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I have a few lease options clients at the moment. I was looking into the Wrap. They both seem to have you wait for your money. They both allow for some cash flow monthly. They both have you deal with potential tenant issues…. I guess what I have done is really check people out. Keep in mind that your clients, if perfect…. do not need either of these options. So you are and will not be dealing with “A” level credit here.
This is what I do,Do they make enough money? Can they afford the financing?
What are there credit issues? Can they be fixed if the buyer is willing?
Do they have an “option” deposit that they could loose if the default?
Do they really want the property….. or just say they want…. There are allot of talkers out there.It appears to me that the difference in the “lease option” and the “wrap” is that you are no longer a landlord. You become the bank. If they don’t pay in a lease option, you evict.
If they don’t pay in a wrap, do you foreclose?Do you need to let you bank know that you have a wrap now on a property that they have a mortgage lein on?
In a wrap, does the buyer get to deduct the interest? (not the case in the lease option)
What about an agreement for deed? Has anyone done that?
Hope my 2 cent helps.
ds