Posted by Karl (Oh) on March 20, 2001 at 24:05:46:
Does the profit that you might make from this deal justify the risk? Are you going to put yourself in the middle of a lease/option deal for a measly $750? That?s not much profit for the liability you?re going to be taking on. It sounds like the seller messed up this deal for you. I would un-convince her that she needs you, and let her lease the home directly to her buyer. By not keeping quiet like you requested, she stole your monthly profit on this deal. Of course you don?t want to rent to own without positive cashflow. That would be bad business.
Can you renegotiate the monthly rent to add some cashflow for you? Maybe. But can you do it without the buyer feeling that somehow they?re getting jacked around? That would be a trick.
I?m in the middle of putting together my second lease/option deal. The seller owes $14k at $165 per month. I?m taking over their payments. I showed the home tonight to a lease/option buyer for $18k. He agreed to pay a $1500 option fee, $400 a month, $200 applies to purchase price, $200 is rent. If he pays on or before the due date, an additional $100 out of the rent is applied to the purchase price. If he doesn?t exercise the option and moves out, I?ll give him half of his option money back if he?s current on his payments and the home is in good condition (tape 7, side 1 of Lonnie?s Home Study course). After three years, whether this guy purchases the home or not, I?ll have cleared around $8500, with no money into the deal. I don?t like being on the hook for a $14k loan, but the profit from this deal makes the risk worthwhile. Ask yourself the same question on your deal.