lease optioning upside down houses

this is basically a co-op L/O or wholesale L/O. it could work but when they are upside-down you have more of a challenge. you might want to make sure houses are appreciating enough in your area to warrant making the deal. realtors should be able to tell you that. you would probably need to have something in the contract that talks about the house being able to be appraised for the selling amount when the T/B actually cashes the seller out. you would take your payment from the nonrefundable option consideration the T/B pays upfront for the deal. i know this can work with houses that have little equity, but the upside-down part is something to go carefully with in the beginning. if you need to know of a couple of investors doing this, PM me and i'll send you their names and you can look up their websites.

please let me know. You are going to have a very difficult time finding a buyer who is going to pay you equitable interest in a house that has ZERO equity. Your best bet is to do a short sale with the owner and if the numbers work sell it to another buyer. In addition, market conditions are not going to be changing anytime soon for a 90k plus gain in 3 years.

so you guys are saying the option is paying for the equity in the house. I'm saying my option fee I'm collecting is for the interest to purchase the house period. Why would I need for the house to appreciate?

For me to better understand this scenario, can someone please break down for me how selling your interest of an option works?

a lease/option should not give any equitable interest in the property. you do a separate lease and a separate option. this house has no equity so you have nothing to offer the T/B as far as equity and most buyers will want some equity. when you go into a deal, you want to make sure that it is a win-win-win on all sides. even though you are selling your interest in the deal, you want to make sure it's a good deal for everyone, not just take your money and go. your option fee is to pay you and has nothing to do with the equity because it should be considered a down payment by the actual seller and your fee to you. the seller should take what the down payment was and subtract it from the price you are selling it to the T/B for. as i said before, you have to be careful when there is no equity and they are upside-down. you might want to study this more to make sure it's a win-win-win for everyone involved.

its a win win if the seller doesn't lose their house and someone can get into a property who couldn't qualify for a loan.