Lease option with Property Management

5 Replies

I’m fairly new to real estate investing so this might seem obvious but let’s say you turn a property into a lease option and you have a property management company find a new tenant for you I know that you pay them their fee however what about the down payment from the tenant what happens with that when you use a property management company to find a new tenant when the original lease option tenant has left is that fee put into the property management contract you sign initially how exactly is that dealt with?

Your question is slightly confusing, even more so because you didn't use any punctuation. Tag me in your response so I am sure to get back to you. I need some more detail.

You are the Owner?

You had a lease-option tenant but they failed to exercise the option and left?

Was the "down payment" listed in the contract as a security deposit? Was it "option" money? How much was it?

Hi Demetrius, it sounds like you may be asking about who gets that down payment fee, you or the property manager?

It would depend on your contracts, first the lease option contract between you and the tenant/optionee as to what happens to that deposit if they fail to purchase the property by the stipulated deadline. And second, the property management agreement between you and your PM.

Now, in a reasonable world, both of these contracts would be structured so that you, the owner, keep that down payment fee in full. 

Good luck!

Originally posted by @Demetrius Clayton :

I’m fairly new to real estate investing so this might seem obvious but let’s say you turn a property into a lease option and you have a property management company find a new tenant for you I know that you pay them their fee however what about the down payment from the tenant what happens with that when you use a property management company to find a new tenant when the original lease option tenant has left is that fee put into the property management contract you sign initially how exactly is that dealt with?

 Lease option investing and all the stuff that is taught online about it is so slimy. Avoid going down that route. Am I too assume you're a new investor with limited to no capital to get started? If that's the case I recommend transacting deals as an agent or house hacking. Much more respectable way to get things going.

Originally posted by @James Wise :
Originally posted by @Demetrius Clayton:

I’m fairly new to real estate investing so this might seem obvious but let’s say you turn a property into a lease option and you have a property management company find a new tenant for you I know that you pay them their fee however what about the down payment from the tenant what happens with that when you use a property management company to find a new tenant when the original lease option tenant has left is that fee put into the property management contract you sign initially how exactly is that dealt with?

 Lease option investing and all the stuff that is taught online about it is so slimy. Avoid going down that route. Am I too assume you're a new investor with limited to no capital to get started? If that's the case I recommend transacting deals as an agent or house hacking. Much more respectable way to get things going.

What exactly do you mean by transacting deals as an agent or house hacking? Also I have capital to get started however I am fairly new when it comes to real estate investing. 

Originally posted by @Demetrius Clayton :
Originally posted by @James Wise:
Originally posted by @Demetrius Clayton:

I’m fairly new to real estate investing so this might seem obvious but let’s say you turn a property into a lease option and you have a property management company find a new tenant for you I know that you pay them their fee however what about the down payment from the tenant what happens with that when you use a property management company to find a new tenant when the original lease option tenant has left is that fee put into the property management contract you sign initially how exactly is that dealt with?

 Lease option investing and all the stuff that is taught online about it is so slimy. Avoid going down that route. Am I too assume you're a new investor with limited to no capital to get started? If that's the case I recommend transacting deals as an agent or house hacking. Much more respectable way to get things going.

What exactly do you mean by transacting deals as an agent or house hacking? Also I have capital to get started however I am fairly new when it comes to real estate investing. 

 If you've got capital than I'd say that's another reason to avoid lease option investing. Most people are drawn to lease option investing because it's one of the commonly taught invest in real estate with no money schemes. If you've got capital to invest I'd invest it in some cash flowing rental properties.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here