I understand you to be asking if you can get “seasoning credit” for L/O payments if you sell the property to the tenant via owner financing.
The funders that will permit you to fundamentally convert or rollover a stream of L/O payments into an owner finance note (that can be sold for $) will require “airtight” documentation. For example, do you have cancelled checks, bank statements, etc. that support without question a timely paying tenant? If you do, some will consider this.
Jeffrey:
Depending on your game plan, One of the biggest problems associated with selling a property under a lease option arrangement is that over 50% of the buyers will NOT be able to obtain the financing needed to excercise their option and complete their purchase.
So when you SELL using an option, especially if you offer no financing alternatives to the buyer, then you really don’t know IF these buyers will be able to complete their purchase of the property from you a year +/- from now. Meanwhile you may have YOUR cash tied up into the property.
Using OWNER FINANCING as a way to offer “exit” financing to a prospective lease option buyer is an excellent tool to create CERTAINTY as to the outcome of an option rather than UNCERTAINTY. I have used in the past what is called “a 12 month contract for option”, it is NOT an option given right away but a CONTRACT that in essence states that If the prospective buyers pay their rent timely, maintain the home, do minor maintenace, etc. during the 12 month time frame, THEN I will give them an option to purchase the home and even provide them with owner assisted or Seller financing.
With a 12 month rental payment history under their belts that can be CLEARLY documented, and with rental payments thatare similar to what a mortgage payment would be, my owner financed paper now can be converted
into CASH through the sale of that note.
We reguarly have invested in such deals in the past.