first lease option

Here is my question; tell me if I am doing it wrong or any suggestions would be grateful.

I own the house; it worths $320K.
I have offer but have not written any contract up yet so before I do, I thought I check in with the experts, thats you.

I have verbally offer to do a lease option.
$8K deposit…which I will credit back
$1400/month rent will credit back 60%.
T/B to purchase house at market value…its appreciating at 20%+

I figure that the house will be around 460K after two years…but we do not know what the market will be like. I would save on commision 27K.

When I think about this, I am too generous. What do you suggest?


Howdy Littlefish:

You are really generous. The rent should be at least $2500 and why credit anything but the down stroke. Call around and see what other investors are offering on lease purchase deals and check rental rates for houses like yours. Also what are your payments? If you have a $250,000 loan and taxes and insurance you will be having a negative cash flow. If you own it free and clear you may consider selling it and using the cash as a down payment for buying $3,000,000 worth of property.


Thanks for the feedback.
What do you mean down stroke?
I owe 275K on it…because I cashed out 50K already.
Its currently financed as a 5yr arm.
The total payment is about 1400.

Knowing the market in Vancouver WA, I dont think it can rent for 2500…I doubt that. But who is to say that it cant to the right t/b.

What do you suggest?

Howdy Littlefish:

Downstroke or down payment.

Knowing your situation a little better helps make better decisions. Just make sure you know the market and get market rent from the tenant buyer. I would not give up much of the payment unless you have to. Do what the market dictates. If there are 100 ads in the paper giving 50% credit then you will have to as well.

Your payment is really low for a $275,000 loan. With that payment and some good appreciation you should do good with doing a lease/purchase deal. Texas and NC are trying to make these sort of deals next to impossible to do. Keep your eyes open regarding these new laws


Thank so much

Where can i find out about the state law on lease option and etc?

Would you suggest I contact a real estate attorney to draw my lease option?

Your thoughts

Hello Littlefish!
Yes, use an Attorney. With all the impending legal changes and possible He Said She Said questions later, an Attorney is worth his weight in gold. Make sure the Attorney is an Investor Savy one though!

BTW, whatever you agree to do is fair. Don’t let others tell you to be more greedy. But heed their advice to see if you are being fair to yourself!

Thanks so much.

This process is so much easier now…