Posted by Lloyd Cook, Los Angeles on January 23, 2002 at 23:43:47:
You could lease option or sell on land contract immediately with no loan costs. If you get someone who can qualify within the first year, you will be cashed out and will not have any loan costs on your side of the equation. You should have good cash flow during the first year since you have no loan costs.
Land Contract or Lease Option (wrap)? NEED ADVICE - Posted by Chris Raber
Posted by Chris Raber on January 23, 2002 at 15:56:07:
I HELP IN CHOOSING WHICH DEAL YOU THINK I OUGHT TO CHOOSE… Ya see, i am buying a house for cash at $30k. I close in two weeks. The home is worth $42-45k.
i would like to resell (flip) immediately, however in Upstate New York, it appears that most banks want seasoning…1 year. (Seasoning hurts here because a buyer cannot get a loan because I haven’t owned the house for more than 1 year).
So, i have two options here the way i see it (assuming the house sells after ONE YEAR for cost comparisons below)…
i refinance the house (get 80% LTV 45k) and take $36k mortage AND I 1)sell on L/C or, 2)I L/O the property.
OPTION ONE means (assume i sell for $42k): i get $4200 down, the difference in my PI and the buyer PI (assuming L/C at $37,800 @11% (“x” yrs)), which is apprx $150/mo (for 1 year = $1716), zero on the refi (due to closing costs, and the net sum when buyer refi’s (conventional) and i get the rest of my equity (Approx $6300. ALL = 4200+1716+0+6300=$12,216 profit!!
OPTION 2 means (assume i option/sell for $42k): i get $1500 down on L/O, the difference in my PI and the buyer PI (assuming i L/O for $700/mo)274/mo (for 0ne year = 3288/yr),$2500(from the refi)(80LTV)36k out minus misc. costs + cash outlay ($31,500) minus closing costs on the refi ($2k, and exercise of option (40,500 owed by buyer (42k -1500 down)- my 36k refi loan (3500) = ALL = $1500+ 3288+ 2500+3500 = 10,788!!!
Am i missing something here, or is the L/O a better solution here