I have a rental property that I’m getting ready to rent out and possibly include an option to purchase. The property is in somewhat of a transitional neighborhood . . . not the best.
I’ve been reading great things about lease options (i.e. Wendy Patton’s recent book). However, I’m also reading about horror stories with lease options.
Any suggestions for when this is a good idea and when not?
I was hoping that it would help me get better tenants.
Lease options are great for buyers but offer potholes for sellers, specifically, if your buyer is receiving rent credit or a credit toward his down payment. You run the risk of your tenant claiming “equitable interest”, and given the current anti-small investor sentiment, could be facing an expensive foreclosure process in order to get him out.
Best of luck to you.
I think I’m going to follow your advice and stick with basic renting, at least until I meet some local investors that are doing it and can give me all of their advice and watch-outs from doing the lease options locally.
One thing that works very well with renters is to offer a discount ($25, $50, whatever) if you RECEIVE payment by the 1st. Good luck.