feedback on this lease option deal

Value of the property: 699k
Asking price: $670k
Amount owed on the property? 667k
Monthly mortgage payments (including PITI): $5800
How long would you consider a lease for:10 years (homeowner’s just want to walk away)
Will consider no money down
Market rent for property? $4500-$5000
Minor repairs: paint in some areas of home.

the ideal price range for lease options in my farm area is $350k. The location of this home is in one of the nicer towns in the county. The first issue I see is the difference between the market rents and the monthly mortgage expense. The benefit to this deal is the homeowners are willing to do a long term lease. base on the above, i would like some feedback from the investors on this board.

thanks in advance.

Hi Ryan,

          You know, you should probable know the answer to this one without posting it!

Ok, a property worth 699k should you lease option it and decide to sell it next week, would cost you 52k just to sell it with realtor fees (5%) and closing cost’s (estimated) which means you would have to come out of pocket 20k just to sell it at full price, and more if the market requires you except a reasonable offer.

Now if market rents are 4.5k to 5k and the PITI payment is 5.8k, then this thing is way upside down to rent it out. This is $800 to $1300 upside down.

Your maintence and repairs will cost you probable 7k to 10k a year (1% to 1.5% of value)

Plus being in a area that may have reduced demand may leave you a unsellable property or one that takes a long time to sell!

Good Luck,


Hi Gold River,

Yes based on the rents I figured it wasn’t a typical LO candidate. Since you’re able to demand higher rents and purchase prices for LO’s…I figured there was some play room considering the longer than usual lease period.

I wouldn’t plan on using a realtor since we would be matching up the tenant buyer through our program.

I appreciate the feedback…I’m just looking for possible solutions (as far as a lease option is concerned)


Option It! They may consider an equity split when and if it it sells. A L/O represents too much risk to YOU. If they’re going to just walk away, ask for the deed and flip for cash! Good luck and let me know if I can be further help