As discussed previously, subject-to sellers are usually, but not always, motivated by bad debt and desperation to restore their credit. Conversely, lease option sellers have good credit, and the sellers that would even consider a lease option fall into two categories:
1) Sellers who don’t need their cash out of the home to move on.
2) Sellers who have no equity in their home—they are financed 100 percent.
I prefer a seller in the first category. Why? This seller has some cushion financially if problems arise later. The second category of seller does not have a cushion, and therefore if they get into financial trouble, they are more likely to botch up the deal—either permanently or for a period of time until things can be resolved.
Excerpt from Investing in Real Estate with Lease Options and "Subject-to" Deals.
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