Lease Options......
A lease option usually has the following two components:
A residential lease over a property. The rent charged under the lease is usually above market rates due to the unusual nature of the transaction and unlike a normal residential lease, the tenant pays all repairs.
A call option that allows the tenant to purchase the property at a future date for an agreed future price. An initial fee is charged for this option which is then deducted from the purchase price if the option is taken up.
If the call option is exercised then a portion of each rental payment is applied against the purchase price.
If the option lapses then the initial fee is forfeited and all the payments received under the deal are treated as rent.
What are the critical success factors?
Pre-qualifying leads
A lease-option offers hope to people who would otherwise have difficulty of ever owning a home. As such, demand will be great - possibly far higher than what you might expect. However, your business success will depend on sorting out the quality clients.
The right property
You may not need a five star property, but it's wise to find a potential home that is structurally sound and in very good condition because expensive repairs may mean that your client will just up and leave rather than stay for the long term.