Hans dives into the reality of taking back a property sold via lease-option or seller financing (contract for deed or wrap mortgage), a scenario that occurs in roughly 5-10% of deals due to life events like job transfers or divorces.
Downsides include: 1) Emotional/time involvement, 2) Potential property damage costs, and 3) Debt liability during vacancy. However, upsides are significant: 1) It’s like a new acquisition without marketing, 2) New down payment/option fee recoups costs, 3) Principal paydown on underlying debt, 4) Market appreciation boosts value, and 5) Resetting the amortization clock increases profit spreads.
Hans emphasizes building a robust portfolio (20-50 deals) to absorb cash flow dips.
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