Escalation values and raising rents on lease purchases. Please help!!!!

I have been doing lease purchases on 6 properties now for the last 2 years. All of my contracts has expired and my optionees are still in my houses. The market in my area has increased rental rates where i could be making $50 more per month on each house. Also, there has been a 10% appreciation rate in value over the last 2 years in my area and I could be getting a lot more in value now. How do I go about increasing rents and escalating my values on my optionees without pissing them off and having them move out? Please help!!

As you have now learned (six for six), tenants are tenants. Just because you call them “buyers” or “optionees” doesn’t change that. If the rents need to be raised, then do so. If you want to raise the purchase price, then do so. It really doesn’t matter. The vast majority of lease option “buyers” never exercise their options. They’re just renters.


ok, I think you helped me in a landlording forum. I took a letter that you typed and added some more lingo. Please tell me what you think of this:

Dear Mr and Mrs Anderson,

You are a valuable client. We do everything possible to keep rents low. However, despite our best efforts, expenses and taxes continue to rise and we will therefore be raising your rent to help offset the additional costs. Please be advised that beginning with the April 2007 payment, your rent will be $840 per month; anything less will not be accepted. Also, your lease option contract began in February 2006 and ended in February 2007 without you exercising your option. There has been an escalation in value of 3% each year and we will now need to raise the sales price on the property to $105k, which is less than the 3% per annum. Please be advised that we need to make an appointment to renew a new lease purchase or regular lease contract. Please make arrangements with Brandon Thompson to sign the new contract by April 1st and to keep your “interest” in the property. Thank you for your understanding.


Travis Doige
Capson Properties

That sounds good to me, except I would take out “anything less will not be accepted”. That sounds kind of threatening to me and is not necessary. The lease is up and you are in control. If you say the rent is $840, then it’s $840. They either pay it in full or they move out.

Good Luck,


Just want to add here too that any option $$$ that you received on the initial L/O now that it has expired is now considered income and should be included in your taxes as such.

If you choose to give a new option to your tenants, fine, but options aren’t “renewable.”

And if you want to get your leasers/buyers out of the “glorified landlording” phase, you need to step up your business as well.

Most T/B’s don’t exercise their option because they don’t know how to improve their credit scores to the point where they can purchase and they also don’t know who to contact about improving their credit or even where to get the best financing for poorer credit scores. If you want to improve your chances of selling, then you need to have these things in place for them before they sign an option. It’s still up to them to do it, but you’ve shown them the doors.