Want To Sell Duplex Lease Option To Retail
I have purchased two preconstruction duplexes in Cedar City, UT due to be finished in Aug or Sept. I would like to sell them each side separately, on lease options to retail (families that live in them and not an investor). What are the pitfalls? Do you have get it okayed by the city? Or can this be handled by the title company or Escrow attorney?
Is each side separately deeded?
If so, then continue full steam ahead.
If not, then you will have to have the property subdivided, replatted and recorded with the county before you can proceed with your plan.
Excuse my ignorance, but how does one get this done, step by step?
Why not sell the whole duplex that way? Less profit, but far less complicated. Your T/B moves in one side, and you rent out the other side. While waiting for your T/B to make 12 payments (so the lender will treat it as a refi), you collect rent from the other side. Upon obtaining financing, the T/B will be able to use the income from the other side to help the T/B qualify; however, it will be the normal owner-occupied loan, since the lender treats a duplex as a single family home, providing the borrower lives in one half. The interesting thing is that you will be able to charge a little above the fair market value AND collect a lot in rent from the T/B, because the T/B will have to pay you a rent amount comparable to what the mortgage payment will be 12 months from today (to prove to the lender the T/B can afford the mortgage payment), which will be the amount of the whole loan on the property, so you get some terrific cash-flow during that year.
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