Curious on the mentality of people who buy on lease options

One complaint I’ve often heard from people who are landlords is the constant dealings with tenants; leaky sinks, toilets, calls in the middle of the night, etc. What are your experiences with people who “buy” on a lease option? Does this sort of arrangement usually attract a person with more of a homeowners mentality? Or are you still dealing with renters?

Just curious.

That’s a fantastic question…


  • You get less money from a tenant/buyer.
  • Same liability, once a lien is filed by the tenant/buyer, in the event of default and repossession.
  • Pretty much the same as foreclosing, if the tenant/buyer isn’t cooperative.
  • Tenant thinks you should pay for repairs, despite limits outlined in agreement.
  • If A/C goes out, and you won’t offer to repair it, tenant will likely bail, and you’ll end up fixing it anyway.
  • Sure, you’re apt to get another 2 or 3 percent as option consideration, but that’s just lost money.
  • Good lease/options are just thinly disguised extra long escrow periods (or a time to allow a tenant/buyer time to demonstrate ability to pay on time, before morphing the deal into a full-on installment note, say after a year.

Seller Financing (installment note)

  • You get more down from ‘financed’ buyers.
  • Same liability, if defaulted buyer is uncooperative, and records a valid lien.
  • Buyer has done his due diligence, does not expect seller to fix toilets or repair the AC.

All that said, our leases and options are mutually dependent on each other, and we do not allow liens to be recorded.

We also have an honest reputation.

Part of the option consideration is dependent on the tenant/buyer assuming liability for all repairs. If he doesn’t want to do the repairs, he can immediately terminate the lease, and extinguish the option, and move out without further liability.

However, if the tenant/buyer defaults on the lease, his option is also extinguished, and he theoretically moves out without a legal fight.

In the event tenant/buyer becomes a sniveling jackass, we go for broke, and break his credit.

We sue him for unlawful detainer; get a judgment for rent and possession; put him to collection; and ultimately attempt to force him into bankruptcy, if at all possible. After the derogatory credit entries pile up, he’ll have a difficult time renting a rake.

Of course, this is the same procedure we use on obstreperous, defaulted buyers, who believe that squatting in our house, without paying, ‘is’ an alternative for them. Nope.

Of course …that would be the worst, dignity-stripping-scenario we could inflict on a customer, and fairly reflects our own professional incompetence, in dealing with default victims.

I mean, getting all personal and emotional, and escalating the situation, just reeks of ‘amateurism’ on our part.

Buyers are naturally that way, and beg for drama and trauma. We cannot indulge in that. It’s too expensive and stupid.

So, we might outline what we plan to do to the deadbeats, and give them a chance to “get rid of us,” with a cash offer to move out by …say Friday. No strings attached.

This works for any deadbeat in training, whether renting or buying.

Meantime, the mentality of either a defaulted, tenant/buyer, or a financed buyer, can be the same, when they feel like they’re backed into a corner.

So, a much wiser approach, is to offer the victim a more dignity-redeeming, if not more profitable exit, then what our contract agreements might stipulate.

So, that’s my discourse on the mentalities of the damned.

To build on what my pal in So Cal eloquently stated…I’ve done hundreds of lease purchases successfully. Let’s not look at mentality…let’s look at what you put in your contract when you get the occupant to move in…have your contract say…everything works…they confirm…if anything breaks…it is their fault and responsibility to repair…put it into your contract and don’t let anyone move in unless they agree to your terms.

You have control of a home to sell along with creative private terms such as a lease purchase…you have what most people need…make the terms work for you because your creative financing terms are what works for the buyer/tenant/occupant.

Hope this helps.


Plus, at the end of the agreement, you are out a house.

Isn’t that significant?

Regarding lease options, this is a great way to sell a property and put an occupant in the drivers seat and typically it would make them a more responsible caretaker of the property. Most times with buyers that chose this route plan to execute at the time of the option. They have option money that is at stake, that is non refundable unlike security deposits which are fully refundable. And in my experience you can often get a more favorable price for your property as the buyers is purchasing the property at a future date.

I occasionally get asked if I will sell on lease option. The hopeful purchaser is always a person I would never consider renting to. I certainly wouldn’t get into any sort of more binding arrangement with them.

I haven’t advertised to sell a house on a lease option, so perhaps you could winnow out a better prospect from all the dregs who will come crawling out of the woodwork hopeful that they can finally buy a house in spite of their pathetic credit and lack of income.

I’m curious of the mentality of people SELLING on lease options.

Do they want to sell the house or be a landlord?

Why not just do one or the other instead of beating around the bush for a few years?

Selling on a lease/option doesn’t require a mentality… it requires a seller who’s pretty much out of options. Otherwise, he’d just sell for cash, and be done with it.

The common seller motivations include:

  • Getting a higher-than-retail price.
  • Unloading a negative cash-flowing “alligator.”
  • Achieving a faster sale by financing a buyer.
  • Lower-risk entry into an eventual installment contract with buyer.
  • Getting higher-than-retail rent payments.

