I’ve been studying the Lease with Option method. In order to make this work, one needs to find a motivated seller and then get them to agree to rent out their home for 6 (six) years!!! That seems like a VERY long time for someone to hang onto a property they don’t want.
Has anyone had experience with Lease with Option and tenent buyers? I wonder if these sellers would be more inclined to accept a request for a 2 or 3 year lease?
Also, in my studying, the tenant buyer puts down a deposit, say $10K. If a person has $10K, why would they take the rent option route? Can’t just about everybody get a mortgage nowadays?
What are the options if the tenant-buyer does not have a deposit?
Thanks in advance!
The key is MOTIVATION. The old term Location, Location, Location does not apply here. It’s motivation, motivation, motivation. Six (6) years is certainly not a leap of faith. I ask the seller for 8 with the expectation that I will get six. If they are motivated enough (which I have already determined before I meet with them) they’ll go with 6 years. This will allow you the “buffer” to work with your tenant buyers, giving them time (2-3 years) to clean-up their credit or build equity (or both) which is why they can’t just go get a mortgage. In reality, they probably could just get their own mortgage with their $10K, but because their credit is shot or they are self-employed, the interest rate on their mortgage is high and they can’t make those monthly payments. Typically I ask for 2-3% of the purchase price. If the tenant buyer is motivated, they’ll find the money. If they don’t have the full upfront payment (I never call it a deposit - they won’t be getting that money back) I accept a minimum of half and work out a payment plan to obtain the remaining balance over the first 2-3 months. I don’t recommend doing this though. It’s burned me a few times. I’ve since gotten better at qualifing my tenant buyers and will do it for the ones that I know will pay in the end.
Lease Option is what I do so I may be a bit biased. It’s worked for me. It can work for you.
Good Luck