I need someone to dumb this down for me (RE: Lease/Purchase Options)

3 Replies

I'm pretty comfortable with my buy and hold strategy right now but I'm trying to determine if I am leaving any "meat on the bone".

I just purchased a house with cash for $25,000 that is worth around $35,000 - $40,000. I could rent the home "as is" for $550 a month.

The lease option looks intriguing because I would not be on the hook for maintenance (misconception?), I would increase my cash flow potential while they were renting and I would get to keep their "option to buy" money if in fact they decided to not exercise the purchase.

My understanding is very elementary at this point and would like some of the gurus to share a little pro and con sheet with me. Also, if there is a podcast or article that bigger-pockets has done on the subject, can you point me in that direction?

Thank you guys!

Not a property to lease-option, you'll likely get in a predatory situation as the buyer will have difficulty in financing that as the amount is below minimum loan amounts. Find a lender for them/it first. Don't finance the option price or give rent credits. Tons of info on these matters here. :)

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There are benefits and risks to every situation. This could be easiest for you NOW but you could end up with the house in the end with some cash or the area could become very popular/unpopular and the property could be worth alot more or alot less in 5 years.

Choose wisely once you get all the info on the table and roll the dice. Isn't that what we all do! No risk, no reward.

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