Lease purchase property questions

[Joeaksa]

Anyone here have any experience with purchasing a piece of property using "lease purchase" situation?

Am looking at buying some land (pretty much bare desert, does have a well and trailer on it but thats it, no electricty and in the middle of no-where) from someone.

They have lived on the place for less than a week and moved out leaving almost everything there. We found the place when a friend was living nearby and took us a year to find the previous owners. They do not want to tell us the whole story but we found out that there used to be some tweakers around and believe that they got scared off. Now the tweakers have moved on (and some in jail) and are not an issue. The place has been sitting empty for 5-7 years and land in this area is simply not selling for anything in todays economy.

Anyways we have settled on a price but no one will lend money on bare desert, especially with no utilities in the area, so it has to be a "owner held note" to sell anything out here.

We are in discussions with the other and settled on a price but now she wants 75% of the monthly payment to be applied to the "lease" and 10% of it on the purchase. This is on almost bare desert, not a turn-key house and land.

We were wanting to pay something like $100 a month on the lease and $200 a month on the principal. This is on a 5 acre plot of land about 60 miles NW of Phoenix and the price is around $70k. Its about 15 miles away from ANY civilization, so pretty desolate.

Anyone have any experience with something like this?

Thx,

Joe A

[Eric Coffey]

What is the lease length and purchase terms? There are usually very few reasons (IMO) to enter into a true lease-purchase. Either work out a purchase-only agreement (seller-financed or not), or a lease-option. Typically, a lease-purchase is done to secure a property for a buyer that wants to improve credit and/or save more for a down prior to purchase (financing).

If it's well-structured, you can do the same with a lease-option, and still have a percentage of rent applied to a (potential) down payment at the end of a lease term. You would just forfeit any of the "credit" if you don't exercise your option to buy. But, you would still get any security deposits back, and would be able to walk away with no strings if you were no longer interested in purchasing. That way the most you are out is the rent paid, without the risk of losing any additional earnest money required with a separate purchase contract.

If you come to the end of the lease and want to exercise your option to buy, THEN you write a purchase contract. All the while, the seller agrees not to market/sell the property during the lease term, or at the very least will give you the first-right-of-refusal. Keep in mind lease-option terms like the above are not automatic, and the contract must be specifically structured as such (PM me if you have any Q's).

[Rick Lee]

Sounds like Wenden or Hope, AZ, something along Rt. 60? Am I warm?

[Eric Coffey]

60mi. NW of PHX? I'm thinking Wickenburg, or if less than 60mi., maybe Wittmann?

[Rick Lee]

Wickenburg is a booming metropolis compared to some of the podunk towns along Rt. 60.

[Joeaksa]

Rick,

You know about Hope AZ? My God man, there isnt anything out there and there is a whole lot of it! I have been in that area and have a friend who owns a ranch out there and its really desolate.

Eric is spot on and its about 15 South of Wicki, in the foothills South of town. That said, nothing out there, only water is your own well and electricity is solar or generator. This is a big part of the reason why I have been getting into solar power as thats the only way to live out there until the power companies ever decide to lay lines into the area.

The plot we have picked out have lots of saguaro cactus, a small hill or mountain and borders on BLM land, so no one will ever bother us on that front, and room for a runway.

[Rick Lee]

I love it out that way. I'd also like to buy some land out there one day, but I doubt the wife cares for such remoteness. I love being around no people and not having to worry about a backstop. One of my favorite routes on the bike is up 17 to Prescott and down 89 to Wickenburg. Carefree Hwy. home is also very pretty, except for all the boat trailers I have to pass. Every time I drive to CA, I take Carefree Hwy. to Rt. 60 until it ends at I-10 near Quartzsite. Rt. 60 is the kind of road where you can just stop in the middle of it when you have to take a leak, no need to pull over to the side.

[Rot 911]

A lease/purchase only benefits one party, the lessor. Think of it like a rent to own store. You pay an exhorbitant interest rate and make one mistake and you lose all your investment. Just do a regular sale with Owner financing at an agreed upon interest rate.

[Eric Coffey]

Your own private runway? Coool!

Sent you an email...

[MRM]

Rather than a rent to own or lease to own, I think the vehicle you're looking for is a contract for deed, sometimes called a land contract. It is a contract to sell the property at a specific price, with owner financing.

Here's a wiki link to land contract: http://en.wikipedia.org/wiki/Contract_for_deed

And here's a link to a legal form store for a contract for deed contract: http://www.uslegalforms.com/contractfordeed/

I would NOT buy the property without a real estate specialist handling the paperwork. By real estate specialist, I mean someone who specializes in real estate transaction and nothing but real estate transactions. There is a huge difference between a lawyer who can handle a real estate deal and one who specializes in real estate transactional work. You want the later, let someone else work with the former.

