Lease/Option A Lower Monthly Payment Than Seller Pays Bank

Has anyone ever heard of lease optioning from a seller for less than the seller's monthly note costs to pay the bank/mortgage company? If so, why would a seller do this and how would we "sell" this apparently crazy idea?.

Alan[ Edited by fearnsa on Date 02/23/2004 ]

Comments(5)

  • raymo2823rd February, 2004

    never heard of it but it could be some sort of tax depreciation sort of thing. i don't know just guessing.

  • lansinginvestor23rd February, 2004

    Let's say the property is vacant, and has been for some time, 6 months. They have a mortgage note for $800 a month, they have $800 a month negative cash flow, you offer to pay the $700 a month on a lease option. 2nd situation could be they have already purchased a new house with a $1200 mortgage, and now have 2 mortgages, if you are offering a lease option that puts them in only a small negative cash flow position, like $100 a month, it's far better than negative $800 a month. I think it all depends on how motivated the seller is, and as already mentioned, there may be some tax benefits for them as well.

  • bpteos23rd February, 2004

    Yes I've heard of sellers accepting less than the monthly note payment. Why? Debt Relief. Especially those home owners making two mortgage payments.

  • fearnsa24th February, 2004

    Many thanks. Perhaps it's not outrageous.

    Has anyone approached a seller and secured a deal with such an unusual but VERY favorable arrangement?

  • tedlarsen24th February, 2004

    I've only come across one of these, currently I pay 900 L/O, his payments are 1016, and I receive 1050 from my tenant, a very nice deal with everyone winning

    Have Fun!

    Ted

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