200 transactions over 9 years with only one eviction? I’d sure like to know how you managed that! Maybe you’ve been lucky enough to have enough demand for your places that you can afford to pick the best one. Or you just screen so carefully and in the process, have a lot of vacancies until the right tenant comes along? Personally, I’ve been plagued with many hard to rent properties where the tenant selection often comes down to choosing who is the least bad of a bad group.
Would it be wiser to sell my current home on a lease purchase, or sell outright to get more cash to invest in another property? First time invesetor here.
Please don’t listen to the advice given so far. You have given almost no information yet are expecting a proper answer.
You don’t say how long you have owned the property so what are the tax implications. You don’t give a clue as to equity. You don’t say where your located and the market conditions there. You really only asked us to answer whether you should sell or lease-option.
You received the answer to sell on a land contract and the one poster said you could sell it for 80%, if that was being considered why would you do that, just as easy to sell at 80% at the front end and why would you want to do that in the first place? So many other avenues depending on what you got and where you are.
Posted by StevenS(CPA) on August 21, 2009 at 11:22:08:
I agree with Herbster. A land contract is the way you want to go if you’re looking to sell your home for the highest price.
But if you have a plan on how you are going to invest the cash then take the cash and invest. But know that you’re looking at a significant discount from a cash buyer.
Posted by Herbster on August 15, 2009 at 13:58:05:
Melanie, The all cash sale is always perferred but in this market its almost impossible unless your giving away the deal of a life time. People who can actually get an approval are looking for great buys on foreclosures and short sales. So if you want to sell I suggest the lease option or land contract. A land contract properly structured could be sold for cash for about 80%. Herbster
One of the issues sellers are having, especially in CA, is that lenders will not allow you to close on your new home until and unless you have closed on your old home. The exception to that is only if the seller can show they can afford both mortgages. Lenders are not allowing any percentage of Rent-to-Income Credits at all. You either sell the house outright or you don’t get your new home.
I’ve made many “Sub-To” type offers asking the Seller to leave their financing in place while we agree to be 100% responsible for the property. In many cases the Seller’s new lender, even if we have a long term net lease in place, are refusing to grant the loan if the seller can’t qualify with their current income to cover both mortgage payments.
The only success I’ve had lately with these is using a Land Trust combined with a Long Term Triple Net Lease. With the Net Lease in place some lenders are still giving a 100% RTI Credit to the Owner/Seller which actually improves their ability to borrow on a new home.
Yes, the Seller is ultimately responsible for the original mortgage if the resident defaults, but if the resident puts enough money in an escrow like contingency fund (typically two to three payments), then there is always enough to pay a month or two while they are evicted, if needed.
Over 9 years and 200 transactions I’ve only had to evict one resident/tenant.
There’s a lot to be said for just selling outright even if you don’t pocket anything. Its nice to have all the issues with some properties behind you and move on to the next, more profitable deal.
