Is it possible to purchase an REO using a lease option?

[Lee Burns]

I don't have a ton of capital or credit and am looking to start investing using a lease option. Can I lease a short sale or REO?

[John Corey]

REO - Real Estate Owned by the bank. The borrower has already lost title to the lender. The lender generally wants nothing to do with a lease option. They just want to sell it. Unless they can not find a buyer, they will not consider anything creative. Even then, they really want the cleanest path to a full exit. A lease option does not provide much in the way of certainty that the property will be sold. The bank will drop the price to force a sale before they are going to take on a lease option. The banking regulations are heavily biased towards banks flushing out any REOs and a lease option causes the opposite to happen (the property stays on the bank's books as the bank would still be the owner).