Lease Option Question: Need Direction
I have a home owner who can't afford her house anymore. was built in 2001 and she purchased in 2002. she can no longer afford to pay for the house because of job cutbacks. she is currently 2 months behind on mortage. The house is a 3/2 bath 1800sf, excellent condition. pay off for the house is approx 128000 and fmv is 140000. how do i structure a lease option for quick sale? :-D
She's now three months behind? Does the Seller require any cash? I usually pay half the equity to the Seller at closing; that way everyone in foreclosure signs up with me (the house has to be in great condition).
For Your T/B
Sale Price: $154,000
Option Consideration: $7,500
12 month Option contingent upon the terms of the Lease
For Your Seller
Sale Price: Loan Balance ($128,000) plus Half Equity ($6,000) minus Total Back Payments (if on the 15th or after when you Sign the Seller, add another mortgage payment to this)
Option Consideration: $1,000 (moving money--payable only upon finding a suitable T/B)
Terms: 12 months with at least 2 additional renewal periods; 30 days to completely rescind the Agreement; rent equal to mortgage payment amount; all Seller nets out of closing is X amount ($6,000 minus the back payments and minus the $1,000 you gave him) from which Title Insurance will be subtracted (hold open policy), and you agree to pay off the loan balance (you retain the loan paydown equity)
Take the $7,500 and give $1,000 to the Seller plus pay the bank the back payments; or do an Open House to drive the down payment money higher
Your Profit: $20,000 (not including the equity from loan paydown or positive cash-flow from rent
You profit is $26,000, but remember $6,000 of that is the Seller's half of her equity, from which you will subtract everything you have paid on her behalf
You give the Seller half of her "today's value" equity, but we will sell and collect a nonrefundable Option Consideration payment based upon tomorrow's value
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Thanks, so much for your very informative information Lease option king!!! Do you have a book out ?
she does not want any cash back just to break free from this property. i'm going to give some cash regardless. her current mortage is 1275 at 5.5 intrest rate
Nah, no book. I type too slowly. lol :p
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