Lease Options

A lease option can relieve the investor of issues that can arise out of being a landlord, such as non-occupied properties, locating qualified tenants, financing expenses and cash flow woes. If the tenant paid their rent on time and kept the house in good condition, they can exercise their right to buy the house, however, they will forfeit the deposit if they decide not to go through with the purchase.

If the tenant does not exercise the lease option then they must leave the property in the same condition in which they arrived and allow the home to be shown to potential new suitors. Every deal can be structured differently depending on the circumstance. Your attorney and real estate investment advisor can structure the deal according to your needs.

As an investor, you will want to build up incentives or the tenant to purchase the property. As investors, in the short term, you maximize your ROI if the tenant decides to buy, however, in the long term, you will maximize your ROI if they forfeit their deposit and you sell the property at a higher price.