Is It Better To Do A L/O Or L/C For High Priced Properties?(m)

My broker said that because of the amount I'm asking for a dwn payment I would have to do a Land contract. Why? I really don't want to give equitable interest if I don't have to. The property is priced at 282,000 with 5% dwn. Why should I do a L/C instead just because of the amount I'm asking down?
Any ideas?

quinn

Comments(5)

  • ZinOrganization3rd December, 2004

    if there is equity you could always auction it off too. just another way to sell.

  • quinn19th November, 2004

    The broker is my money lady and my friend. When there is something I don't understand about financing or RE in general, I can always call her and get answers. She finds me alot of deals too. She invests too. Thats how I came about the L/O vs. LC advise.

    quinn

  • LeaseOptionKing4th December, 2004

    Typically, a LC demands 10 percent. She may be unaware of how easy it is to find a T/B.
    [addsig]

  • quinn5th December, 2004

    When the T/B finally purchases, where do you usually apply the option money? Do you knock it off the purchase price or is it used as part of down payment? Also, with L/O can you make them responsible for taxes?

    Thanks everyone

    quinn

  • LeaseOptionKing6th December, 2004

    Some people apply it towards purchase price, because they feel it helps to prevent equitable interest, and that's true; however, you can still stack the deck in your favor by allowing it to go towards a down payment (which is what I do). Depending upon the lender used, if your Contract doesn't state it will be applied as a down payment, your T/B will have to come up with another full down payment from scratch. Never ever ever under any circumstance have the T/B directly pay your taxes or insurance. The T/B only pays rent. If you do and your T/B shows up at the eviction proceedings, you likely will be told you have to foreclose. There's also a chance you will have to refund any monies paid to you above fair market rent, especially option consideration.
    [addsig]

Add Comment

Login To Comment