Posted by Bud Branstetter on March 14, 2001 at 17:31:26:
One of the criteria is intent. If you intend to resell then it is not an investment. But since it is very difficult to determine intent why worry. Yes there are things that you can do to show intent that it is a lease. Like the separate option from the lease. Another is hold them 2 years.
I don’t do L/O often anymore as I prefer the Pactrust approach. Most sellers can see the benefits over a sandwich lease. You can approach a leasee two ways. One is to hold their hand and make sure they see the mortgage broker, etc. The other way is to pick tenants that have a few more credit problems that normal and stay hands off. It is therefore unlikely they will staighten up themselves. You in effect get premium rents with less management. You would first have to know a lot more to pin down a percentage. I’m trustee on one that a woman just walked on 10K.