1st L/O DEAL!! $5K Frontend Profit, $0 mo. cash flow, & $30k Backend Profit! - Posted by ZMan (TX)

Posted by Bud Branstetter on April 03, 1999 at 12:56:36:

When you do a lease option you have a future profit usually. As a way to insure that you make that profit you create a mortgage on that property. There are no payments, interest etc. If there are subsequent judgements on the owner of the property the mortgage can be used to clear title so the option can be exercised. If you have to put cash into the property(septic system, paint, carpet) it is also a way to protect those investments. If my tenant buyer flakes out I don’t want the owner to walk away with my improvements. But then again that is why L/O work best with property that does not need repair.

1st L/O DEAL!! $5K Frontend Profit, $0 mo. cash flow, & $30k Backend Profit! - Posted by ZMan (TX)

Posted by ZMan (TX) on April 02, 1999 at 16:58:24:

Need some professional advice on my 1st L/O. Here’s the deal:

  1. owner is desperate for debt relief & lives 300 mi away.
  2. currently leases for 1600/mo. experires June 1
  3. has $143k balance on note, non-assum. $1596/mo PITI
  4. needs $7k new septic system
  5. no inside work needed.
  6. 2600 sq ft. appraises for about $185k, built in '84
  7. neghborhood is $200k+, $300k houses across street
  8. I’ve read the LeGrand L/O module

What are your thoughts on this?

Thanks in advance for your input!

Zman

A thought about the septic system! - Posted by SCook85

Posted by SCook85 on April 03, 1999 at 09:12:18:

Zman,
My thoughts about the septic system. Why don’t you take money down from someone, sell the home on a L/O for $190k and then have them fix the septic system. Tell them that whatever they spend on the septic system will applied toward there down payment and to give you a copy of the receipt. This way you don’t have to lay the money out for the repairs yourself.

SCook85

Get Busy - Posted by Bud Branstetter

Posted by Bud Branstetter on April 02, 1999 at 23:56:12:

Get the option with the lease agreement. Then start finding your tenant/owner. It will be more difficult with someone in there. Is he willing to fix the septic system? Can it be financed as a second? Get generous rent credits and buy so you make a good profit. If you have to put out cash for the septic system be sure to cover it in the performance mortgage.

Re: Get Busy - Posted by ZMan(TX)

Posted by ZMan(TX) on April 03, 1999 at 14:24:07:

Thanks Steve, Bud, & Dilbert,

…for your comments. The current owner is willing to assign the deed to me subject to the mortgage. I was thinking to use a land trust so not to trigger the “due on sale” clause, but not really sure the mechanics of that transaction.

Thanks in advance to those who reply!

ZMan

Re: Get Busy - Posted by Dilbert

Posted by Dilbert on April 03, 1999 at 09:12:35:

What is a performance mortgage and its place in connection with the repair of the septic tank?