Posted by Shawn J. Dostie on July 14, 2003 at 20:07:32:
It depends on your buyer, your feelings on that day and the downpayment. Safety for you the seller would lean more to the Lease option. I would hold their option deposit, making sure it was no more than a 3 year tenancy, and that the optionee knew that if they couldn’t cash you out in the three years, you could continue to rent it to them, or even carry the entire note yourself, but under no circumstances would they get their option deposit back. And that would be in writing. The rental payment would be enough to cover both your underlying payments plus enough to cover taxes, insurance, plus a little for your risk. If they have some real money down you might consider the land contract(Contract for deed). Thae payments should be higher than what you are currently paying, and I prefer a pretty stiff rate of interest because my principal gets paid quicker than theirs creating a larger spread at payout time, and because it encourages them to get refinanced sooner, therefore limiting my risk. Here you have a saleable instrument. A L/C can be sold at discount for cash, whereas a L/O can’t. However it’s easier to evict than to foreclose, although there are legal, ethical, and moral ways to get some of them to move without the foreclosure headaches. It all boils down to what you are most comfortable with. I’ve done both. I’ve never had a L/O tenant fulfill, but then again I can do it all over again with higher numbers as time goes on.
Need Advice - Posted by Sal
Posted by Sal on July 13, 2003 at 07:28:42:
Asking for advice/options. Here is the situation:
- Selling personal residence (retiring from military and starting new career)
- 1st (84,000) and 2nd (33,000 - Home equity from Insurance) = 117,000.00
- Comps do not exist in local area (rural). Radius would be increased but to the extent of comparing apples and oranges - Neighborhoods)
- Replaceable/Build new would be over 100,000.00 (2440 sq ft (living), 4 bdroom, 2 bath, 1 1/2 acre)
- VA appraised @ 96,000 Oct 01. Purchased for 79,000
- Approved for 2nd home at new location w/o selling first! What a feeling.
- Do not want to pass on the entire cost of equity loan (not all was used for house)
Selling financing (L w/option purchase): If I am not in a position (financially) to sell the house when the T/B wished to exercise their option, and I refuse, then I can be sued? Correct?
Releasing 2nd from this house: Requesting the transfer of 2nd to some other item that the bank would feel comfortable with. Say my new house?
Seek unsecured loan in the amount of 2nd to release lien.
Straight Lease without option to purchase: Long distance landlord.
Does anyone have any ideas/advice? I am trying to think creatively but from the seller point of view.
Re: Need Advice - Posted by Shawn J. Dostie
Posted by Shawn J. Dostie on July 13, 2003 at 16:27:05:
If you are offering any type of owner financing, why not sell for the 117k and forget about it? You are offering a valuable service that not all sellers are willing to do. The value of the home will surely rise over the next 5 years won’t it?
Re: Need Advice - Posted by Sal
Posted by Sal on July 14, 2003 at 17:55:40:
I agree that offering Owner Financing is something of value. Afterall, not everyone can get financed.
Yet, which Owner Financing do I use in this situation?