If you’re selling a house, would you prefer to sell on a lease/option or land contract?
What are the pros and cons when you compare the two?
If the end result is the same, then you need to ask yourself whether you want to be a landlord or a banker.
The technique that gets your property sold and your money back in your pocket is the one that is better. I am not trying to be flip, but there is no “correct” answer to your question.
Shaun, just like Dave said but if you want to know.
Lease Option, Seller holds title and the tax benefits, buyer might not exersize the Option, if buyer doesn’t pay you evict.
Land Contract, transfer the deed, buyer gets tax benefits, if buyer doesn’t pay you foreclose.
There’s more but you have to deside which way you want to go. herbster
Just a minor correction. A land contract does not transfer deed until the contract is satisfied and the seller is paid in full.
I guess what I’m really asking is, is it more harder to evict or foreclose. I wouldn’t mind being a landlord. I’m trying to figure out which one would be more of a pain if the buyer defaults.
Dave I oops, thanx. Shaun your talking about a month to evict and 3 to foreclose or around there anyway. Which do you think is cheapest? herbster
I would guess cheaper to evict since it takes less time.
It really isn’t that simple either.
Sure it’s going to be easier to evict (depending on state laws and all) but you also have to weigh everything.
In theory, a L/O is supposed to have 3-5% down. In reality, it’s more like 1-3%. In a L/O, you’re a landlord and in theory, your not supposed to be dealing with landlord headaches. In reality, you still do. In a L/O, you are still limited to what the local market rents are. Sure, a tenant will pay a little more than market to “rent2own”, but not much more.
On a land contract/contract for deed, the buyer is an actual buyer. That is THEIR home and they will treat it as such (not usually true with a L/O tenant). If something breaks, it is THEIR problem (definitely not true on a L/O). Not only will you get more money down (you should), you will likely get more money monthly, as that payment is based off of the loan balance and interest rate vs. local market rents.
And in most cases, their are far easier ways to get people out than evictions or foreclosures.
Of course, there are tax benefits/concequences for each method as well, where you’ll need to consult your tax professional.
Raj