Posted by Matt KY on July 14, 2002 at 02:43:38:
this is assuming that by the time the house is paid for by your t/b, that the house’s value will have appreciated past your above market price. not to mention that you will have set a higher price with your t/b.
as a general rule though, buy for as LITTLE as possible.
L/O offering more than fmv - Posted by banks
Posted by banks on July 13, 2002 at 22:22:02:
I was told its safe that if a home appraises for 40k I can give them 45k on a Lease option. My personal instincts tells me this is wrong. Can this work?
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.
Re: L/O offering more than fmv - Posted by Scott Ewing S.W. MIch
Posted by Scott Ewing S.W. MIch on July 14, 2002 at 05:39:39:
Do some figuring. What is the appreciation rate for yor area? How long is the contract for until cashout. Can you offer a larger than normal consideration? When I OFFER a house on L/O, I always insist on at least $1000 consideration, plus first months, and security. Do your homework, talk to the owner and negotiate. Best, Scott
wrong way - Posted by Donald
Posted by Donald on July 14, 2002 at 05:19:42:
banks
Any fool can L/O or buy property all day long above appraisal value.
1…FMV–is 40k, how much equity does he have?
2…What would he sell it for if you offer him all cash?
3…Does he have a mortgage that you could assume?
4…Why does he want to sell?
5…Who says it is appraised for 40k?
my 2 cents
Donald