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Posted over 6 years ago

Some Lease Option Faqs!

It’s always my pleasure to answer student questions about lease options. I do this via multiple venues. Sometimes it’s a direct response about specifics to a deal a student is currently working on. At other times, the lease option coaching FAQ is more general to appeal to a larger audience.  It could also be a webinar.

Here, I provide answers to questions that frequently come up on the subject. When it comes to lease option coaching FAQ the sellers and end buyers have different concerns. You, as the principle (investor) in the deal not only have your own questions but also need to be able to answer the questions for your sellers and buyers. The FAQ that follow should be of interest to everyone (investors, sellers, and buyers) but don’t hesitate to submit your own lease option coaching FAQ.

To your Success,



Generally, both seller and buyer FAQ are pertinent to lease option investors either as the owner, buyer, or strictly as an investor in sandwich lease options.

Lease Option FAQ for Sellers

Q: Why would I choose to do a lease option instead of outright selling the house for cash?

A: That depends on your circumstances. However, there are many advantages for the seller in a lease option. First, it can be difficult to find a qualified buyer in today's market. It can be even more difficult to find a buyer willing to pay your asking price. The lease option allows you to sell at an above market price and brings in many more potential buyers.

Q: The lease option seems like a complicated process. Where do I start?

A: Start by deciding the terms you want to offer the buyer. Decide how long you want the purchase option to be available. Most common is a 1 or 2 year purchase offer. Then decide how much to charge for a nonrefundable purchase option fee. Typically, it's between 1% and 5% of the purchase price. Check your local market to see if a standard exists. You also want to begin considering what maintenance responsibilities you want the tenant to assume that go beyond a traditional lease.

Q: What's the next step in a lease option?

A: As the seller, you have several options to consider. Even before you have a buyer interested in the lease option, you should create a draft of the purchase option agreement. You want a win-win agreement, which means the buyer will have some say in the final contract. However, a draft will go a long way towards helping the buyer understand how the process works. I always recommend that you have a real estate attorney knowledgeable in lease options review your contracts. This is particularly important with your first several deals and after any change in regulations.

Additionally, for investors, I encourage you to take full advantage of these lease option coaching FAQ as well as the additional resources I’ve included at the end of this article.

Lease Option FAQ for Buyers

Q: Finding a lease option purchase home seems difficult, where do I start?

A: Finding a lease option purchase starts with a search for available houses. Begin your search by asking a real estate agent to search the MLS. Also, look at your local craigslist and other local periodicals with a real estate section. You can also find any house for sale to make a lease option purchase offer.

Q: When deciding to accept a lease option purchase agreement, how do I know if I'm getting a fair deal?

A: You should always have a real estate attorney review any contract before signing. Just as importantly, you can counter offer any lease option purchase agreement to include terms that you prefer. The lease option purchase agreement is a very flexible contract that can be written to suit both the buyer and the seller.

Q: What is my biggest risk?

A: Qualifying for a loan to complete the purchase is the biggest difficulty most people face with a lease purchase agreement. Carefully consider if it's reasonably possible for you to fix your credit rating within the option time period. If not, ask for more time. Also, a lease option agreement can include a provision to automatically extend the option period if agreed credit improvement is being made. Credit counseling is another option.

Wendy Patton

Comments (2)

  1. Is this option possible if you have financing on the property? I was attempting to do this and the bank was going to call the note so basically would have just been the buyer assuming the mortgage.


  2. Lease option is for investors leasing with the option of purchasing later, it gives investors more control of the property especially if their   aim is to quickly resell the property using another lease option, thereby acting as an agent at the same time making money out of the purchase. 

    Although, lease option purchase arrangement is not common from where i come from as it is in the United State. I still consider it as one of the best purchasing strategy investors can adopt because it prevents splurge if due diligence is followed