I have a deal that I wanted some help structuring. I have home that I am lease-optioning for 105k, with 3k option fee. I found a tenant buyer who has money coming from an estate in two months. They only have about $600 as an option fee now and can pay the rent + the monthly option fee of $150. They will be receiving 40k in two months that they want to use as a downpmt on the house and have me owner finance. How do I insure that I get the 40k in 2 months? Any suggestions? I do currently have a mtg on the prop. so it will be wraparound. I want to set it up lease-option initially, and then owner-finance. Thanks
Well…if you take the 40,000 down while it is still in the lease stage then it could be construed as a sale and not a lease/option. That doesn’t mean don’t do it. This situation sounds profitable.
Since it is a lease/OPTION it would be hard to grantee the 40,000 unless you don’t do the L/O and put together owner financing with an AITD. Then you could guarantee the 40,000 in two months or you could foreclose on them and get the house back.
If you wish to continue with the L/O I would write it all out in an addendum attached to the lease/option contract stating the terms of payment.
You’re getting into a sticky situation depending on your state. What happens to this 40%? Is it refundable and going to be held in an interest-bearing account on their behalf while they rent or are you just selling the property to them owner-finance?
They shouldn’t lease if they have 40% down. There are banks that will lend to people with bad credit and even no SSID with a 60% loan. A judge, lawyer, etc., may think you’re taking advantage of these people if you put them in a lease option AND take their deposit/downpayment when you can instead help them qualify to buy the home.
Leases have deposits. Sales have downpayments. Be very clear on which type of transaction this is (or combination thereof) and have a clear contract so the buyers understand what they’re signing.