Lease Opeion Question
I have questions regarding a lease option that I want to pursue, however, I know that it is a marginal deal and I have been told by other investors to walk away. The property is very nice and it is worth ARV 71K, the owner owes about 68K and on 15 December wiill be 3 months behind in mortgage and not condo fee. The mortgage payment until the 15th of December is 1432.00. I was under the impression that I could lease the property to a qualified buyer, get the owner caught up on the mortgage, and allow him to walk away and possibly resale the condo in a year or 2 for about 82k. Someone please tell me what is wrong with this picture? Confused newbie trying to learn the ropes. Thanks much
Sounds like trouble to me, walk away there is no profit to be made. Just my two cents.
It is not clear on how you will make money on this one. Are you trying to acquire with a lease option and then put a renter in there? What are the terms of loan? What would it rent for? It looks a bit thin but you need to figure out how you will make money on this. There are going to be association fees, association assessments, taxes along with loan obligations. We need more info.
Make your money buying. I tried the same thing that you want to do with this property only better. I did 30 with 0 down and take my house please. I held on and held on and held on for 5 years then lost them all. Two yeras later they doubled in value and I would have been rich. Hard to know how long you have to hold and it is a whole lot easier to hold a positive cash flow than a negative.
Good LUCK and HAPPY HOLIDAYS
Hope this helps some
Ted Jr
Thanks for responding everyone. Well, I was thinking to lease the property to Section 8/Housing Voucher Program participant. It is such a nice place and good for a rental. I just do not know exactly how to make it work. In what case would it be feasible to get a property subject to? It would be nice if everyone had equity, but for the most part, I have not encountered many people with much equity and all just about are in trouble. Has anyone had the experience of making a small deal such as this one work with a tenant or Section 8 participant?
Adrienne,
You can check with the Housing Authority in your area to find out what they will do on section 8. Much depends on the needs of the family as well as the property (# bdrms, #bathrooms, etc.). I have a number of section 8 tenants and I like the program. The question is "Will the income cover the costs and leave you with some positive cash flow for your holding period?" As Ted Jr said you want to be able to hold on indefinitely.
Regards,
Ed