I had a question about lease options. I understand the process up to a point. The part I don’t understand is how you can sell the property when your not on the title (owner) I like the Idea of using LO’s but a little unclear on this.
Also, do any of you have luck lease optioning from a owner in foreclosure? Seems risky relying on the homowner to be responsible for making the payments, and not getting themselves back into the same situation as before you cured the default?
I’m just a newbie myself, but what I believe you can do is this…
Gain control of property with a lease option, make it say 18 months…
Sign a triple-net lease which allows you to basically sublease the property to someone else… make their lease more than yours so you cashflow, sign them up on a 12 month option…
When they are ready to close in 12 months, use their money to close on your option with original buyer…
Hopefully your option price for the new buyer is greater than the option price you paid…Everyone is happy, original owner sells property and has made money off of your lease payments and the sale of their home, you make money off of your tenants lease payments and from the difference in your option price and your buyers, buyer gets a home…
If your tenant falls through, either ask for extension, don’t excersize your option, or just buy the home yourself and start over…
Basically you can sell what you own. In a lease option you own the RIGHT to buy. So you can sell the right to buy. You’re not actually selling the house because the buyer isn’t buying–yet. When they’re ready to exercise their right to buy, you exercise your right to buy from the seller, and then resell to the buyer.
There is NO WAY I would do a L/O with a seller who’s in default. Although you can make the payments directly to the lender to avoid having the seller screw up again. The real reason I wouldn’t do an L/O in this situation is that you should never put money into a lease/option. If you have to put money into it for back payments or repairs, you better buy it on a land contract or sub2.
I had a question about lease options. I understand the process up to a point. The part I don't understand is how you can sell the property when your not on the title (owner) I like the Idea of using LO's but a little unclear on this.
Prior to you selling the property, you are exercising your option to buy, also.
Also, do any of you have luck lease optioning from a owner in foreclosure? Seems risky relying on the homowner to be responsible for making the payments, and not getting themselves back into the same situation as before you cured the default?
No! Not a good idea at all. First of all, if the owner is in foreclosure the late payments need to be cured. Where is this money coming from? Not you, I hope!
Then, if somehow that obstacle was overcome, what makes you think the owner won't fall into this mess yet again? There are easier deals to work lease options with.