The ‘whacky’ amount he charges them per month is most likely a very favorable sales price, amortized over 30 years at a very favorable interest rate. It’s treated as an installment sale by the IRS (grrr).
I have a rental house with a long term tenant who
now wants to buy. She can’t get a loan due to bankruptcy
but will be eligible in 20 months. I would like to change
her lease to a lease option, but don’t know what the standard is for this type of contract. She pays 625.00
in rent now and the house has a FMV of 75,000.
You are inferring that they can’t now. I know a mortgage broker that got a new mortgage within a few months of a bankruptcy and foreclosure. It is best to find a good mortgage BROKER. Most can do it after 12 months. Even the note buyer will buy a note by then if they have re-establish some credit. If you want to wait for your money an attorney can draw up a contract, you can find a free one or pay for one out of one of the courses.
I just met an investor who just does 30 year open ended lease options. He said he hopes they never cash him out! In his case, he just gets the downpayment (option) and then charges them a whacky amount for PITI, like $637.39 or $663.42 for 30 years. Due to the unusual amount, he never really gets an arguement. They assume some deep and complex calculations went into it, and it wasn’t negotiable.
Anyways, in your case, you can structure it thousands of ways. Since she’s been there for awhile maybe you can roll her deposit into all or part of the option fee, and just sign up a new lease.