What Would Be The Best Option?
I recently bought a house and have a mortgage of $ 1000 on it.
I have three offers on the www.house.Iam selling the house at $179000.
1st buyer wants a A Lease option of $1500 a month and a option money of $3000.Exercise the buy option at the end of 12 months.$300 to be applied each month towards the purchase price
2nd buyer has 20000 down and a collateral for 60000(has a house free and clear appraised at 60000)..I have to take the balance as a lease www.option.The buyer is Ready to put in only 500 a month towards this End of 1 year exercise the option to purchase
3rd buyer is qualified for a FHA loan of 100000.Willing to put in a 5000 down I need to take the balance in second mortgage or do a lease option.
Given these two scenarios,which option would you suggest best?
1.Remember I have a mortgage of 1000 each month Even if I take one of the options I have to find a way to either pay off the mortgage on my house or partially pay it based on the money i get.
2.is there is a better way to structure one of the above options?
All three buyers are very interested and want the house so I have the flexibility of terms with them
[ Edited by Samw on Date 02/26/2004 ]
[ Edited by Samw on Date 02/26/2004 ][ Edited by Samw on Date 02/26/2004 ]
if everything is as said, #1 gives you the best chance at a positive cash flow - depending on repairs. #2 gives you the most security (paying the extra $500/month takes 6k off of your 20k immediately, plus maintenance. leaves u with 14k + 60k house. #3 needn't bother with this. you actually stand to lose if you have to kick him out - you lose your monthly and your second.
of these 3, i'd go number 2 for sure. most security - even tho the cash flow hurts, he's risking the most by taking your place. if he defaults, you get to keep the 20k (14k+) plus the smaller home - then you get to redo this all over with a new tenant. this one could be sweet whether he wins or loses!
From your wording I get the impression that maybe you aren't clear on what a lease option is. It sounds like you consider a lease option as a form of seller carryback. It's not. You cannot 'take the balance as a lease option.' Mixing a sale and a lease option may get you into legal complications. It's either one or the other. The topic 'lease option contracts' in the 'law and legal' forum has a lot of info on this.
Now, having said that, this would be an easy choice for me. Go with the second guy. Take his $20 G's as option consideration, tell him to sell or refi his house and hold on to the $60k. Have him pay $1500/ month rent (or 1700 or 2000) with $500 going towards his purchase if he exercises his option. If he buys in a year, he'll have $26k ($20k option consideration + $500 each month) plus what's left of the $60k as his down payment. With this the other $100k or so should be an easy loan to get. If he won't pay $1500 maybe you can consider accepting just $1000 to cover your mortgage, since you are getting a pretty big chunk up front, but none of it should go toward the purchase price. [ Edited by Realestateutah on Date 02/26/2004 ]
This is a no brainer. I'd take current number 2 Monty. For the present and the future, remember that in a lease/ option transaction -you call the shots.. I don't negotiate with the optionee.
I'd llike to point out to you that taking a second on a FHA is not permitted. Sure, you can play games an not recored the mtg until sometime late but r-why risk it?
Keep your transactions clean & you will be able to keep your money rather than enriching your attorney.