Lease Deal
Have a situation where I own property outright (have $73,000 into the house) and I want to refinance cash out on $93,500 land contract for a year with a renter with not very good credit. I stand to make $14,000 after capital gains--should I do this even though I could get stuck if person defaults on contract within 12 month period?
Would I have capital gains on either scenario?
In some states a Land Contract requires a simple eviction, but you usually have to wait like 30 days to start it. Whether a Land Contract or a Lease Option, you can refi the Tenant in 12 months. A Lease Option is usually a smoother and quicker eviction; however, in those states that specifically require only an eviction for a Land Contract, you would be fully protected against any claims of equitable interest. With a Lease Option, you have to take special precautions to ensure such claims will be dismissed. Not difficult to do, though.
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