My lawyer wants me to do land contracts and not get them notarized so they can’t be filed so the “buyer” can’t claim equity should the deal get messy.–I like the lease purchase because the judges around my area will think you’re being slick if the land contract isn’t filed. Frankly, I thought he was being lazy. As for getting conventional loans, I don’t see where it would make much difference which one you had–the criteria is the same anyway: good credit, debt to income ration, and job history.
I am finishing a rehab, and have questions about how to sell it.
Does lease/optioning properties help prevent the IRS classifying you or your company as a dealer? I can see the benefits of L/Os for tax purposes (short-term vs. long-term gains). But I’ve also talked to someone who has done hundreds of rehabs and who stopped doing L/Os in favor of land contracts because a land contract is like gold to a bank when it comes time for a buyer to refinance. L/Os, on the other hand, are much weaker from lenders’ point of view for the buyer when they want to buy you out, especially when they have a shorter-term lease with you. He also said the requirements in many leases that tenant/buyers are responsible for minor repairs (advocated by many gurus) is a bit questionable legally.
So, what’s your experience? I’m trying to figure out how to sell this baby…