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pt.2 Lease Options And How To Use Them
#194: pt.2 Lease Options And How To Use Them
Scenarios in which you want to use lease options vs contract for deed.
- Avoid hefty title transfer fees and tax.
Example of wholesaling a Lease Option- SFH worth 550K Buy on lease option for 505K with 2K down. Find a tenant buyer for 522K with 17K down. With 2K monthly lease payment. Take 15K as a wholesale fee.
Master lease option example- best to use on investment properties with value add opportunity. Where you have a lease with the owner and can sublease the units. Owner is responsible for capital repairs/expenses, taxes, and insurance. The owner no longer has to manage the property or hire a management company.
Example 20 unit apartment building, 10- 2beds 10- 1beds by a university. 150K in deferred maintenance. Owner will have a large tax consequence when he sells because he depreciated it over 27.5 years. The heirs want him to hold the property till death to avoid tax consequences. Rents are below market and can be increased. Charge pet rents. Chargeback sewer/water/garbage to tenants, add storage units, ect. Offer to pay 80K as option deposit.
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By Cody R, Nicole K, and Jeff Rappaport: Real Estate Investing and Creative Financing Expert
4.8
157157 ratings
#194: pt.2 Lease Options And How To Use Them
Scenarios in which you want to use lease options vs contract for deed.
- Avoid hefty title transfer fees and tax.
Example of wholesaling a Lease Option- SFH worth 550K Buy on lease option for 505K with 2K down. Find a tenant buyer for 522K with 17K down. With 2K monthly lease payment. Take 15K as a wholesale fee.
Master lease option example- best to use on investment properties with value add opportunity. Where you have a lease with the owner and can sublease the units. Owner is responsible for capital repairs/expenses, taxes, and insurance. The owner no longer has to manage the property or hire a management company.
Example 20 unit apartment building, 10- 2beds 10- 1beds by a university. 150K in deferred maintenance. Owner will have a large tax consequence when he sells because he depreciated it over 27.5 years. The heirs want him to hold the property till death to avoid tax consequences. Rents are below market and can be increased. Charge pet rents. Chargeback sewer/water/garbage to tenants, add storage units, ect. Offer to pay 80K as option deposit.