The common buyer motivations include:

  • No-cost commitment, if/when option consideration is credited to the price.
  • Immediate financing.
  • Time to prove credit worthiness.
  • Immediate possession of a desirable home.
  • Paper acceleration of down-payment from rent credits.

Issue: Lease/Options rarely close.

  • Seller or buyer expected too much from a lease/option.
    • The option price was ridiculous.
  • The fuse on the option was too short to exercise:
    • Buyer’s credit was still too crappy.
    • Buyer’s income was still too iffy.
    • Appraisal was still too low.
  • Lease/options are rarely deals just disguised as long escrows.

What is so wrong with the house that he can’t sell through traditional means?


I am going to help you out Redstar, when a home owner moves or has an additional home as a rental or vacation home there are credit and tax ramifications. When you buy a car it is recommended that a minimum of 6 payments are made before you pay off your loan, this is the minimal best to build your credit and create payment history!

When you have a job and have additional income, and you have more than 2 homes you want to manage your tax liability, so you may not want to sell your home this year because it causes you to jump 2 tax levels and costs you significantly more than you would pay next year or the year after!

So managing your investments is important for liability, capital gains and earned income!



So in the case of lease options when a home is leased with an option and the option consideration is paid your receiving the lease payment, deposit and option consideration upfront. Since over 90% of lease options never exercise there option and buy the home, the tenant pays there lease and takes care of maintenance and repairs but hands it back because they have not fixed there credit or don't have enough income to qualify, you get the house back. 

Then you can lease option the house again. If you get an extra say $7,500 every two years on the same home as additional income isn’t that pretty smart? But then if you increase the monthly lease payment so the option holder receives a monthly rental credit and you say get $250 more per month but provide a $500 dollar monthly credit against the option on an agreement to sell the house at option time value!

This way you get an extra $3,000 per year for two years say in our example, but the lease holder does not exercise there option, you got $13,500 over two years in our example completely free!


It was simply a question. How many deals have you done this year? I’ve only done four this year, but have gotten $20K in down payments with back end profits of $65K. I come here to learn, not criticize others strategy. My strategy is to sell using owner financing, I was curious about lease options.

oh, and I don’t have a penny of my own money out of pocket. Dont need private lenders, or any of that jazz…


Luke I will add over $300m in commercial property this year between apartments, hotels, retail, office, storage and commercial / industrial property! 

When I was in school the teacher taught because the teacher had more experience and more education, the teacher understood the correct way to teach in order to learn! I did not consider my teachers lessons as criticism as I knew darn good and well the teacher knows the right way!

We go from simple math 2+2=4 to advanced math like algebra, geometry, calculus, etc. Could you imagine your teacher trying to teach you calculus in 1st or 2nd grade before understanding the basics of addition, subtraction, multiplication or division? Could you imagine trying to write your thesis in 1st grade before you learn to read or write, of course not!

If receiving constructive criticism makes you upset, so be it as it’s a tough world out there, no one is handing you something on a silver platter, no one owes you a living and no one holds it over your head if you want to work at McDonalds for 40 or 50 years, we all have free choice but when people with expertize and knowledge offer their advice for free, it might be worth listening to!

Wow, when the seller finances a deal or provides a lease option the seller is the private lender!!!

Luke I think your doing great, but it would be nice to get everyone on this forum as successful as you are!

Good luck to all,



I’ll listen to you. How did you get those four deals that you did this year?

Bandit signs, using the exact strategy I laid out in a different post. If I wasn’t so lazy I’d have at least five more this year. I’ve been terribly inconsistent in marketing.

I sign up deals wholesalers don’t touch. For instance I’ve formed a relationship with a couple wholesalers around here that send me the leads that they can’t perform on.

Here’s one deal:

Buy Sub2 $74K
Sell owner finance $99,900 with $7-$10K down at 8% interest. This gives me $7-10K upfront, about $200/month positive cash flow, with $15K (and rising) backside profit. This deal will take me about 4-6 hours when said and done. There are tons of these deals out there.

Even though I haven’t bought Javipa’s course, I think him and I do something very similar.

That sounds like a good idea.

How long does it take you to get the house sold through owner financing? How are you able to afford the sellers mortgage payments in the meantime?

After you have sold through owner financing, what do you still pay on the house? Taxes and insurance?

It’s never taken longer than three weeks to sell. I also never buy before I sell, ever. I suppose I would if the deal was right, but so far I haven’t.

Once I’ve sold it and the deal is done, I pay the underlying payment which almost always includes taxes and insurance.

I realize I’m new to this, but how can you sell something before you buy it?

What is your most effective method of finding deals?

I have a signed contract between me and seller. That gives me equitable interest in the property, therefore I can advertise it for sale. I’m upfront with the sellers about everything I’m doing. Half the time they still live in the property, it’s never been a problem for me.

My most effective method, for both buying and selling is bandit signs.

To find sellers, use preprinted signs.
To find buyers, use yellow 18X24" handwritten signs

My bandit signs have yielded me nothing so far.

I’ve gotten one call from another wholesaler.