If its not based on credit in anyway, can I deny them without giving explanation?

It's the only explanation that makes any sense.If I could get this place for 40K and put 20K into each side it would be worth $1,300.00 a month rent.

In technical terms, and according to the actual principles you are referring to (again, not sure how it really serves a purpose here) we buy at market value, force appreciation and realize a profit at sale.But to use that as an explanation to teach newbies really does not capture what we really do and that is, buy under what we consider, market value.

No doubt many people may chime in to this post and attempt have more clear and cogent explanations.

Your explanation is a little confusing but I think your referring to a Subject To transaction.

The other huge issue is you'll need a heck of a good LOE - letter of explanation to sell the UW (underwriter) on why this is ideal to be  your primary residence using factors the UW deems as variables that make sense for a primary occupant (larger family, location, schools, sob story, etc, etc).

@Matt Devincenzo , it seems as if your explanation for the lease option is as if you were the tenant/potential buyer, whereas your explanation for the subject-to is that you are the investor.

@Divina Westerfield Thanks for the explanation!

I will give a brief explanation of how I structured when I get to my computer in a little bit.

@Shane Woods  Thanks for the excellent explanation of what the % formula is made up of.