[MT930]

Originally Posted by MRM

Rather than a rent to own or lease to own, I think the vehicle you're looking for is a contract for deed, sometimes called a land contract. It is a contract to sell the property at a specific price, with owner financing.

I would NOT buy the property without a real estate specialist handling the paperwork. By real estate specialist, I mean someone who specializes in real estate transaction and nothing but real estate transactions. There is a huge difference between a lawyer who can handle a real estate deal and one who specializes in real estate transactional work. You want the later, let someone else work with the former.

Agree 100%

I prefer trust indentures I don't know AZ R/E law. Contract for deed as number 2 choice. Don't lease to own. It can get complicated over time. Keep it simple they get complicated anyway.


Kurt V A

lease/purchase only benefits one party, the lessor. Think of it like a rent to own store. You pay an exorbitant interest rate and make one mistake and you lose all your investment. Just do a regular sale with Owner financing at an agreed upon interest rate.

Very true !!

[Dantilla]

Originally Posted by Joeaksa

Anyone here have any experience with purchasing a piece of property using "lease purchase" situation?

As stated above, no need for a lease option if you already want to buy.

Since you have already agreed on a purchase price, you just come up with a financing plan.

If you make the payments, the place is yours. if you default, the seller gets the property back. Very simple, and done on a regular basis. The word "Lease" should not appear anywhere on your paperwork.

Is your runway going to be long enough for me to stop by and say "Hi" in a Bonanza?

[fintstone]

Originally Posted by Dantilla

As stated above, no need for a lease option if you already want to buy.

Since you have already agreed on a purchase price, you just come up with a financing plan.

If you make the payments, the place is yours. if you default, the seller gets the property back. Very simple, and done on a regular basis. The word "Lease" should not appear anywhere on your paperwork...

Agreed. What you want is owner financing, not lease to own. For raw land, generally you pay a small down payment and finance the remaining for somewhere between 5 to 20 years.

70K seems a bit pricey for the 5 acres you describe.

[911Rob]

Joe,
Eric is your man!
Good luck bud

[porsche4life]

Originally Posted by fintstone

Agreed. What you want is owner financing, not lease to own. For raw land, generally you pay a small down payment and finance the remaining for somewhere between 5 to 20 years.

70K seems a bit pricey for the 5 acres you describe.

$70 seems a bit pricey for the land he described.


Joe-
Why do you want to live in quite literally the middle of nowhere. I live on the edge of it and it quite sucks.

[Big Ed]

Originally Posted by Kurt V

A lease/purchase only benefits one party, the lessor. Think of it like a rent to own store. You pay an exhorbitant interest rate and make one mistake and you lose all your investment. Just do a regular sale with Owner financing at an agreed upon interest rate.

What he said.

[Joeaksa]

Originally Posted by porsche4life

$70 seems a bit pricey for the land he described.

Joe-
Why do you want to live in quite literally the middle of nowhere. I live on the edge of it and it quite sucks.

Well, we are all different and right now I live on the edge of Phoenix and "the desert" but its not enough. Had enough of having a house 10 feet from me and want the next house 1/4 mile (or futher) away from me.

It may "quite suck" for you but others absolutely love it. Some people would love living in the middle of Manhattan but I have lived in too many big cities (Berlin, Kopenhagen and London so far) and do not need that type of life anymore. I want 10-50 acres and a place to retire, along with enough room for a runway and large garage/workshop for my toys.

Thanks for the ideas everyone, and am in touch with Eric on other ideas. Regarding the property, it has a 910 foot water well on site, along with a large doublewide with a septic tank system. A 2000 gallon water tank on a small hill and piping down to the "living area" and so on. Its not totally bare and were you to have to add all of this (and every place out there has to have its own well and sewage system) that would add at least another $20,000 to the value.

Will look into the other options mentioned above and go from there.

Thx,

Joe

[porsche4life]

Hey man to each his own but living way out sucks when you need that one $0.50 bolt from the hardware store.

[Joeaksa]

Originally Posted by porsche4life

Hey man to each his own but living way out sucks when you need that one $0.50 bolt from the hardware store.

Sidney,

PLAN AHEAD and you will not have that problem!

Yes, it does happen from time to time but I tend to stockpile things like this so it happens very rarely. As well you tend to make lists of what you need and organize your life a bit better.

[vash]

let me know ASAP if some annoying couse deer comes and eats your garden. i am starting a large antlered pest control business.

joe, i know there are lenders that specialize in money associated with land purchases. mostly farms and stuff. looks nice out there. please reference that sun burn thread...