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I’d like to do an HBS for the highest down payment on a home that I own subject to in Atlanta. I’m currently using it as a short term rental, but I’m not able to keep up with bookings, cleanings, house bills etc due to life & schedule changes so I’d like to lease option it. I have Jackie’s manual on HBS’ and understand the process, but since it’s my 1st time I’m wondering if there’s anyone in the are that I can liaise with on this one? It’s a 2br 1ba home in the Sylvan Hills area, quiet neighborhood, primarily home owners in the neighborhood. It’s still underwater a bit by about $5k – the mtge is $60k, the value is $55k.
Hadn’t thought about that. If I sell with seller financing how would it work? I’m open to trying that?
I also have another home that I planned on leasing for myself & my family, but I’ve changed my mind b/c I don’t want to move. I just signed a straight vanilla 2 year lease option with the owner. There’s no mortgage on the house and he didn’t want to seller finance. There are no stipulations in the contract that I can’t sublease. Do I need to go back to him and ask him if I can do that? I was considering doing a lease option on this one as well, but I’m open to your suggestions. It’s a 4br 2.5ba home w/a den in one of the best school districts in the Atlanta area.
The lease option house you planned to move in to that does not have a sub-lease clause needs to be re-negotiated. First of all, you need to get an extension on the option for 2 years + 2 years + 2 more years – usually with a small fee paid for the extension.
You also need to add the sub-lease clause.
The thing I hate about lease options when buying is the option seems to always happen at the worst time – like right after a real estate crash or when interest rates are increased so there is not as many qualified buyers or when your tenant buyer tells you they changed their mind and are moving out 30 days before your option expires, etc…
If you want to get a lease option versus buying with seller financing or subject-to, then you need to anticipate their potential problems when it is time to exercise your options. Have a plan B.
Add language to extend the option another 2-5-10 years for an additional option consideration.
Add language to get a discount if you exercise your option sooner.
And always add language for the right to sub-lease.
When you sell with a lease option it is important to give the tenant/buyers a shorter term than you have just in case they do not qualify for financing when your option needs to be paid off. This will give you time to find another buyer or do a highest bidder sale.
And remember that you do not need the option You could just do a lease (master lease) with the right to sublease. Negotiate a long term like 3-5+ years. You can always add the option later.
Getting a lease option backs you in to a corner to get the house sold within a certain time frame.
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