Lease purchase (tenant, 5%, mortgage, mortgage)

[misueno]

Any thoughts on a lease purchase option? As a seller is it a viable option or a bad situation?

[MMichelle]

It's a waste of time.
I've never seen a tenant end up with the property. There may be money to be made by the landlord. A landlord may hold XX dollars for the option and retain the money if the tenant doesn't buy. However, it's a fairly cheap tenant rip off.
BTW - It possible that a lease option will void the title insurance on the property and might put a cloud on the title.
Take care.

[Marty Van Diest]

Most of the time they do not work out. If you do a true lease option then the buyer will pay for the option to buy at a later date. The amount that he pays for this privilege will give you a better idea whether it will work out or not. Anything less than 5% of the purchase price almost guarantees that it will not work out. The more option money the better.

I wouldn't do it myself. If you do decide to go for it, get a good REAL ESTATE attorney.

[Sergio M]

I use Lease option when I'm advertising some rentals. This opens up to potential buyers who are on the fence and thinking about buying, or their credit is less then perfect, it gives them time to fix their credit. This maximizes the marketing for the rental, and get more leads on the phone. Some of my Landlords also offer 50% of the rent paid, toward down payment. In this market, you need to think out of the box. After about 9 months, the house goes back on the market, and it just may be a way to get your home sold.

[zugor]

I bought my first house on a one year lease option with $3600 being 5% down, several hundred $ of my monthly rent went toward additional down so I had 10% when we closed the deal. It was a funky little place in a marginal neighborhood but it got me started. Stayed for 7 more years then on to a somewhat better place in a much nicer neighborhood. Stayed there for 16 years. Sold at the top of the market in CA and now to retirement in the country with 28 acres, big house, big garage (bigger than the first house now that I think about it) and both a pond and a creek for the dogs to enjoy.

For me it was a great deal. Oh - that first house - I was able to assume the mortgage at 8.5% which was a good rate , and the owners carried back the second at 12% for 7 years.

28 years ago a single woman getting a mortgage on her own was still somewhat unusual.