Posted by JFinke KC on February 12, 2002 at 17:28:56:
I generally do not do Lease Options and don’t have any real experience with them, but from what I’ve read your theory is relatively sound, however, the deal is very thin. Possible but thin. The reason for the increase in sale price is to allow the buyer to get into a home without immediately qualifing for a loan through a bank, that’s what I meant by easy qualification.
When it comes to new homes, they can have just as many problems as used homes. I would try to get references from the developer/builder of these homes and speak with neighbors to see if these homes are of quality workmanship. I’ve heard of several stories of new homes being built poorly. Always have a professional inspection done before you buy. This deal is thin enough where a single major problem could eat you alive.
As you can probably tell I think investing in new homes is a bad idea, unless you are the developer. Hopefully someone that’s done this will chime in with their opinions.
If it were my money, and had to reinvest it with a 1031, I would probably look into smaller multiunits (2-6 units) in a middle income area. Something that cashflows relatively well. But that’s just me.