Lease Option Viable Strategy in 2020?

Question

Hi I’m currently researching on the legalities pertaining to lease-option deals. I’ve searched bigger pockets forums and have read through blog postings, but can’t find any information thats current. I’ve read the “Safe Act and Dodd Frank Act” and will go over it again after this post.

My concern really is if it’s still a viable source to rely on in real estate investing? I hear/read discussions from both parties concerns revolving around lease option. Any information that can shed light on this topic is greatly appreciated, thank you.

Andrew Anthony · Answer

@Jonathan Taylor Smith Thank you for the swift reply. I’m glad to hear it’s still okay to pursue as a strategy legally. There have been conversations about marketing to potential buyers if you’re not licensed. What is your take on this? Any info you can direct me towards in this regard?

Also to entice the clients further, would you recommend having portion of their rent credited to their down payment in a separate contract? Any legal ramification I need to be aware of?

Thanks!

Jonathan Taylor Smith · Answer

Hello @Andrew Anthony - Are you seeking to BUY or SELL via Lease-Option? On the face of it, there is certainly nothing that makes Leasing a property against the law. There would be no Landlords and no Tenants if that were not OK. And there is nothing against giving a person the Option to purchase a property for a stated price by a later set date.

So if you do not blur the lines when it comes to money going towards the Lease or towards the Purchase Option - then you avoid what would appear to be your concern. You potentially create an issue (where there need be none) when you start doing things like applying a portion of the Lease payment towards the future Purchase Option. Just let the rent be rent and the purchase be the purchase - and you'll be fine. And of course have your Lease and your Option contracts drawn up by an attorney in your state - and record the latter.