FIXER UPPER LEASE OPTION (FULO)
A lease with the right to purchase can be a good tool for profiting on fixer-upper properties. Many fixer upper properties can be bought inexpensively, but they still require cash. If you obtain a bank loan to purchase the property, it will most likely be required of you to put more money down, especially if the property is in very poor condition. You will also need money to fix up the property and pay monthly interest payments while waiting for the repair completion, and for the new buyer to qualify for his/her loan.
Instead of purchasing the property outright, lease it for six to nine months with an option to purchase.
Consider this strategy with borrowing money and making interest payments as you are fixing up and holding the property for resale. Think about what you could be saving if you lease with the right to purchase:
- Extra closing costs
- Financing costs
- Unlimited opportunities your money won’t be tie up with banks/lenders for your next project.