Long-term Lease Options

[Richard Chover]

What does everyone think about lease options?

I used to do lease options 20 years ago, and it seems like a great way to wrap around without trigger a sale or breaking any terms of common notes.

I have a $1.3M property with a 1st of about $850k at 3.25%(or somewhere around there). My current PITI is around $5,500. I am thinking I could offer a lease option 10% down, plus 3% option fee, and structure the deal so I am cashflowing $3k positive per month.

What would you think of a deal like this?

[Steve Vaughan]

Quote from @Richard Chover:

What does everyone think about lease options?

I used to do lease options 20 years ago, and it seems like a great way to wrap around without trigger a sale or breaking any terms of common notes.

I have a $1.3M property with a 1st of about $850k at 3.25%(or somewhere around there). My current PITI is around $5,500. I am thinking I could offer a lease option 10% down, plus 3% option fee, and structure the deal so I am cashflowing $3k positive per month.

LO's are my favorite slow exit strategy and have been for a long time.  I also like to purchase options.

I'm just confused by your language of wrap around and down payment in addition to option fee.  

Wrap around and down describe a sale now.  How can you have both of those and an option which describes a sale at a later date? 

[Sujit Mapadath]

Sounds like you are doing a lease to buy deal. if you can lease it out for $3K more than your PITI, I think that would be a great deal.

[Jeremy Bourgeois]

Looks like a solid option to me.

I have sold a few properties on similar terms (A lease option that converts into a contract for deed) Similar to the BRRRR strategy. Buy fixer upper, rehab, sell on lease option, refinance. And I just mark up the interest rate.

It works for me in Utah because there is no other way I can think of to make a house cash flow here without putting 50% down. I'd assume California is similar.

[Richard Chover]

Quote from @Steve Vaughan:

Quote from @Richard Chover:

What does everyone think about lease options?

I used to do lease options 20 years ago, and it seems like a great way to wrap around without trigger a sale or breaking any terms of common notes.

I have a $1.3M property with a 1st of about $850k at 3.25%(or somewhere around there). My current PITI is around $5,500. I am thinking I could offer a lease option 10% down, plus 3% option fee, and structure the deal so I am cashflowing $3k positive per month.

LO's are my favorite slow exit strategy and have been for a long time.  I also like to purchase options.

I'm just confused by your language of wrap around and down payment in addition to option fee.  

Wrap around and down describe a sale now.  How can you have both of those and an option which describes a sale at a later date? 

I did mix my language... that is what happens when you write posts late at night.

The structure would be a long-term lease with an option fee on the right to purchase.