LeaseOptionKing: How Would You Handle...

Comments(8)

• 
  LeaseOptionKing16th September, 2004

  Is ARV "after repaired value"? But it's in move-in condition, right? Today's value is $205,000? What's the mortgage payment? I'd sell it for $225,000 under a 12 month L/O with at least $7,000 in nonrefundable option consideration (slightly over 3 percent). Put the monthly payment, number of beds/baths, and general area in the ad. Ask everyone, "How much do you have to put down towards your beautiful new home?"
  
  NO QUALIFYING! No
  Credit Check! 3/2 NE
  $xxx/mo 555-5555 lv msg

• 
  active_re_investor16th September, 2004

  LOK,
  
  I see that you say "no credit check"
  
  Any reason that you do not collect the information even if credit is not a factor in the decision? Does no credit check mean you will not look or you will look but not use the outcome as a factor in the decision to accept the L/O applicant?
  
  John
  [addsig]

• 
  205JUNKERS16th September, 2004

  This what you said below:
  
  
  LeaseOptionKing
  
  Is ARV "after repaired value"? But it's in move-in condition, right? Today's value is $205,000? What's the mortgage payment?
  
  Yes ARV means "after repaired value",
  Yes, it's move-in condition
  Yes, today's value is $205,000
  Mortgage payment is will be between $900-$1100/month
  
  So, $7000 would be enough on this property or should be the minimum I should accept?

• 
  LeaseOptionKing16th September, 2004

  By not placing the down payment in the ad, you might be able to obtain more, but 3 percent is the lowest you should accept, and is sometimes all you can get on a high-dollar home. I don't care about credit. I do ask for identifying information to prove who they are and in case I need to pursue legal action.

• 
  DVTFG16th September, 2004

  LOK:
  
  Why did you suggest a sales price of $225k. If the present value is $205k, what are the chances it will appraise in 12 months at a 10% increase?
  
  Which would mean that even on a re-fi the T/B's would have to come from the pocket for some pretty serious change to get perm. financing.
  
  And, 205Junk would make over $80k; and I would be jealous!
  
  [addsig]

• 
  205JUNKERS16th September, 2004

  LeaseOptionKing
  
  How do you get them financed in 12 months to a year if you don't care about credit?
  
  If you could go into more detail on the process.

• 
  rajwarrior16th September, 2004

  DVTGF,
  
  Let me jump in here and give LOK a little break. The $225K sale price may work in LOK's market and not in JUNKERS. I believe that it was really only a suggestion, more or less. The actual sales price JUNKERS will have to determine on his on based on the market for the area. That said, pretty much anywhere that there is at least some appreciation going on, you could get $210-215K out of it easy.
  
  JUNKERS
  
  How do you get them financed in 12 months to a year if you don't care about credit?
  No offense meant, but whole books and courses have been written on this single topic, so neither LOK nor myself could go into enough detail here to make it easily understood.
  
  In short, you need to locate mortgage broker(s) who work with low credit financing. In most cases, those that really know what they are doing can get almost anyone financed if they have a proven track record of on time payments from a L/O. The main thing here is that you, the investor, needs to take an active role in helping them get to the refinancing. Sometimes it may take longer than twelve months. However, if it does, then you'll need to decide whether or not to renew the contract and if so, to keep it as is, or change the terms.
  
  Roger

• 
  LeaseOptionKing16th September, 2004

  In my area, appreciation is 5 percent a year, but appraisals are subjective, so I can tack on another 5 percent and have it be acceptable. Better to be too high than too low; you can lower the price if you have to, but you can't raise it at closing. You can also give some rental credit (to be applied towards the purchase price only) to help bridge the gap to pursuade on-time rent. You could also take back a second for the remainder of your equity. I would make it no interest, no payments, with a five-year balloon. Half will outgrow the house and move in two to three years, at which time you will get a phone call to come pick up your check. The other half will have to refinance in five years to cash you out and will no doubt lower their interest rate since they have been actual Owners for sixty months. Your friendly neighborhood mortgage broker may have lenders whose criteria is very liberal; they may treat it as a refi, where credit is used only to determine the interest rate (which will be high). They will need additional funds to close (and I encourage them to come up with as much as possible), but if you are willing to defer some of your profit, you can make it work (with a serious Buyer).