Lease Option Techniques – For Real Estate Investors, Home Buyers, or Home Sellers

May 16, 2023 0 Comments

Lease Option Techniques

As an investor or homeowner, the lease option is a popular method of selling property and earning a profit. These lease option techniques are provided to assist both the buyer; the seller; and for the investor, techniques such as the sandwich lease and reverse lease options. There are several lease option techniques, all customizable to your specific situation.

As a seller, here are some lease option techniques to consider:

  • Consider owner financing as a lease option technique, especially if the tenant is motivated but may simply have trouble obtaining conventional financing.
  • Require a tenant option fee. Requiring even a few hundred or a few thousand picks up buyers who are less motivated to exercise the option.
  • Consider contract terms like maintenance and repairs; subletting, one of the popular investment lease options; and extend the term of the option.
  • The lease option can be a complex document and combines aspects of both the conventional sale and the lease. Consider a real estate attorney to help you.

As a buyer, here are some lease option techniques:

  • Set up an escrow account to protect your funds in case your landlord doesn’t honor your choice. Most homeowners are honest, but why take any chances?
  • Start early to secure financing, especially if you need to clean up your credit. The more time you have, the better. Remember, in most cases you will not get your money back if you do not exercise your option.
  • Make sure you agree to the language of the contract to maximize your lease option techniques.
  • It includes a clause to assign the lease to a third party, if indeed you cannot find financing, you can assign it to someone who does.
  • Have the document notarized and registered with the public real estate records to encourage the owner to honor the option.
  • The right to extend the option deadline gives you a cushion in case the last closing day approaches before you are ready with financing.
  • Consider sharing maintenance costs with the seller, since both have an interest in keeping the property in top condition.

change lease options they generally consist of the investor locating another buyer to exercise the option before the option expires and ownership changes.

Or consider building a sandwich lease. The investor subleases the lease option to a buyer, and when the buyer is ready to exercise the option, you simultaneously do the same. You are in the middle of the seller and the buyer, hence the term sandwich. The trick to using lease option techniques, specifically changing lease options, is the timing of locating a seller and a buyer.

Lease option techniques to find a buyer?

  • Run ads and list the property as “rent to own” or “great fixer top” if the property needs improvements.
  • Find a buyer who has “top fixer” skills.

Lease Option Techniques to Find a Seller?

  • Read foreclosure listings and real estate ads, both in the for sale and for rent sections, especially if you are exercising lease options.
  • Contact sellers with old listings. Sellers may be motivated to consider lease option techniques that they may not have considered before.

Leave a Reply

Your email address will not be published. Required fields are marked *