Lease/Option Sale

Answers:In some states, such as Texas and Illinois there are specific laws making lease-options functionally illegal. In other states such as California, there are various legal hazards associated with structuring lease options. Please consult with an attorney before structuring such a transaction.

We have seen many property owners offer their properties on “Rent To Own” plans, in which they are totally unaware that they are breaking laws. The penalties for structuring one of these transactions incorrectly can be quite severe – in some cases resulting in the seller having to DEED THE PROPERTY to the tenant/buyer AND reimbursing all monies collected during the lease.

Dallas Houses for Cashcan manage this entire process legally for you by contracting to lease your property from you (with an option to buy), and then reselling the property to a buyer that would like to buy a property on a rent-to-own plan in states where it’s legal.

Answers:If you do not have significant equity, than the mortgage payment assignment program or wrap-around mortgage sale program may be better alternatives. If you have significant equity, there are many options listed on this website.

Answers:If payments are missed, you have the right to evict and start over with a new tenant buyer.

Answers:The disadvantage of leasing is that the tenant/buyer may not treat the property as well as an owner would treat their own homestead in which case you would have to evict them, clean and repair the property, and then find a new tenant/buyer.

Answers:As a landlord all rent received is treated as ordinary income, while all expenses (mortgage, taxes, interest, repairs, insurance) are deductible. If the rent is about the same as the PITI payment, then your tax ramifications should be minimal.

Answers:There is no rule that says you can’t have more than one mortgage, and, for example, most landlords have many mortgages.

You may have to explain to your new lender (when asked about the old loan still on your credit report) that you are leasing your property. Note: in some cases, although someone is effectively making the payments on the loan, and the amount of the payment covers the expense of the payment, having the loan will affect your debt to income ratios. This can push some buyers below the current lending thresholds. Each individual is treated differently and getting another loan on a new property is certainly not guaranteed. So you’ll need to check with a mortgage banker to find out how your individual situation will be treated.

Another option, if you would like to buy another property, is allowing us,Dallas Houses for Cash, to find you a property that is available through the Mortgage Payment Assignment Program or one of the other forms of owner financing.