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Updated almost 9 years ago,
Lease Purchase contract
Hi,
I'm new to real estate investing and I just purchased my first single family home last month and I am ready to find a renter. I live in NY, so I purchased an out of state property in FL.
My property manager, who is also my real estate agent, suggested I do a Lease Purchase option instead of just renting it to a tenant. As this is not what I was originally expecting to do, and I am very new to this, I would greatly appreciate somebody else's opinion if I should do this. Below is how it was described to me by my property manager.
The property has a current value of about 100k. She would find a person for a Lease Purchase contract that would pay 130k in 2 years. That person would have to put down 10k as a deposit. If they do not purchase it in 2 years(such as being due to not being able to get financing), they would lose the 10k deposit. I'm told that less than 5% actually purchase it. As the property manager is the person that found the person to do the "Lease Purchase" contract, the deposit would be split with her(5k to her, 5k to me).
In the unlikely event the buyer is able to get financing in 2 years, then they would pay 130k as the contract says, which is 30k over what it is worth. Even though I do not want to sell it, I'm willing to do it due to the large profit I would make.
Does what I describe above make sense to do? Does anybody see any potential problems with doing this lease purchase method instead of just renting it like I was planning?
Thanks