Re: L/O offering more than fmv - Posted by KC Questions
Posted by KC Questions on July 14, 2002 at 22:28:09:
The only way that I would offer more than FMV on a lease option is if I am getting an extremely large rent credit like 100% of my monthly payment. The seller’s benefit is that I am giving them a lot more for their house than it is worth and I get my equity buildup a lot faster than any loan.
The other way I would do it is if I am getting a large amount of extensions. Two weeks ago, I lease optioned a house for one year with 30 extensions. My option price is “balance of mortgage with XYZ loan company.” There are 29 years left on the mortgage. The balance of the mortgage is about $40,000 and the house is only worth $35,000. The mortgage payment is $365 and my lease payment to the owner is only $300/month. He was more than happy to pay the difference to keep from losing the house and ruining his credit. I will be subleasing this house for $500/month.
This is a house that most investors that I know would pass on since he owes more than it is worth, but I found a way to make it profitable.