garage, island kitchen... from an investor who owns several room-rented homes and who lives in Los Angeles. I live in Palmdale, about an hour or so drive from him. He calls me the house-mom because I collect rent for him before he makes the drive, pay for our bi-weekly house cleaner, supply the common kitchenware and basics needs, show rooms to prospective rentors, deal with the gardener needs, report unethical behavior, keep out the parties, keep the peace etc.
In 2003 my business grossed $32K. In 04, just in the last three months, it has grossed over 40K, largely through referrals. It just keeps expanding. I've tutored celebrities, policeman, fireman, learning disabled, top students etc. and have the best of references. My fees average $3,000 for a 2-4 month program. (I am not soliciting - in fact I don't have openings right now). These are the pluses of who I am.
With references from this investor and current and past tenants and clients, would an investor consider that I may be a plus as a lease optionee despite my disastrous credit rating?
Are foreclosure investors a viable group to connect up with to learn more of what is needed and wanted from a lease option seller?
Any tips, evaluations or guidance would be welcomed.
Tracy 
Tracy,
Being the responsible house-mom is admirable, but not something a lender will look at. A clean pay history is. That said, you are a candidate for a lease option. I would expect you could have your collection accounts paid off within 6 months. Most options have a 6 to 18 month window to exercise the option.
Now, you could also possibly get a mortgage now. Check with a mortgage broker, but there are lenders with flexible criteria. The biggest is no lates in the last two years. You can also go FHA if you needed to, or sub-prime. I will warn you though, that sub-prime is ugly. Normally a high rate (although some are very reasonable), and often with a pre-payment penalty. Again, a good mortgage broker should be able to advise you.
Finally, I would like to commend you on your attitude toward paying the collections. In my twenties, I had a complete disregard for my credit - much worse than yours. I did not settle on my accounts, and eventually paid them all off. I now have high scores, so your attitude and plan are admirable, and should be rewarded with strong scores after a while. I do have one question though. What is the deal about the credit card machine that was never delivered? Why are you willing to pay for something you never received? This can be ethically and morally disputed, and should probably be disputed. If they cannot verify receipt, they should write it off with no impact to your credit.[ Edited by bnorton on Date 09/07/2004 ]
Lease option is a great way for folks facing credit issues along with owner finance properties.
Normally foreclosure buyers prefer to sell via cash.
www.Realtor.com can be a source for lease option or owner finance properties http://realtor.com/FindHome/SearchOptions.asp?typ=1%2C+2%2C+3%2C+4%2C+5%2C+6%2C+7&mlsttl=&frm=bymap&pgnum=1&mls=xmls&lnksrc=RDC-NAV-0016&js=on&target=&ct=&st=&zp=&mnprice=0&mxprice=99999999&mnbed=0&mnbath=0&poe=realtor
Appreciate your responses.
In answer to why would I pay for something that was never delivered (the credit card machine), the answer is because I didn't dispute it when I had the legal opportunity before it went to collections. That was my mistake that I'm willing to pay for.
Your responses helped very much. I've been hunting for answers to these questions for hours on the net. Now I have just enough knowledge to ask new questions, if you can help me?
I can pay off every thing owed on my credit report within a month. Is that better than showing payments on them and paying them off slowly since they total so little compared to my income?
Another question... I've been tutoring for 30 years but my fees have been unreasonably low until last year when I raised them. Then again this year I raised fees drastically which accounted for over 40K GI in the past three months working part-time and even these clients are referring others. Would an explanation of this finanancial expansion matther much to a private investor, or would one tend to only view the average of my last two years income, current quarterly returns, or how might that work?
I would like to here from more foreclosure buyers to find out a percent of you who would give more consideration to a lease option if the optionee has a good reference as a house-mom.
Appreciate your valuable investor's time.
Tracy
Sounds good - everything. I'll ask the company to present proof of delivery of the credit card machine and that will resolve that. Thanks for the additional tips. It makes all the difference.