Does this L/O offer sound ok?

This is my first lease option deal, want to run it by some folks to see if it sounds ok. Just bought the home for $220,000 about three weeks ago. My payment including PITI will be $1264/mo. The option fee will be $5000. The monthly rent will be $1365 with a $100 rent credit each month. I am using a 15% appreciation value each year (we’re in Calif) so at the end of year two, we sell the home for $290,950. At the end of 2 years, I will apply the rent credits to the down payment ($2400). The option fee is mine to keep for tying up the house for two years, regardless if they exercise the option or not. Is this ok, because after reading other postings it appears that most people will credit the buyer with the option fee. Any comments/suggestions would be most appreciated.

The option money you receive is credited to the purchase price not the down payment. I think the rent credits are treated the same way. As for the deal it sounds like a pretty good one to me. Congratulations!!!

Hello Susie,

It sounds like you got everything going good on this one! It is up to you if you want the option money to go towards the house. Typically it goes towards the house. But if you can get a T/B to give up $5k and not have it go towards the purchase, more power to you!! good luck with that!!! Most T/Bers I have came across get excited that the Option money is going towards the final price and it makes an easier transaction! If you do have it go towards the purchase you could probably get more than the 1.7% that your asking for now. I would go for at least 3% of the purchase price. More money in your pocket now! To convince the T/B to do this, Let them know it brings down the mortgage by 8 to 10 grand!! makes it look more appealing!

Also, just an FYI, make sure the T/B is aware of the Rent Credit, and that this only applies on good rent record “Making Rent On Time!!”

Besides that, good luck!!!


Sounds good

The only problem i see is if the house doesn’t appraise for the value you set. If this ends up to be the case, the tenant buyer may not be able to get financing and not take the option. You may not care cause you can do it again or just adjust your purchase price at that time to fit and move the house. However if the value is there, and they take the option - you done real good girl.

Just make sure your tenant/buyers will be able to get a loan i.e. good credit…and so on.