Lease Option question on my 4000 sq ft SFR investment

[James Park]

I am currently in negotiations on my first investment property I had bought in 2006. I know it is a bad investment but i learned a lot through this mistake.

The home is located in a "B" neighborhood and I purchased the home new for $546,000 in June 2006.

The home rented out for 7 years to amazing tenants who took great care of the property. I just steam cleaned the carpet, touched up the paint and home looks like the way when i bought it new.

An agent wanted me to do a lease option which i have never done before. We negotiated and the terms we came to is:

$10,000 option, $2800.00 rent (market rent) for 18 months and option to sell at $500,000. The home is valued right around $460,000 today and my best guess is that the home will be worth $525,000 in 18 months. I wanted to a appraisal option, but the tenant tells me that the maximum he can qualify with is income ratio is $500k.

I understand that i will keep the $10k option if the tenant cannot purchase the property in 18 months, but what happens if the home appraises less than the agreed amount $500k? Can i make a stipulation that i can return the $10,000 option and void the contract?

Will it be okay to a put a stipulation where the tenants will responsible for all repairs on the home for the next 18 months since this is a lease option?

Everything month that the home is vacant, it is costing me $2300/month. The price of this home rebounded 20% from 12 months of ago.

I would appreciate any advice from the bigger pockets community. Do you think it is a wise decision to lease option this property?

[Wayne Brooks]

Brian knows much more about the L/O than I, but normally the $10k option money is Not refundable. If they can't buy due to Any issues on their part,, they lose the option money.