Buying With No Credit Check
I happen to come across some site which was selling books and info on real estate investing, and generally those things are alot of bs like the seminars, but this one was talking about how this program allows you to buy something without a credit check and with very little money down. He kept mentioning the phrase "controling properties" i dont know what he means by Control?
i wanted to see if anyone has any info on this since i never heard of this before.
no one knows about this??
The combination of very little money down and controlling properties suggests that he may be talking about options to purchase. When a potential seller grants an option, there is not likely to be any credit check either.
Yep,
Exactly right! Thats what there talking about Lease Options.
Lease Option gives you control over the property, you can either lease option it out yourself or find a buyer which is in essance what your doing when you lease option it out yourself.
Mike [ Edited by mcarr1973 on Date 10/05/2005 ]
Ok so are you guys reffering to lease with option to buy? if so what can you technically do if you dont physicall occupy the place.?
???
ok now iam even more confused, its not a lease option to buy its just called an option or a lease option?
dont quiet get what you meant by options are different then lease options.
So what is this thing called and how does it exactly, work, i understand that you make an agreement with the seller and then try to sell it for more.
Lease is the same thing (generally speaking) as renting. Think of it this way for this example.
Option give you the option to buy up until a pre-set date.
So if you agree only to a contract called and "option" then you can purchase this property at any point up until that date set in the contract.
A Lease option means that you are renting a property out from the seller (you pay the seller rent) and you ALSO have an option to purchase that property out until the end of the option agreement (usually the same term as the lease).
Get it? Now a lot of courses teach to approach a seller and ask if they are interested in Leasing out their home long term and if all payments are made on time, if the seller would be interested in selling to you at the end of that term. If the seller is up for that, then you would lease option the house from him and then lease option it out to another person (that other person paying rent to you and you paying rent to the original seller)... Of course you would try to rent it out higher than the rent you are paying and sell it at a higher price you are buying it for...
How did I do?!?
Good Luck
[addsig]
Matt,
Thanks for the quick and informative reply, you did pretty good. I know how lease options work for the most part but i wanna know more about the options people mentioned above where you can contract an option and then try to sell it higher before a set date.
Matty and Jeff thanks so much for the in-depth explanation. I now understand about lease options.
Greetings Scrub,
There are several things you may want to consider.
If they have been approved for $135K and want you to carry $15K, they are obviously looking for 100% financing and are coming in with nothing down. And for whatever reason, apparently no lender will qualify them for a 100% program.
One thing I might do is try to do is confirm that their lender would even allow a 100% CLTV. If not, you could go through the whole process only to find out they can’t close – and then you have wasted valuable time and may have missed out on other good offers.
I would definitely pull their credit. I would also want to see their rent history, if there’s no mortgage history on their credit report. Also, look at the dates and history of everything on their report. If the dates of the derogatories are fairly close together, it may mean something temporary (job loss, etc.) If they are spread out over several years, it could be a pattern of them not paying.
Your only safety is in the fact that you would have a second-position lien recorded against the property. So, if they default you could initiate a foreclosure – providing you have the proper contract that is properly recorded. But I would check the laws of your state to understand the process and what’s all is involved.
Remember, there would be no equity spread. So, if they defaulted on the first mortgage, you could be hard-pressed to get your money out. But how safe this really is depends a lot on your market as well.
If you did carry back paper, you could always sell the note at closing and pull your cash. But you would most likely have to discount it heavily.
And, I would want more than 6% interest. The way the interest rates are these days, even 8% is generous -- especially with them having poor credit and no down payment. Keep in mind, you would have more invested in the house than they do.
I guess the real questions might be… How long would it take to get another offer? How much lower than your asking price would you accept? And, is this offer really worth the difference you may or may not gain?
If it were me, I would be interested in why they have bad credit and why they have no money to put down. Are they flakes? Or, have they just been hit by a temporary setback? If they seemd like flakes, I would run like the wind. If they have just had some temporary bad luck, I might be more inclined to work with them.
Just my initial thoughts.
REO properties mean that the bank has already foreclosed, and now the bank owns the property. Short sell is a technique that is used before the house is foreclosured. You are too late for a short sell.
Most REO properties are listed on the MLS or are going to be listed on the MLS. Try giving the person a call, but chances are that the bank has very rigid procedures in place and these procedures do not include selling to investors. Most REOs are MLS listed to get top dollar for the bank and the least amount of hassle. The realtor does all the work. Just remember, nobody you speak to at the bank has the authority to do anything that is not standard procedure.
Brenda
Oh, and would this process be considered a double close? Can someone explain it to me and how it would work in this situation?? thank you
No Love?
You must first read your P&S contract and see if the contract is assignable. If it is not assignable and it requires that the original buyer purchases the lot, then you are not able to flip the lot without first purchasing.
If it is assignable, then you need (1) an Assignment of Purchase and Sales contract (2) a buyer (3) a real estate attorney that will do a simultaneous close.
Brenda
Thanks Brenda,
I have been reading where some are saying you can only gross so much or then it becomes illegal.. There isnt a limit on what I make out of the deal is there? Or are they talking about something totally different??
"some are saying" you do not care what same are saying. You only care about what is written into your purchase and sales contract. That is the contract.
Brenda