As the title says has anyone successfully negotiated a lease purchase using a note in leiu of a cash option consideration?
No ,
But sounds really good. Sounds like it is for your apt deal. Like a promissory note. If the seller will take it I would go with it. Hope you don’t mind but I am going to add that to the tool box !
Darin
I’ve got one desperate seller that will do it with nearly nothing so its easy. The one I was thinking about using this for is bigger (3.5 times as much property value) and a guy that is looking for a considerable down payment (which I don’t have). I figure if they guy is looking for something good to keep me in the deal so I don’t walk at the end of the lease term a note for $100k or so should be enough to put him at ease, or at least that’s what I’m banking on.
Hey Rich,
I’ve touched briefly on this on “the other forum”, but
you could get a low LTV 1st (20-50%) on the property and have
the seller carry the rest as a 2nd.
No $ down for you and the seller gets his “large down payment”.
If I did a sub 50% LTV would I still get hammered on the interest rate since with the seller second it would still be 100% financed?
Can’t really answer, as it would depend on a # of variables.
Some lenders would want you to have some “skin” (money) in
the deal.
However, any sub 50% loan in a 1st position is pretty sweet.
Even with the seller holding the majority of the balance in a
2nd, I can assure you they’d feel more than comfortable, as
a nice “windfall” would be coming their way should they
have to foreclose.
I’m investigating this with a broker and have a question out to the seller to see what he’s willing to do. If he’ll lease option with 10-20% down or less vs get 40-50% up front when I get a low LTV mortgage I think he’d be more willing to take the bigger chunk. Of course with the bigger chunk comes more risk in that he’d be in the 2nd position. We’ll see…
Damn, he’s looking for at least 5% out of my pocket to do the deal.
I would hold the difference between the mortgages and 95%, so I'm asking someone come up with 5% (minimum).Guess I need to find some private money to cover that. I definitely don't have $165k.