Lease to purchase?..........Good or bad?

Question

I have heard some guys around my area that are offering lease to purchase options to their renters. I have done some digging on the process and what it entails. It seems too good to be true. Does anyone have any thoughts or experience doing this?

Nathan Gesner · Answer

What I said is, "It's a great idea if they're educated on the pros/cons and know how to protect themselves."

Your guy knows how to do it right, so he's killing it. I read about a college student that did something similar with trailer houses and he was a multi-millionare by the time he hit 30. The vast majority of Sellers aren't that smart.

Cameron Garver · Answer

There is a guy here locally that is purchasing a property and leasing it to people for 17% interest rate and bringing in $1,200/month in interest. He is also stating that renting to own is awesome because they are 100% responsible for the property. So in other words zero maintenance and decent cash flow. He also states that when they opt out he keeps the 20% down and gets to do it all over again when someone leaves. Are you saying it's not smart if you're a seller because people are charging not high enough interest? Not being stand offish I just want to learn from you if possible.

Nathan Gesner · Answer

If you're a seller, forget it and move on. If you're a Buyer, it may be an opportunity to take advantage of a naive Seller and get a great deal.

Jeff He · Answer

Typically, the rent is going to be quite high vs being a regular renter. If you wanted to buy a property as an investor, you would probably be better off house hacking than leasing to own.