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Updated almost 8 years ago on . Most recent reply
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Are Lease Option and Seller Finance valid investing tools?
Hi my name is Han.
English is not my first language so please bear with my broken english and newbieness.
I have question about lease option and seller finance strategy.
I am 40 years old and almost broke.
My goal is having 5 to 10 free and clear rental property as my retirement as soon as possible.
I read books and listen seminars about lease option and seller finance.
It sounds very good strategy to pursue but sounds little too good to be true.
And I found most successful investors don't really mention about lease option nor not much about seller finance.
And I kinda noticed things has been changed since 'Dodd Frank Act'
Are lease option and seller finance valid tool for investing or just 'sounds good to sell' strategy for so-call Gurus?
Is this strategy too risky due to 'due on sale' clause and Dodd Frank Act?
Is market too small or too competitive?
Thank you for your attention and answers in advance.
Most Popular Reply
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I've done a few lease options. THey work if both parties actually are really planning on completing the transaction . Buyer puts a non-refundable down payment. This down payment does toward the purchase price but is kept by seller if purchase does not go through. Buyer rents as normal. Sometimes a portion of the rent goes toward down payment too. Typically tenant pays repairs.
when able, buyer buys the house.
Seller is not able to sell to anyone else during the lease term of the lease option.
I dont really see it as a way for an investor to make money, just a way to sell a house to someone who can't get a loan right now, but can in a year or 2 and wants the house.