Lease Option For Bad Credit
is it profitable and smart to buy ahouse and re sell it to some one with bad credit on a lease option for more than you baught it for? assuming at the end of the option term thier credit is good enough to get a loan to purchase the home? 
Yes! Selling houses with a l/o is a GREAT way to get a buyer for your house.
Make sure your payments are less than what you lease it for, so you have positive cash flow.
We have a mortgage broker who our prospective tenants qualify with BEFORE we agree to sell them the house. We have to know what they'll need to do to improve their credit and how long it will take.
Okay crf3boys, why am I getting so much flack from friends that are real estate agents. They have a fit when I tell them what I'm doing and say everything from I'll end up getting sued to it's illegal.
Is it that we're taking a commission away? If the folks have bad credit they won't generate any profit. Am I missing something here??
Most real estate agents are absolutely clueless (and I'm being polite). What objections are these agents sharing with you? Ask them "why" it's illegal.
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I'm with the King--ask yourself this question about RE agents: if they REALLY are the experts they want you to believe they are, how come they aren't investors, just salespeople? I think I saw some figure that out of the hundreds of thousands of RE agents, less than 6% of them were RE investors.
And this isn't just limited to RE agents: I've had attorneys tell me the same thing. It comes to the fact that they don't know what they're talking about, but don't want you to know it so they spew as much negativism as possible--to get you out of the game and to make themselves feel better/smarter.
Read thoroughly on this board and I can guarantee you that you'll know more than most so-called RE professionals out there.
Rant is complete,
Andy
it is profitable to sell l/o to bad credit t/b's. if they don't exercise the option you have the opt. payment { i charge about 5% of the purchase price}. if they leave its yours. plus the over and above lease money and no it's not illegal........km
Thanks for all the good stuff in here! Who pays the insurance and property taxes on this l/o properties?
L/O has nothing to do with predatory lending. a L/O is not predatory and far from lending.
Predatory lending usually involves unscrupulous brokers who take advantage of (preying on) naive borrowers by offering them loans with outrageous fees and points added in. It tends to be an issue with mostly subrime refinances of 1st mortgages.
Never allow the T/B to pay taxes and/or insurance. A L/O has nothing to do with predatory lending, although some investors can be predatory in how they take advantage of a T/B.
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