Need help with possible lease option for first rental propery

[James Bradford]

Hi everyone,

I have been looking and learning on the forum for about 5 months now and came across what seems to me like a pretty good start to my real estate business. I currently live with my parents in Illinois but am looking to relocate to Orlando. I have pretty much zero credit and have been working to save enough for at least a down payment. I think this would be an ideal situation if I could get into this condo (with my business partner) under a lease option contract. Which would ideally give me the time to raise the capital or find an appropriate way to buy the property and rent it out to students near UCF campus in the near future. Here is the listing.

http://www.zillow.com/homedetails/3533-Aristotle-Ave-Orlando-FL-32826/2122808717_zpid/

also it says it needs a little fixing, but I am pretty handy and will be going to visit Orlando at the end of this month so I could possibly check it out and better assess what problems are there that need to be fixed.

Thanks in advance for the advice!

James (Jai)

[Brian Gibbons]

Originally posted by

@Wayne Brooks:
The property is listed with an agent already. You'll have to go through them, and this is probably not the prime L/O candidate property.

Wayne is an agent. Agents do not like lease options.

I target the following -

Listed w Agent Houses

Expired Listing Houses

Landlord Houses

FSBO Houses

Property Bought at Top Of Market (2006 - 2009), see listsource.com.

All these properties are candidates for either a sub2 or a lease option assignment.

Sorry, but many agents will BUY A LISTING. Not saying all agents do. Many do.

Let's say a Seller couple would interview 3 re agents and inevitably pick the agent that would promise them the highest price. But their home would sit and drop in price. This was a technique used to win business. Then in 60 days the agent will say, "Well we tried it your way, now we need to price it right"

A good agent will list at 95% of real comps to get competition through the house and move the house fast to prevent a vacant house to sit 3 - 12 months, and this sitting on the market costs the sellers PITI payments. At $2000 a month x 9 months, that sucks.

I'll buy a $200K house with $195K owed against it (if it cash flows) on sub2 or wrap or CFD, and then exiting with renting it or RTO'ing it.

Or I'll lease with option and assign the deal for a $5000 assignment fee.

Lease Options have a bad rep because the TBer (Tenant Buyer) rarely gets the mortgage. Many REIs just get a warm body in the house. I understand Agents hate that.

To Increase your odds of getting the TBer to get the mortgage do the following...

1. Get the TBers to a RMLO and do a 1003 app. Have RMLO write an opinion of ATR (Ability to Repay) as per the Dodd Frank.

2. Do a straight lease and a pure option, record the option to cloud the title.

3. Have someone work on the TBer FICO score. I use www.UpGradeMyCredit.com , best guy I know in the USA to increase FICO scores and help coach underwriting guidelines,

4. Make sure the Seller knows that the TBer is working hard to get the mortgage, and have a 12 - 24 window to get the house sold.

5. So the TBer does not get screwed, have the rent payment go through a 3rd party payment company, so Buyer sends his-her rent electronically, 3rd party pays PITI, then anything left over is sent to seller.

For less than 5- 10% equity, you can

A. List with an agent, price it to sell, and pay to get rid of the house.to help buyers afford to buy and

B. Rent it and wait.

C. Short Sell it (that is a joke for low equity)

D. Seller Finance it on a wrap, cfd, lease option, etc.

Gary Keller of Keller Williams wrote:

http://www.kw.com/kw/shift.html

"Chapter 10 - Expand the Options - Creative Financing.

....Affordability drives the real estate industry....Buyers must be able to buy in order for sellers to be able to sell....Affordability is the juice that makes the market go or stop....In a (market) shift, finding creative ways to help buyers afford to buy and sellers afford to sell is the game you must learn to play and win.

....if the conditions warrant creative deals but you are not able to put these deals together, then you could be done doing many deals. Unfortunately, creative financing isnt well understood by most and as a result, sometimes gets a bad rap. But it's far too valuable a vehicle to abandon just because a few missed it individuals have misused this critical real estate consulting tool.

In a shifting market, you will often need all the legal, sound, historically proven financing solutions at your disposal to get some tough transactions closed.

As a real estate sales consultant, you are buyers and sellers expect you to educate them about all the financial options they might have to create the best win-win transaction possible.

So, when the market shifts it's time to bring out the creative financial ideas and expand everyone's opportunities..... To make creative financing work, you'll need to do three things. First you'll have to be clear about what buyers, sellers, and lenders one. Specifically, what each individual he wants, and generally, what each of them always wants.

Second, you'll want to be well-versed on what each of them can do creatively to put a sale together. Each one has a time proven list of options they can consider to make the Senate work.

And last, you'll need to be created in making all of this work at one time. Create financing is a combination of knowledge and skill. Define success you must understand each party's motives, when the choices available to each, and then you must creatively suggest solutions....

Creative things sellers can do the sell their house

1. seller contributions

2. seller funded permanent buy down

3. seller funded temporary buydown

4. owner financing

5. contract for deed

6. seller second mortgage

7. lease option and lease purchase

8. wraparound and assumable mortgage

2. Creative things buyers can do to purchase a home

1. gift funding

2. selling and refinancing existing assets

3. non-occupant co-borrowers

4. using a 401(k)

5. temporary IRA transfer

6. pledged asset mortgage

7. equity transfer and bridge loan

8. employer assisted mortgage

3. Creative things lenders can do to finance a transaction

1. lender funded buydown

2. Fannie Mae's my community mortgage

3. running scenarios with automated underwriting systems

4. adjusting amortization period to lower payment.

5. adjusting interest rates to cover closing costs

6. state province and local grant or bond programs

7. mortgage credit certificate

8. Private Lending

I hope every agent and REI gets the book and helps sellers sell and helps buyers buy.