Lease Optioning with an A.R.M.

Is it worth to Lease Option when the underlying loan is an A.R.M.? In this its a 5yr. A.R.M.

How would possible tennants normally react to this?

If you are in a sandwich lease option, the ARM really has little effect on you. It is your sellers who have the problem depending on how effective a negotiator you are.

I would be negotiating a fixed payment for myself no matter what their underlying loan situation. This way you can pass the same to your buyers.

Don’t make it any more difficult on yourself than it has to be.

If it is 5 years until the rate adjusts just make the lease option payment adjust accordinly in 5 years. Even if it adjust before just make the lease payment adjust too. Lately rates have been low and when going up it has been small. With caps even a big increase would not hurt much.

Hope I helped a bit

Thank you,

Ted P. Stokely Jr
11505 Sw Oaks
Austin, Texas 78737

512-301-9171 home
512-587-6177 mobile