Lease Options on Rental Properties! Pro-Tip Everyone Wins!

Lease Options on Rental Properties! Pro-Tip Everyone Wins!

Property Manager · Boise, ID · Member since 2024 · 20 posts · 7 votes

As a licensed realtor and a property management company owner I come across lots of interesting opportunities and each time I try to create a win-win-win deal. Meaning win for the Seller, Buyer and myself!  There are so many opportunities in real estate that just sit undisturbed like a gold nugget just under the surface that ordinary people walk on and over every day but are too busy or so it seems to even bother to notice!

Today I created a lucrative deal for everyone.  We had a property come up for lease and this property is over 1 acre and so when we have these homes on large lots I always ask myself how can we get more rent income on it being that it offers acreage.  

In this deal I located a business owner who is in the bounce house rental industry and found out he rents a building for $12K per month to operate his businesses and store equipment.  He also rents a home for $4K which totals $16K per month.  We worked out a lease option deal whereas the renter will rent the home with option to purchase in the future, put down $25K for the option and pay 3x the current rental amount with some of that money paying down the house all with a 3-year balloon and 3-year lease agreement.

In this scenario Renter can purchase the home at the end of the lease at a predetermined price favorable to owner, renter lowers their existing monthly output by over $8K per month, owner gets a quick $25K and substantially more rental income over next few years and if renter defaults owner keeps $25K and additional rental income.  We as a property manager earn more on property management fees due to increased rental amount, we make a real estate commission once it closes split by Buyer / Seller and everyone is happy.

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  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    7mo

    Never credit option money or rent towards purchase.  If taken to court, this contract can be converted to Land Contract which leads to crediting all rent towards purchase.  There's a better way to do this, without connecting the lease and the option together.

    Agree on the final option price, then subtract the total would be credits from that price.  This isn't in writing, it's just a calculation you use to determine the actual purchase price...which IS in writing on the Option Contract.  This way, the buyer gets their credits if they execute the option, but the seller doesn't lose anything if the buyer doesn't execute the Option. 

  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    7mo
    Quote from @Thomas Meyer:

    As a licensed realtor and a property management company owner I come across lots of interesting opportunities and each time I try to create a win-win-win deal. Meaning win for the Seller, Buyer and myself!  There are so many opportunities in real estate that just sit undisturbed like a gold nugget just under the surface that ordinary people walk on and over every day but are too busy or so it seems to even bother to notice!

    Today I created a lucrative deal for everyone.  We had a property come up for lease and this property is over 1 acre and so when we have these homes on large lots I always ask myself how can we get more rent income on it being that it offers acreage.  

    In this deal I located a business owner who is in the bounce house rental industry and found out he rents a building for $12K per month to operate his businesses and store equipment.  He also rents a home for $4K which totals $16K per month.  We worked out a lease option deal whereas the renter will rent the home with option to purchase in the future, put down $25K for the option and pay 3x the current rental amount with some of that money paying down the house all with a 3-year balloon and 3-year lease agreement.

    In this scenario Renter can purchase the home at the end of the lease at a predetermined price favorable to owner, renter lowers their existing monthly output by over $8K per month, owner gets a quick $25K and substantially more rental income over next few years and if renter defaults owner keeps $25K and additional rental income.  We as a property manager earn more on property management fees due to increased rental amount, we make a real estate commission once it closes split by Buyer / Seller and everyone is happy.

     Well done!

    Be sure to check on what @Joe Villeneuve posted as we've had that actually happen here in Michigan:(

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