Advice please...Lease / Option outta my comfort range! - Posted by lyal_mn

Posted by Bill Gatten on April 20, 2000 at 13:14:26:

How might she feel if she knew she didn’t have to transfer the title to you, OR give you an Option per se? And how would you fare if you could offer your incoming tenants the entire income tax deduction at once (along with all the other incidents and benefits of ownership…equity build-up, appreciation, use, occupancy, etc.)?

Consider putting the property into a title-holding trust in HER name; then just taking a beneficiary interest in that trust, along with an agreement to sell or refinance in, say 3 or 4 years (keeping all sums over and above today?s FMV and all sums applied to loan principal). Then at the end you could share the proceeds of sale with your co-beneficiary tenant (who, by the way, paid all of your closing costs at inception, all the monthly payments, and handled all expenses relative to management and maintenance costs along the way…while paying a positive cash flow to you). You agree of a value today of, say $330,000.

Your ad (for your tenant) then says: “No Bank Qual, No Down, 3 pmts and clsg costs moves you in. 4+3 w/pool. Brnd new $450K Home, only $3200 p/mo + tx & ins…”

When they call, you merely say: “…if you can afford the closing costs and monthly payments, I’ll just GIVE you the property: all I want out of it to have you sell it or refinance in a couple years, and if there’s been any appreciation, I’d like to split it with you.”

A little something to think about.

Bill Gatten

Advice please…Lease / Option outta my comfort range! - Posted by lyal_mn

Posted by lyal_mn on April 20, 2000 at 06:03:00:

I’ve been trying out the “Wanted Executive Home to Lease with Option to Purchase” ad that LeGrand talked about at the convention. Got a call last night from a woman who was curious. She has a 1 yr old home in the 425 to 450K (haven’t done comps yet) price bracket. Tried to get a feel for her motivation. Not real motivated. She and her husband built the house planning to live there for 2 yrs and then build again grabbing the appreciation and tax break. Our local market is soaring and my guess is that they want to lock in the high selling price in case the RE market here retreats. I did talk to her about the fact that they would compromise their tax break by not living in it for the full 2 yrs. She didn’t say much about that and I’m guessing they would try to keep that fact under the radar of the IRS.
There may be more going on under the surface but I couldn’t get any hint what it was.
She is interested in the L/O concept but wanted to discuss it more with her husband and call me back so we didn’t get to talk about mortgage balance(s), what they need monthly to cover their PITI etc yet.
The price is way out of my comfort zone. Also I have no feel for what a place like this would rent for. Is there any possiblility of a deal here or should I just move on?