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An Alternative to Wraparound Mortgages
Posted by: Investors Lounge Online in Tenant, Subject To, Sub Prime Lending, Refinance, Real Estate Investment, Owner Will Carry, Over Leveraged, Mortgage, Market Bubble, Loan To Value, lease purchase, Lease Option, Landlord, Investment, Financing, Credit Cards, Analyze on Aug 14, 2008
How To's and Not To's of a Lease Purchase Agreement
Posted by: Nick Johnson in lease purchase, Lease Option on Jun 05, 2008
How Can "Rent" Be More Cost Effective Than "Buy"
Posted by: Nick Johnson in Real Estate Investment, Lease Option, Investment on May 08, 2008
Why Would Sellers Do A Lease Option?
Posted by: Nick Johnson in Subject To, option fee, Motivated Sellers, lease purchase, Lease Option, Foreclosure, Due on Sale Clause on Apr 27, 2008
Structuring Deals on 100% Financed Properties
Posted by: Elliot Barron in Subject To, Over Leveraged, Over Financed, Lease Option, Investment on Apr 23, 2008
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Scenario #1. Ok, you find a home you like for $250,000 and a good interest rate requires 20% down to eliminate the escrows and insurance. Take that $50,000 and when you add a 1% origination fee, probably 2% interest points, survey, appraisal and closing costs, your payment on that now, $200,000 8% mortgage is going to cost you $1,467/mo. Once you add home insurance and taxes, you are upwards to 1800/mo putting your out of pocket around $55,000 and only $50,000 equity. Now it looks to me like you're already in the hole 5,000.
A Lease Options is a "Rent To Own" arrangement, which is simply a lease where the tenant has the option to purchase the subject property. This tenant/buyer is sometimes called "Homeowners In Training" where they can own now and buy later.
One way to make money on a property which is 100% financed, is to take over the property "subject to" the existing loan. Then, you can Lease Option the property to a tenant/buyer. You could not only make money by getting an upfront deposit, but you can also make money every month by charging a higher monthly payment. You can even tie the sales price to a future appraisal. This way, you are building up equity in the property until your tenant/buyer exercises their option to buy. That equity would be your third payday down the road. There's more you can do with "subject to". Say take over the property on "subject to" and find a buyer who's going to live in the property. Many people who wish to own a home are ready to pay five to ten thousand dollars above market rate, if they didn't qualify for the loan.







