Posted by Lou(TN) on September 09, 2002 at 15:17:01:
Instead of doing a 6yr option. Why not do 1 or 2 yr options with the right to extend for a $1000 or $2000 option fee. In the new option add the increase in value. As long as they keep extending you keep giving them new options. You can estimate the increase in value and option it for the future value since they are buying in the future. Your buyers are usually seeking you out because they cant qualify for bank financing and are usually more concerned with monthly payment amount than price.
I would like to lease my house with an option to buy. I was thinking of mayby 5k down and leasing for a year (maybe two). What do the “buyers/tennants” do to exercise their option? Go to a lending company and try to qualify for a loan?
How much of the monthly payment I receive every month should go toward their “down payment”, if any?
Re: Leasing my house with an option - Posted by James Harris
Posted by James Harris on September 09, 2002 at 09:48:53:
Perhaps the first order of business is to find out what the FMV of your house is. Talk to a real estate agent to find comps of your property. You can sell the property at the FMV. Your consideration cost for the tenet/buyer should be anywhere from 3-5% of the purchase price. Using this thought, your property might be valued at $100,000. Next, ask your self this question…How much do I want to make per month? I have set a goal for myself; in the next year, I will retire( at the age of 43) into rei. I plan to obtain 9-10 properties paying me $200 per month. After that, my ultimate goal is to have 35 properties @ $200 per month. My suggestion is to set your monthly payment $200 over the cost of ; mortgage, taxes, insurance. Set this for 6years(Tenet/buyer can excerise their option at any time during the six years). Allowing $100 per month as credit toward the purchase of the property. Just my two bits. God bless.
I also would like to take this opportunity to exhort everyone that reads this post to stop and pray for our country and leaders as we approach the 1(one) year anniversary of the tragedy of the WTC.
Re: Leasing my house with an option - Posted by Clair-MO
Posted by Clair-MO on September 09, 2002 at 09:38:43:
Doc,Where are you located? To find a qualified tenant/buyer with 5k or more to put down as a non-refundable option consideration is going to be a challenge. Why? Because most folks who are going to be calling you will have some damage as to their credit rating. I will suggest charging a $45 credit report fee and get a $9 credit report online and pocket the other. If you run an ad such as Rent to Own, No Bank Qualifying, low down payment! You will get quite alot of callers and I would charge a fee for a credit report and keep the name and phone numbers in case you find another home to lease out to own. Create a Buyers List with folks who you can help later on to put them into a lease option home.
Re: Leasing my house with an option - Posted by Kevin
Posted by Kevin on September 09, 2002 at 02:13:22:
Doc,
I do not know the value of your home but 5K down seems much too little. The more you get from the buyer-tenant, the more goes in your pocket and the better the buyer-tenant would be because they have so much invested. So, you should pick from the list of possible candidates the ones that have the most cash to bring to the table. You need someone to explain lease-option or you may get into a lot of trouble. Good luck.
Re: Leasing my house with an option - Posted by Phong Le
Posted by Phong Le on September 09, 2002 at 13:29:03:
I have never done a lease option before but I don’t think allowing a person as much as six years to buy your house would be a good idea especially when you’re selling it at today’s FMV. In good neighborhoods, properties values might increase tremendously over a 6 years period. So let’s say in six years, when the leasee decides to purchase the property, its market price might be a lot higher than the exercised price. You should do some research and determine the potential of your house. If it has high potentials, you might want to consider selling higher than the FMV depending upon the term of the option.