Lease options: Who's still doing them? I have questions!

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Lease options: Who's still doing them? I have questions!

Allan Smith
Contractor · Nashville, TN · Member since 2014 · 1k+ posts · 1k+ votes

This seems to be a nebulous topic online, not a lot of info about it other that "you should do it, it's great!" I have a couple houses I want to try it out with. I have bunch of other rentals but haven't done this.

- It seems no one advertises the option price, just rent price. How do you approach that convo with prospects? Wait until they have an approved application then discuss? Seems weird not to advertise it.

- Where and how do you advertise this type of rental? The rent-to-own websites are awful from what i can tell and there's no way people are actually doing deals on there. Is it all zillow? Do yard signs still bring in good applicants? I stopped doing them for my LTR's.

Thanks y'all!

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Shiloh LundahlPro Member
Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
11mo

@Allan Smith I put 3 or 4 signs in the front yard. I want it to me annoyingly obvious that I am selling the house. These are not nice signs. They are hand written signs with a sharpie written in English and Spanish. I will sometimes put a sign with an arrow at the entrance of the street the house is on too (especially if the street where the house is doesn't get a lot of traffic). 

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  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    11mo

    The rent is usually set.  The option price can have a number of different variables that would set it, so a lot of times that price isn't listed.

    There are a number of websites you can list this on, specifically set up for LO.  If you are doing it on a generic listing site, just mention in the description "LO available".


    Yard signs are iffy.  The key to doing this is to understand how LO's actually work.  As a seller, there are a few very specific traps that many are still caught in because they don't understand the trap.

    LO's, as a seller or buyer, can be very lucrative, if you understand them and follow specific rules.  If you don't, you will open the door for a very bad experience.

    1Reply
  • Shiloh LundahlPro Member
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    11mo
    @Allan Smith I’m located in Arizona and I do a lot of lease. I probably done over 120 in the last eight years. I would say about 40 of them have their option. I advertise them on Facebook, Zillow, yard signs, and on my Arizonaleaseoptions.com website. I would say by far the yard signs create the most interest. Let me know what other questions you have.
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    • Allan Smith
      OP
      Contractor · Nashville, TN · Member since 2014 · 1k+ posts · 1k+ votes
      11mo

       Where do you place the yard signs for best results? Just one in the yard or around the area too? thanks for the info.

      When do you discuss pricing or how do you pick a price with the TB? I figured I would discuss with them after their application is approved...

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    • Shiloh LundahlPro Member
      Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
      11mo

      @Allan Smith I put 3 or 4 signs in the front yard. I want it to me annoyingly obvious that I am selling the house. These are not nice signs. They are hand written signs with a sharpie written in English and Spanish. I will sometimes put a sign with an arrow at the entrance of the street the house is on too (especially if the street where the house is doesn't get a lot of traffic). 

      480-206-1209Podcast Guest on Show #287
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  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    11mo
    Quote from @Allan Smith:

    This seems to be a nebulous topic online, not a lot of info about it other that "you should do it, it's great!" I have a couple houses I want to try it out with. I have bunch of other rentals but haven't done this.

    - It seems no one advertises the option price, just rent price. How do you approach that convo with prospects? Wait until they have an approved application then discuss? Seems weird not to advertise it.

    - Where and how do you advertise this type of rental? The rent-to-own websites are awful from what i can tell and there's no way people are actually doing deals on there. Is it all zillow? Do yard signs still bring in good applicants? I stopped doing them for my LTR's.

    Thanks y'all!

    The target audience for “lease- option” is different from renters and different from buyers.  These are people with a DESIRE to buy, but without the means to buy.  Often found among the newly divorced; previously foreclosed on; those having filed bankruptcy; those having changed careers and been at their new job less than 2 years; those with an unreliable income.  

    You have basically 2 options for marketing; outbound marketing in which you contact the prospect first, thru social media, ads, etc.  and inbound, which basically is having a highly ranked website and having interested parties “discover” your website and contact you. 

