How does Tenant Buyer finance their LO Purchase? - Posted by mehls17

Posted by Phil on July 12, 2005 at 14:07:51:

Hi. Well L/o’s are easy for the investor’s standpoint. If you can get a seller to L/O his prop. for very little option consideration. For the T/B they will get a loan to buy the place from you, or pay cash. Its easy for them because they don’t have to qualify for a loan (if they need one) until they decide to excerise their option. Reguardless of what the T/B’s tell you now, a lot of them do not end taking the option. So you keep the 7800.00 they paid and would made a profit on the monthly spread. Get an L/O from the seller for longer than your T/B’s, so if they don’y buy, you find another T/B and collect another option fee.

How does Tenant Buyer finance their LO Purchase? - Posted by mehls17

Posted by mehls17 on July 12, 2005 at 13:47:19:

I have not done a lease option before but am considering it for a duplex I have on the market here. I get the whole concept however I am wondering how the TB gets financing for the home once the option comes due?

Lets say I have an agreed purchase price of $260K at the end of the option period, they put down 3% of that or $7800 and paid $100/mo rent credit on a one year L/O. So they would have $9000 in credit coming back. So essentially they need to come up with financing (and its downpayment) for the amount of $251K? I thought Lease Option purchases were supposed to be easier no money down purchases? Am I missing something?

Thanks -

Joel