BiggerPockets

Bump--I'd like to kow as well...

I know this topic is a little old... but...

I've done all three at one point or another. The choice depends on what you are doing. Answers follow:

"What are the circumstances in which it would make sense to do a lease purchase rather than a lease option?" The following is in the context of the property owner. We used a lease purchase agreement when we *needed* a sale. The tenant would buy the property at a fixed price within X months. We would use lease option when we *wanted* to sell a property. The option allows the buyer to opt out. The L/P has a commitment, and we had a higher "consideration" in our arrangement. Our L/O agreements are really structured as an alternative to listing a property for sale while keeping it productive (getting rents.) Both agreements credited 100% of the "consideration" back to the buyer at closing (execution of the contract.)

"What are the circumstances in which it would make sense to do a regular option vs. a lease option?" The following is in the context of the property buyer. We have offered options to purchase at lower price points to property owners with known "deadlines." Refis, balloons, and pre-foreclosure/foreclosure properties come to mind. We also offered options on one occasion (one campaign) to out of state owners. Fixed price purchases over 24 month time frame. All were straight options, none were L/O when we were buyer.

Results: Very few options we offered were ever accepted. The last straight option we offered was over 3 years ago. These vehicles are not necessary for our business model in the current market, and we don't foresee a need for years to come. We do not offer L/P agreements anymore. So we only deal with L/O, and only as *offering* L/O.

It is kind of interesting that as property owners, we have never solicited, nor received, a "regular" (we call them "straight") option.

Herb, I agree. In my context (per my post), as owners of the underlying property, my company is ultimately looking for a sale. (The option fee is not a revenue source for the company.) The great thing about the use of options is they can be modified to achieve a wide range of goals depending on your business model.