    The “free ride” for marketing available in the early years of social media is about over.  It now takes money, time or both to penetrate the market. If you’re looking to do just one or two LO deals, then you can probably strategically place some notification in appropriate places and get so,e response.  If you’re talking about doing this as a business, you’ll need a far larger commitment to marketing.  
    Private Mortgage Financing Partners, LLC
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    1Reply
  • James JonesPro Member
    Investor · Collierville, TN 38017 · Member since 2017 · 734 posts · 534 votes
    10mo

    Allan, great questions, lease options do work, but the reason you see so little clear info online is because the execution depends heavily on local laws + the operator’s systems. Here’s what’s been working for us and other investors who still run this model:

    1. Don’t advertise the option price upfront

    You’re right, almost nobody posts it publicly.
    Not because it’s a secret, but because:

    • You need to confirm they can actually qualify to exercise the option

    • You need to verify their timeline + income + credit

    • You want the flexibility to adjust the strike price based on market data at the time they’re screened

    The proper flow is:

    1. Advertise it as “Rent-to-Own / Lease Option”

    2. Screen them like a normal tenant (income, background, rental history)

    3. Once approved, then present the option structure, option fee, strike price, and timeline

    If you share it too early, you get tire-kickers who want an option fee refund when they get denied. Avoid that.

    2. Where to market these

    The rent-to-own websites are useless, you’re not wrong.
    The best traffic sources are still:

    • Zillow (just label it “Rent-to-Own / Lease Option Opportunity”)

    • Facebook Marketplace (strongest lead volume)

    • Local FB buy/sell groups

    • Craigslist (still converts surprisingly well)

    • Yard signs absolutely still worth doing for this niche

    People looking for lease options respond VERY well to physical signs because they often drive the neighborhood looking for opportunities.

    3. Option fee + strike price structure

    Most investors use a structure like:

    • Option fee: 3–5% of future purchase price

    • Rent credits: optional, but very small ($50–$150/mo)

    • Strike price: Fixed at contract signing

    • Term: 18–36 months

    Just make sure your attorney drafts the paperwork so the option fee is non-refundable but creditable toward purchase.

    4. Biggest warning

    Lease options become a nightmare only when investors:

    • Don’t screen hard

    • Don’t verify income

    • Don’t use an attorney

    • Treat it like an “easy sale” instead of a hybrid rental

    If someone can’t hit a mortgage in 24–36 months, they shouldn’t be in a lease-option.

    Bottom line

    Lease options still work extremely well if you’re structured, screened, and attorney-backed.
    And for filling vacancies, this niche brings in very grateful, long-term applicants.

    2Reply
  • Ken M.
    Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
    10mo
    Quote from @Allan Smith:

    This seems to be a nebulous topic online, not a lot of info about it other that "you should do it, it's great!" I have a couple houses I want to try it out with. I have bunch of other rentals but haven't done this.

    - It seems no one advertises the option price, just rent price. How do you approach that convo with prospects? Wait until they have an approved application then discuss? Seems weird not to advertise it.

    - Where and how do you advertise this type of rental? The rent-to-own websites are awful from what i can tell and there's no way people are actually doing deals on there. Is it all zillow? Do yard signs still bring in good applicants? I stopped doing them for my LTR's.

    Thanks y'all!

    I do lease/options. It's important to note that you should and after a certain number, are required to follow Dodd-Frank. Most untrained investors do them incorrectly.
    1Reply
    • Joe VilleneuvePro Member
      Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
      10mo
      Quote from @Ken M.:
      Quote from @Allan Smith:

      This seems to be a nebulous topic online, not a lot of info about it other that "you should do it, it's great!" I have a couple houses I want to try it out with. I have bunch of other rentals but haven't done this.

      - It seems no one advertises the option price, just rent price. How do you approach that convo with prospects? Wait until they have an approved application then discuss? Seems weird not to advertise it.

      - Where and how do you advertise this type of rental? The rent-to-own websites are awful from what i can tell and there's no way people are actually doing deals on there. Is it all zillow? Do yard signs still bring in good applicants? I stopped doing them for my LTR's.

      Thanks y'all!

      I do lease/options. It's important to note that you should and after a certain number, are required to follow Dodd-Frank. Most untrained investors do them incorrectly.
      Well said.  I've seen way too many post Dodd-Frank investors do this and get screwed big time.  How you did them before and after, is very different,...but the basic premise still works, and very well.  In fact, I think D-F actually forced a better way of doing it.
      1Reply
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