Whats The Best Direction
OK Had this one fall in my lap and have never did a lease option. Man approached me and said he had a house he owes 19000 on. Wants 25,000. Currently rented with a brand new tenant at $400 a month. Tenant wants to buy on a lease option but owner just wants out. Comparables are around 42-45000. How can I stucture the deal to be the most profitable to me with no money out of my pocket. I currently have all my resources tied up in a rehab.
Thanks,
Tim
One way of structuring the deal is to create a promissory note (2nd) between you and the seller for his equity, which would be $6,000 ($25K - 19K). That way the seller is guaranteed his $6K because it is backed by his property. Have the seller deed you the property and then refinance the house in your name. It will payoff both the 1st mortgage and 2nd (promissory note). You can write a contigency in the contract stating that you have XX days to refinance the property and payoff the underlying loans, else the contract is null and void. Just make sure that you can refinance within the amount of days you specify.
Tanya
p.s. File the promissory note and deed at the same time.[ Edited by tanya1215 on Date 02/24/2004 ]
Thanks for the reply and info. Have another question?? When the promissory and deed is filed does that have to go thru a title company or can I just do it at the courthouse. My signed over deed would be my proof that I own hosue so I could refinance right??
Thanks,
Tim
P.S Rehab is a lot easier to understand. LOL
I would tie it up and "wholesale" it to
someone else as a rental unit. If you can
get $5-10K out of the deal, a bird in the hand is better than two in the bush!
Best Riches,
Jeffrey Adam
[addsig]
You can just record it at the courthouse and once it's on record, then you are the owner of the property.
Jeffrey also had another option that you can consider. You can get the property under contract and wholesale it to another investor for some quick cash.
[ Edited by tanya1215 on Date 02/25/2004 ]
You do not need to buy title insurance to buy a property but you would be taking a huge risk to not have a title search done. What i would do is to open escrow with a title company and get the search done and then buy a policy when you sell to your buyer. This avoids the double policy costs and protects you against unknown liens and judgements
Good LUCK and Thank You
Hope this helps some
Ted Jr