On Lease Options, How Much You Should Agree to - Posted by Lynn Johnson

Posted by J. CA on July 13, 2001 at 22:26:16:

“When no other rule applies, make one up.”

Your entire first paragraph implies there are some sort of rules and established procedures. There are not. It all depends on the numbers.

No matter how much equity a seller has, get that equity either by way of 0% payments, or cash discount.

Example: Seller has $100,000 house with $50,000 equity. Follow Ray Como’s rule: Equity / 100 = $500/month.
Or if buying the equity for cash, a nice simple rule is: For every dollar bought, get a dollar discounted, i.e. buy that $50,000 equity for $25,000 cash.

Charge as much rent and mark up the price as much as the T/B market will pay, if that’s less than what you need to make a profit, then you’re in the wrong deal!

What if rents won’t cover the costs? Read “You can’t do this where I live!” in the money-making section of this site, for the answer to that.

On Lease Options, How Much You Should Agree to - Posted by Lynn Johnson

Posted by Lynn Johnson on July 13, 2001 at 20:31:44:

pay as far as monthly rent to a seller when their house is already paid for and they simply want you to lease purchase their house? How much more should you charge your tenant/buyer for rent so that you will have a monthly cash flow? How much more do you add on to the sale price to the tenant/buyer to make your profit on the back end when you sale the house to the tenant/buyer?

What if the seller does have a mortgage on the house and it’s much higher than the actually rents in the area, do you pass on these or what?

Please give an example of each scenario so that I can understand your answer clearly.

Thanks for responding.