Posted by Paul Macdonald on October 28, 1998 at 20:34:20:
I wouldn’t do this deal the way its set up. For a lot of reasons:
- How would the investor take title when you do and than lease option from you? Sounds like you’d be swinging in the wind,
- If you do a lease option with this investor with a mortgage you’ve just received with a break even cash flow, you’ll have a qualifing negative cash flow for future deals. That makes it that much harder for you to qualify to do your next deal.
- If you are going to “wholesale” it and FMV really is that much higher - do it for cash. Or a positive cash flow. This investor of yours wants you to finance the deal, take the negative for qualifing cash flow, receive no interest on your money - but allow him to get a positive cash flow, AND get full benefit of the difference between your contract sales price and what he sells it for to the leasor. I’ll bet you a dollar to a donut hole the contract purchase price he offers to his tenant will be higher than what you are considering as 100% FMV.
- And what