Section 8 Lease-Option Program?
I just read that HUD has a section 8 lease-option program. Is anyone familiar with this?
I just read that HUD has a section 8 lease-option program. Is anyone familiar with this?
Always get the Deed.
Don’t ever buy something that requires a lot of "I f this happens then I can make money" if it isnt a good deal it isnt a good deal and you shouldn’t try and make it one.
How you sell the property is a completely different question.
As a guy who has done a deals I can state that equity buying is much safer than creative reselling. However you most certainly can make a ton of money in the arena.
As for what happens if the buyer can’t refi... Most creative financing investors are banking on that fact...
You get to do it all over again with someone else... Anytime you can sell the same pair of shoes over and over again without a cost of production or shelve cost you’re ahead. We happen to be in a market where most lenders are requiring a considerable amount down on a purchase therefore our 90% seller financing deals look great to the buyer pool. Not to mention that marginal buyers can even qualify for a loan right now.
The one consideration if you are buying marginal deals to make certain that the rent roles are close in line with the cost of the property to the buyer.
I like to be within 200 per 100k of purchase.
Good luck.
Michael Quarles
[ Edited by MichaelQuarles on Date 05/12/2008 ]
I am not sure which way to go at times; I guess comfort level best describes it!
How much equity would you need to take the title? Would you take this deal? (just examples; buy S2/LO and sell LO)
Case1: mtg=$240K; payment=$1900/m; value=$290K
so equity=$50K. You can rent it for 1500/m; cash flow= -$400. After you buy if a home in the area sells for $265K (motivated seller/ REO/ SS etc) now equity=25K! After you pay for vacancy, holding, final TB closing costs there is not much left!
Case2: mtg=$500K; payment=$3500/m; value=$570K
so equity=$70K. You can rent it for $2500/m
What if you could rent it for $3500/m? Now the mtg is covered but if goes vacant in future you will have to pay up the mtg until you find a new tenant.
If it were LO you could have a provision for vacancy/ return the property. Also, if the home had equity you could ask rent credit on your payment (some people ask 50-100%!) so your payoff drops and backend profit increases.
Please advice
[ Edited by SKrei on Date 05/12/2008 ]
Sub-2 and LO go hand and hand.
When aquiring a property, it can be done in these ways:
1.)Assumption of Mortgage
2.)Payoff of existing loan (Standard Way)
3.)Taking over the loan Sub-2, many sellers are less likely to do this, because they want mortgage relief now
Whether you choose to sell the property quickly, or do a lease option (sandwich LO is the most common) is up to you.
Saying that Lease Option were better than Sub-2 is in itself an oxymoron.
We put up 10 signs per house"rent to own". We are also testing a flyer campaign for buying homes. 1000 Flyers and see what the results are.
Also we run a test ad in newspaper sat and sun for "3 Homes in xxx Subdivision, Priced 650-1200/month, Rent to own." Just to get calls and see if we want to buy in that area. Building your buyers list you might say.