Careful...I love to sell my own investment properties via lease/purchase option but as a general tool in a declining market your sellers are taking on a bit of risk. I agree that selling under Lease/Purchase is wonderful for a seller behind the 8-ball to generate income to cover the debt service and prevent foreclosure. I also see opportunity in acquiring under a Lease/Purchase as you can control the property, improve it, re-sell it without taking on the personal risk and expense of a mortgage (using other peoples money). It is true that L/P should be written for slightly above current market as the furture value should be greater. I think the real benefit to the seller is the up front option consideration and the above market monthly lease income (but don't tell the tenent that their rent will be credited towards the downpayment...lenders only allow the portion above fair market rent as equiity)

However, it is a bit of smoke and mirrors to tell sellers they can sell for greater than market value. When the option is exercised, the purchaser is going to be limited to appraised value at that time (and most options are written for less than 24 months). Most owner/occupant buyers who use the L/P method are doing so because they have credit issues right now. They will need to get a mortgage at the option maturity date and a key factor is going to be appraised value. Post sub-prime meltdown backlash is going to put great pressure on future appraisals as unsupported appraisals have greatly hurt Banks on the foreclosure side. If the value isn't there, they can not recoup through foreclosure. Having said this I think in the near future many owners are going to be taking back their properties from tenents who are unable to exercise the option. The biggest risk to the seller is that the house may be greatly damaged by that time.

Creative financing has its place but I would recommend saving it for very specific sitruations. Also, I'm not sure, but a licensee may be setting themselves up for litigation if any of the paperwork or assertions result in a deal that unravels. I'm not trying to pooh-pooh your programs, its just that there is a degree of specialization required to correctly facilitate these transactions...many agents won't have access to the correct documentation, etc...

Ricky - I do specialize in Lease Option and Owner Financing. Usually a person has no equity and they hold the property for two years they get a check vs selling today and having to pay out of pocket! I work with the buyers for the 1 to 2 year period to make sure they fix their credit and can get the home.

I do have paperwork written by lawyers to protect both buyer and seller. It has to be a win-win. They do get more than TODAY's appraised value! That is usually all they are looking for, since they can't sell today without paying $20,000 to get rid of the property.

You are right it isn't for everyone to try and I have seen many go bad because the agent took a wing and a prayer attitude about the transaction. I make sure everything is set up through lawyers and paid through escrow accounts. Protection for seller and buyer.

But, thanks for your concern and you are right it isn't for everyone. This is why I sit down with every seller and ask what they need from the sale. Do they want to profit or do they want a possible long term investment. Sometimes, I just tell the people to take the $20,000 loss, it would be better for their situation.

Todd

Good...you are doing it right !!!