How to sell a house on lease option

7 Replies

How are you marketing your buyers that you have a house

For Sell with a lease option to purchase

A lot of them tell me that they are looking for owner financing and when I tell them that in 1 to 2 years they have the option to buy, Refi and own a home and they look at me funny. They think I am going to finance it to them and they don't like that they have an option to buy.

How do you explain Lease option to purchase to a buyer.

Some of them want to know how much a month goes toward the principle?

And now with Dodd Frank I can't give monthly rent credits like in the past.



Hi @Chip Chronister

If you have the right property, that has all the bells and whistles for amenities, and the right location (good schools, lowest crime rates, etc) and offer that to a renter that needs assistance getting a mortgage (DTI and credit issues), that is the strength and value of a lease plus option.

If it is a low quality property, no one with money for an option fee wants to live there, and you will have trouble filling the property.

If you do not want to sell the home ownership dream to bruised credit, high income renters, stay out of Rent to Own and just rent out to tenants.

If you couple this type of B- borrower and a Seller of a home with little equity, you can do a Lease Option Assignment Business, which complements a Wholesaling Business.

@Chip Chronister ...Most looking for owner financing won't qualify in 2 years for a mortgage(poor credit, back child support, etc.)..If they could qualify for a traditional mortgage many home choices available...But of course it's not!

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When you sell on lease option what do you say to them?

I have a lot of people that are in the 550 credit score range.

Do you advertise it L/O or owner finance and when

they get there you explain L/O to them and tell them in blank years

you can buy the property and use the option money as a down payment?

I know people sell on L/O all the time especially with the new DF law

So how do you explain L/O to a potential buyer.

If you are advertising, try say "creative purchase terms available". That should keep you out of trouble, at least until you talk to them.

I'd not every say "Rent-to-Own" that just draws attention you may not want now.

If you're wanting to do deals of leasing to homeowners, feeding them a line about buying, giving them credits to deals they can't close, having them take on maintenance and repairs, the taking the property back and doing it again, I suggest you find another business strategy.

If you have crappy properties, sell them to some buy and hold type and get into better properties.

Brian has some good points there.

John works with qualified buyers or those who will qualify, as you should be doing if you want to do installment sales. That means learning conventional financing requirements so you know what the goal is, where people need to be in the future to buy.

If you don't want to learn all that, just rent the places out, give them a first right of refusal to buy with the lease. Tell then to save their money and just send you the lease payments. :)

Here is the rub in Lease Options When Selling...

If you get the

-right house (floor plan, quality of kitchen-bathrooms, age of systems - roof etc),

-attitude of the seller-landlord, etc(is the seller open to help a tber buy the property, being patient over 2 - 3 years),

-right neighborhood (services, low crime, great schools, etc),

All these factors create a GRADE A Product.

Once you have a GRADE A Product, then you can market on the MLS or Craigslist or postlets, etc. with an ad that says something like...


FOR RENT OR FOR RENT TO OWN (to the right family)

Describe house.....

For Rent to Own, we will look at good income, references and reasonable credit. The Credit Improvement Company we recommend is which boosts credit FICO scores up to 100 points in 6 - 12 months.

For Rent to Own, you will need to see an Registered Mortgage Loan Originator and an option fee of $______ or greater which is applied to purchase price. This home is off the market until your contract expires, which means the home is in your control. Purchase price of home is tied to a new appraisal at the time the mortgage is applied for.

To apply for rent to own, go to this link:

Any questions to can reach us at [email protected]


@Chip Chronister To market to them, we utilize our website, which gets over 3k hits per month, then we have an account with rental, rentals,com and zillow. you can also use Clist, although we don't much.

I do get calls wanting to know about "what is the interest rate" then I have to explain there is no rate, this is a LO.

If they are looking for a owner finance, I tell them the benefit of a LO is you don't need 15%-20% down.

Then ask you have 15% - 20% down? Now, most people don't know how to calculate in their heads so ask them. (assuming it's a 100k house) Do you have $15,000- $20k to put down on this $100k house?

That normally makes the light go off that "Hey! A LO sounds like a great idea!"

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