Rental Tenants or Lease Option Tenants

3 Replies

I use to do many lease options in Texas in the late 90's. Some worked for a while and I still have two paying...but out of probably 30 deals most didn't turn out well in some ways. At least with the option money I had money to repair the property in comparision to the small deposit I get from rentals that NEVER cover the damage.

New rules in Texas and lease options aren't worth jumping through the hoops BUT most of the tenants still call and ask for lease option properties. 

Many landlords still do them just under the radar.

My questions is WHY would a tenant want to rent to own instead of just rent? Do they "think" the landlord will stay out of "their" home; because most of these renters NEVER complete the option. Why not just rent? After all these years I still don't understand the mind set. They usually only have $1500 to put toward the option...and in my experience don't really take care of the property and NEVER buy the property.

Frankly I would do the lease options all day with lots and lots of screening since it's easier to repair with $1500 than with $600. 

Disclaimer: I live in rural Texas with low income. A nice 3/1, CH&A with fenced back yard is $675.00 with $500.00 deposit.

Any ideas or your experience?

Thanks in advance and Great $uccess to All

@DG H.

Well the lease option model needs a component of mortgage and credit counseling by YOU and or Your Credit Counselling Company to be more successful in getting families mortgages than a small percentage of your rent to own tenant buyers.

It is true that only a small percentage will buy if left to their own planning for a mortgage.

See a credit improvement coach like Blair Warner

Build the cost of that service into your program (my tenant buyers really want to own)

It is a "one on one service" to get NEW marks on the bureau and to look seriously as to their DTI to get a FHA mortgage.

See these articles.

And getting an ADDITIONAL part time job for 10 hours a week to be a home owner is not out of the question. :)

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@DG 

@DG H.   !!!

Weatherford!  BAM BABY!

Reading your post I see the issue very clearly....

Price point baby!!! BAM!

If you are trying to lease option a trailer in Springtown or a 3-1 in Brock.....LO's are NOT the best way to go!

The T/B will almost never exercise the option!

That price point is a rental or owner finance. 

Get me a 4-2 in Aledo for $225k and that is a L/O!

Originally posted by @John Jackson :

@DG 

@DG H.   !!!

Weatherford!  BAM BABY!

Reading your post I see the issue very clearly....

Price point baby!!! BAM!

If you are trying to lease option a trailer in Springtown or a 3-1 in Brock.....LO's are NOT the best way to go!

The T/B will almost never exercise the option!

That price point is a rental or owner finance. 

Get me a 4-2 in Aledo for $225k and that is a L/O!

 For you folks not in Texas, what John means is "CD" areas where there's not great schools and not the best crime rate, don't even bother doing a lease option

If you want to deal with nice owners that are intelligent, well-educated, they want to sink their feet for five years or more in a good neighborhood, good schools, go into "AB" areas and go after 

expireds, 

landlords, 

listed houses, 

for sale by owners, and 

talk to "we buy houses" people that have leads that are thrown away due to low equity

If you get the product right meaning a four bedroom two bath, quiet street, something that people really want, then filling it with the tenant buyer is quite easy, and making your 3 to 5% is a lot easier if the product is right

Think of it like the car business:

you've got a Ford Fiesta on a car lot, and a Toyota Camry. Which does a family want and pay top dollar for?

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