Lease Option? Other Ideas?
I am uncertain which forum this should go in. As such:
I own 2 SFH in a gated lake community in Va. #1 just came vacant and I was thinking about doing a starker. Now my tenants in #2 asked to move to #1as tenants and are interested in buying it if I can figure out how to make it happen. 2 yrs. ago when they became my tenants, their credit was so-so. Things might be better as they are married now and both are gainfully employed w/decent jobs.
Any suggestions?
If you were going to use #1 as the relinquished property in a 1031 exchange, why not just use #2 instead. Let the tenants in #2 become your tenants in #1. If they want to buy sometime down the road, sell then at full retail.
Yes, that is one idea. I just don't want to get rid of both of them and I think he would buy #1 if I can structure it right. I would like to sell it to him and create a win/win by either L/O or seller take back. Is there a way to sell that property to him and use that as a starker?
My thinking is that the L/O will work once he buys.
How bout a sale w/owner financing.... but I know that gets taxed differently. What ideas are out there?
You can't enter a 1031 exchange while your property is still under lease option to your tenants. Your exchange window starts only after the tenants exercise their option and actually purchase your property. Can you wait for a year (or two) if it takes that long for your tenants to exercise their option to purchase?
Thanks NewKid,
Yes, I guess I'll wait. I was just trying to trade up in potential.
I just extended their lease from one property to the other. In the last few days they have painted, cleaned the carpet + filters and they just agreed to replace a ugly linoleum w/ laminate floor. When I get into #2 I will decide whether to exchange it or not. The tricky thing about these 2 houses is that there is a community fee. It was 600, 725, and now proposed to go to 925 in 2005. They charge both the owner and the tenant, so I am trying to structure something so it is one fee per house.
Meanwhile, any suggestions on good ways to sell the house to them? I will be researching the difference between L/O and CFD and owner take back(if that is not CFD).
~~Thanks for thoughts, ideas, suggestions~~