Yes you are right! I didn’t even think about selling by contract for deed. Well I did, but I was thinking more like 20% down because I’d rather folks get their own mortgage and cash me out or what have you.
Here’s my question to you: If I’m going to finance the purchase, shouldn’t I get more down then if I’m going to sell via a lease/purchase?
Can you please email me privately and tell me how this contract for deed business works, because I did have a buyer that definitely could afford the monthly payments BUT their credit was sh*tty and I couldn’t get them approved for the loan…
I got a house that I’m getting ready to sell via lease option.
The values of the homes are $80-85k, I’m going to l/o it for $89k.
Now, the rents in the area could go for $900 for a twin and this home is a single, is it reasonable for me to ask for $1000 or more for this home? Even though the price is $89k and IF they were to get a mortgage that price wouldn’t be close to that??
As I’m writing this, I’m thinking that I’m not even making sense by asking this question and that I’m answering my own question. The answer I suppose would be If they could get a mortgage to pay less, they would! But they can’t so they need a lease/option.
Anyway, in this area I think I may have a problem getting above $950, but I’m gonna try…
If you were to sell to them on contract getting about $4k down, financing the balance of $85k at 11%, their PI payment alone would be $809.47. After adding in the taxes & insurance on top of that their payment would be at or above $1k per month. You don’t say what the taxes & insurance is on this property, but my guess is that it’s at least $190 or more per month! Am I correct?
I think you are squeezing too much out of the monthly payment. True, they should be paying a premium for your willingness to work with them, but perhaps you would be better served to raise the purchase price rather than the monthly payment. I think people care more about what they are paying per month than the total cost.
Hi Carey,
Just because someone can pay $1000.00 per month for a L/O doesn’t mean that they can get a loan. You are doing them a favor by letting them into a home when NO ONE else will.
You can always go down on price but not up…so I would make sure that your property is as good or better and market it. Send flyers to all of the up-scale apartments in the area, these people can already afford the payments, Just maybe one of them wants to own a home of their own.
You can offer better rent credits to off set the higher rent.
Best of Success,
Dee-Texas