Owner Finance / Lease ??

Hi, I am trying help out a friend who wants to move to Arlington, TX. He is not able to qualify for a home loan due to non-verifiable income and other minor issues. To help make this easy for him I have agreed to purchase a home in my name (since I have good credit) and then sell it to him owner finance. We were thinking something like signing a lease to make it appear that he is renting from me to pay the mortgage and cover me if I were to purchase another home this one would be a wash or close to it financially, having a lease agreament. Also, if he is late on the rent more than so long, I could evict him, take the house back, and rent or sell to someone else. We also wanted to do a contract for deed parallel to the lease stating that he is purchasing the house for me but the lease agreement has to be met until he pays off the house. If the lease is violated then it voides the purchase of the house. I am not sure if this is the correct approach or not. I am not very experienced in real estate and am looking for advice on how to do this deal. What would be a good method? What is the best way to do it to protect him and myself and what forms should I use. Any advice would be appreciated and when I get closer to finding the house I may be looking for someone to help me out (for a fee of course) with the forms and so forth if they are in my area(DFW).

Gary :slight_smile:

Howdy Gary:

Do not use a contract for deed. These have gotten really hard to work with over the last several years. New laws etc have made them impossible. A lot of these go wrong and many a friendship is lost. I too have done the same thing. There are several mortgage companies that will do no doc and no income verification even with less than perfect credit. Have they explored all these options.

Do a lease and separate option agreement if you end up doing the deal. Do not even mention the option agreement in the lease. It can get confusing as to what money if option money and what is rent and deposit and even prepaid rent. I have seen non refundable option money considered prepaid rent etc. Be carefull

Good luck and thank you,
Ted P. Stokely Jr
11505 Sw Oaks
Austin, Texas 78737
512-301-9171 home
512-587-6177 mobile

Whatever you do, don’t sell to him on a Contract for Deed in Texas, look back at previous posts from me to see why… we learned the hard way!! CFD in Texas for selling is bad bad bad!! =) For the buyer… that’s a whole other issue.

Heather Zaal