Posted by Jim IL on May 07, 1999 at 24:33:46:
We did not really “buy it” yet, but we have one under a Lease Option agreement.
The seller was over encumbered. They owed $2k less than the FMV.
They got a job transfer and when they tried to sell, the RE agent refused to list because there was not enough equity to pay commission.
(that was my agent, and she passed this one on to us).
At first they tried to simply “Rent it”, but only got people willing to go short term.
Apparently they did not try too hard, because we have a tenant buyer already lined up, and will occupy this one June 1st.
The home is 2 years old!!
Our deal is for the “loan balance” and rent in the amount of the payment, which is approx. the average market rent on these homes anyway. (thanks to a low int. rate on the sellers loan)
We are getting $4k upfront, and $150/month cash flow, plus $10k backend.
As “Lonnie” would say, that was "good nuff!"
So, do not buy one, unless the seller is willing to Deed it to you “Subject to”…and they may.(never know til you ask!!)
But, if they are credit conscious (sp?), then just L/O it from the seller. This way, they get the tax breaks from owning it, collect a check and have NO landlording headaches. (you get those). And, you maintain it, not the seller.
This works great for low to no equity homes. (usually the newer homes bought on Govt. mortgage programs…little down payment for FHA and VA etc, means low equity in a couple of years)
Good luck, and I hope this helped,