Lease Purchase contract

[Robert T.]

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

[Matthew Fields]

I have done a decent amount of research on this and I don't think you are necessarily ripping them off. I don't think it's a good deal in the terms explained. In my market it would look like this, $100,000 3yr lease option $3,000 deposit, 10% over market value rent with overage applied to built in equity to assist in owner financing. I would continue to allow the tenant to pay the above market rent to continue build more equity towards future purchase, the total purchase price would never really be able to be so far over appraisal like in your scenario. In this scenario you win by, collecting the deposit and above market rent and the tenant treats the home better when the think of it as theirs. All pluses for you, and yes they may purchase the property in the future, but if you bought with equity you should still be ok.