Lease Option vs Seller Finance

[Justin Pumpr]

Hey all,

What would you suggest for this property?

It appraised last week for $388k. I'd be happy to sell it on a lease option or seller finance (wrap) for $350,000.

If I seller finance I need to charge at least a 7% interest rate as that is what my rate on the property will be. I'd be able to make a couple of hundred a month that way, but I lose a lot of tax benefits.

My preference is a lease option, but I'm struggling to price this out. My break even without putting anything away for cap ex, vacancy, or maintenance is $2,395. Market rent in the area is around $1,800-$2,000, although working market rent out is hard as there's nothing of this size, or condition available in this pocket of the Columbus. 

Any thoughts on what the ideal way to structure the lease option is since my breakeven is quite far above market? I could add the "rent credit" on top of the market rent, but then that's a $400-$600/month premium on top of the rent that's supposed to go towards the purchase price. Over a 2 year lease that's almost $15k which is pretty significant. I don't know of any mortgage where you can reduce your principle down by that much over 2 years!

Also, STR and MTR don't work on this property. I also don't want to have to pay to furnish a 2,000sq ft home for those, or for a padsplit.

All help appreciated!

[Michael Carbonare]

I would offer it as a long term lease option, 24 months minimum, 36 is even better.
1) Option money, $15K ballpark, see what the offers bring in
2)  Rent, $2450.  The market is always right and will quickly tell you if you're on target
3) Option to purchase price at current appraisal, $388K