Real Estate Investing!

tenant-buyer qualifying - http://www.dealmakerscafe.com Forums

Original message

Vlad

"tenant-buyer qualifying" , Wed 27 Sep 21:27

in qualifying a tenant-buyer for a lease-option, what qualifications are important? is a large option consideration payment enough? most people i'm attracting have lousy credit. should i wait for someone with great credit? it seems like lease-options only attract buyers with lousy credit.
Vlad

Replies:

Al Jordan

"Re(1):tenant-buyer qualifying" , Thu 28 Sep 05:56:

Vlad,
Lynn is right. We use Accurate Credit Check, Inc. and also verify their income, but option deposit is king.

L/O do attract people with bad credit, but that's a good thing because they are willing to put down a large deposit to get a second chance.

When our tenants have a larger deposit we sell contract for deed. That way they don't have to come up with another deposit for their bank, they can just refinance to satisfy our balloon.
Al

"When rejection loses its emotional charge you can function at your best"
-Azriela Jaffe

[this message was edited by Al Jordan on Thu 28 Sep 05:58]

lynnhahn

"L/O v.s. Contract for Deed" , Thu 28 Sep 07:38

I just wanted to point out, for those who may not know, that there are many mortgage sources that will do a "refinance" transaction on a lease-purchase, just the same as if it was a contract for deed.

Lynn

Those who say it can't be done are usually interrupted by others doing it!

lynnhahn

"Re(1):tenant-buyer qualifying" , Wed 27 Sep 22:13

You have to weigh all of the factors. The main two areas that I focus on are:

1) History. The #1 thing that I want to know is their history of paying their past rent or mortgage payments? I don't really care if they pay the dentist or not as long as they show a solid history of paying for the roof over their head. Make sure that you verify this information. Be wary of "friends" posing as private landlords. We use National Tenant Network for credit checks and eviction reports.

2) Option Consideration. A large option consideration payment can go a long way in making me look the other way on poor credit. If they have a small option consideration payment then I will scrutinize their credit history closer. If someone is paying you $10,000 option consideration, they probably have good intentions, and you have plenty of cash to boot them out if they default.

Happy Investing!
Lynn

Those who say it can't be done are usually interrupted by others doing it!