The biggest problem you have here is too figure out what the house is worth. Without that you don’t know if its a deal or not. If the house is worth 250k then it may be a good deal, if the house is worth 200k then you may want to renegotiate. I only say this because when it is time for the lease option tenant to get a loan you want the bank to go along for the 250k. If the bank doesn’t go along for the 250k you’ll never you a pay day on the other end. Good luck hunting,
Using the numbers you gave, the risk to reward ratio isn’t good for you at all.
First, why would you pay asking price? These days, the buyers are calling the shots. Or is that $225K price such a good deal?
Second, your assumption seems to be that you are guaranteed $5K option money from your tenant/buyer. Maybe you’ll get that, maybe not.
The bottom line as I see it is that there isn’t enough of a spread to be in the middle of this deal. Again, the risk to reward ratio isn’t in your favor.
As for the final purchase price, I feel it is okay to buy at FMV in a lease/option. Wouldn’t my tenant buyer accept a higher price b/c I make it easy for them to buy?
I understand the rent may be too high. I was trying to cover the mortgage payment to make the seller happy also. There is some risk. Is there any way to decide a fair market rent when no one else is renting in that area?