I need some help!

I want to purchase a property from an elderly lady who really wants to sell her single family home. She owns the house with a mortgage of $26,000 note. The property needs some work, approx. $20K to bring it up to good shape. I am not in position to purchase the property via a loan. So, I was thinking of doing a lease/option or a contract for deed. In either case, I will be responsible to fixing the property up and preparing it to re-sale or tenant/buyer. Which option is best? Please help and please define how a contract for deed works… I am a Newbie.


Contract for deed is a way of Owner financing, where the seller gives you a contract with terms on it like a loan for a certain period. Then you go get a loan with a lender and purchase the home with the loan and you will get a deed a closing. With a contract for deed you do not get the deed until you pay your seller off. If you cannot get the loan right now and you are going to put that amount of money into it, I would go with the contract for deed vs. the L/O.

Good luck,


Thank you,

What terms should I have in the contract for deed. In particular, how long should the contract be before I get a loan? 1 year - 2 year? Where can I get a contract for deed form.


Why not simply have her owner finance with a balloon at 5 years…or less? You take title, you $ is protected, you do the rehab, then sell it retail. Your note to her is paid in full at the time you get your profit. Nice, because you have the deed, recorded, in your name.

one thing here worth mentioning, is that you would have to do the math in order to determine which of your 2 options are better:

in regards to the owner financing, see what interest rate she would give you, and determine after lets say, 36 or 60 months later, what your payoff balance would be.

then look at the lease option and determine how much money each month would go towards your purchase price.

choose the option which would leave you in a better position down the road. does this make sense?

one other thing here is that depending on which state you live in (each state has their own statutes, and different phrases for this) you can qualify usually for a lower property tax rate if you have an ownership interest (contract for deed) and you may have a higher tax rate (non-owner occupied or sometimes referred to as non-homestead rate) in which leases, (regardless of option to purchase) would not qualify.

let me know if this all makes sense or not.