Re: Creating a note from a lease-option? - Posted by Michael Morrongiello
Posted by Michael Morrongiello on February 06, 2001 at 18:48:47:
Can this be done? YES, Will there be some issues to be concerned with? YES
Here is what you inted to do, if I understand you correctly. You have a legitimate option to purchase a residential property from its owner at one sales price, and then you wish to “sell” this property (that you do not yet own) to a “retail” Buyer who will be purchasing the home to occupy as their primary residence, at a substantially higher sales price, and you wish to use SELLER FINANCING to accomplish that sale to the “retail” buyer with ultimately the seller financed note being sold off to generate the CASH necessary to allow you to exercise your option price with the property owner.
The main issues that will come into play are:
Is the “retail” sales price justifiable?
What will be the credit worthiness, and stability of the proposed “retail” buyer? and What amount of cash will be put at risk by that buyer?
Is there enough “spread” between what you can excercise your option price at and what you can sell the home for to the “retail” buyer given the fact that that the under the best of circumstances, a legitimate note funder will NOT fund anymore than around 80% (LTV) loan to value of the “retail” sales price.?
How long have you had the option to purchase the home? - if it is relatively short term, then the “seasoning of interest or ownership” issues crept into play.
So, given the issues and how they are dealt with all in all YES, this type of a deal can be put together.
To your success,