I call a lot of For Rent ads to see if the owners are open to selling their houses on L/Os. I find a lot of people that are open to the possibility of selling this way.
My question is - when I meet with these people in person to see the house, what’s the best way to tell them that I need to put a 3 to 5 yr option on the property and that I will essentially be subletting to a buyer on a 12-18 month option?
When you call them and they are open to the idea of L/O, I think you need to find out at that point if they are open to at least a 3 year term. If they are not, you aren’t wasting time meeting with them.
When you meet and you make your agreement on the deposit, terms, length, etc, you need to bring up the idea of subletting. If they are a motivated landlord, I don’t think they will have a problem with it.
I would ask them over the phone or email first before the meeting, I know from experience that FRBO (4rent by owners) are more open to the idea of L/O than FSBO…
If you want to avoid the “how to pitch the L/O” to FRBO, do like what I did, I found a developer that builds custom homes everywhere and I’m in charge of doing all kinds of LO’s (basically any creative deal) for him for as many houses as I can (he builds more houses than I can count LOL), this for me is a repeat biz with the same developer.
By now, this developer really looks up to me and always calls me for advise 8)
Pearl 
Pearl, How did you find the developer you work with? Sounds like a great deal for you to have in place!
In your market where the RE prices are so high, how can people afford the rent on a house that is in the $600’s? I’m not even sure that my market here in Tucson will carry a LO or RTO because the rent will be too high for anyone to afford. Any advice or pearls of wisdom? Sorry about the pun!
Thanks!
luvnas, (pearls of wizdom?) LOL 
I like that
Pearl, How did you find the developer you work with?I called the FRBO newspaper ads and the developer answered the phone but I didn't know what he was until we met and talked.
In your market where the RE prices are so high, how can people afford the rent on a house that is in the $600's?Actually, the rent market is very low. ($1,400 - $3,000) What I've learned is that most of the times the FRBO (buy and hold investors) I deal with, they really don't want to sell their investment properties right away and hope that the t/b don't exercise their option, but if they do exercise it then no problem either, so either way, we're good ;D
Any advice or pearls of wisdom?Get educated, make lots of calls, don't be afraid of making mistakes and team up with other experienced investors by birdogging for them locally.
Pearl