Selling on Lease Options ROCK! - Posted by Dianna

Posted by Arthur on August 08, 2003 at 20:32:58:

If you have a capital repayment mortgage, most of the payment at the begining is interest.

Selling on Lease Options ROCK! - Posted by Dianna

Posted by Dianna on August 08, 2003 at 24:02:55:

After marketing through the MLS and having offers “fall out” because of whatever reason, we decided to cancel the MLS listing.

1 ad. 1 day. Everything we wanted in a tenant. We met them at 10 a.m. and too an application. We checked rental history – 7.5 years at the same residence and never later. We checked employment – they make more money then we do and more than pass our “3 times the monthly rent” qualification (by 3 times). And finally, their credit – decent. A few charge offs. A foreclosure that’s 6 years old. So, an application at 10 a.m. an a move-in happy couple by 6 p.m. My personal best. They we ecstatic. I was ecstatic – we don’t have to make August payment. They have place to live. Win/win.

Lease Options ROCK. Months on the MLS and one day fulfillment rate as a Lease Option. Whooo hoooo…


The details??? This house is just below the Seattle Median at $200K, so we have a huge market of folks who need houses, but don’t think they have the credit. Monthly rent is just above the average for a 3 bedroom at $1350 ($100 month rent credit). Non-refundable option fee is $5000. We bought this house in May, and because we mortgaged it on a interest only loan, our PITI is about $856/mo. Do the math - that’s $500 month cash flow, our capital costs (carpet and paint) were cashed out with the new loan. Better yet, since the PITI is so low, this won’t be a “hit” or negative on my husband’s credit.

For all of you pro’s that have figured out the subject to’s – I’m still envious. I like the control of having it on my credit. Oxymoron? Probably…

Best luck in investing to all of you!

Re: Selling on Lease Options ROCK! - Posted by eric-fl

Posted by eric-fl on August 08, 2003 at 16:15:29:

Ok, I “did the math”, as you suggested…

Assuming you acquired the house for 180k, on a 30 year loan, and the P&I was $800 a month, your effective interest rate is 3.42%. How’d you do THAT on non-occ investment property you personally signed for? I know you said it was “interest only”, but interest isn’t that big of a portion of the payment early on to begin with. Plus, are you then effectively not paying down any of the debt? You probably don’t care if you plan on getting a cash-out, but what if the T/B doesn’t exercise? Will you never pay down the loan? I’m sincerely happy for your success, but some of this just sounds a little to good to be true…

Re: Selling on Lease Options ROCK! - Posted by Arthur

Posted by Arthur on August 08, 2003 at 20:34:58:

and i make it 5.33%, not 3.42%, or have i not taken into account an expense apart from interest?