Thoughts on converting my rental property to a lease option?

[Ashraf Farrag]

I have a fairly steady rental property. It was a former home of mine. I lived in it for 7 years and it has been rented for about 6 years. There still is a mortgage on the property and it has a decent amount of equity in it. I could refinance / home-equity loan to pull the equity out for another RE investment but I am trying to use this an an opportunity to learn how to work the numbers of creative financing to be able to do other deals.

What I am trying to determine is if it makes more sense to go with a lease-option buyer in order to continue to have some residual monthly income but free up the equity in the property so that I have capital to seed additional RE investments. 

I also understand from the proponents of L/O that having a buyer-tenant with more "skin in the game" versus a renter in the house would make the management easier.

From what I read/understand, it definitely does not seem to make sense to seller finance in regards to my options for non-payment (eviction vs. foreclosure).

The problem I have in structuring the deal is if they cash me out "soon" then I don't stand to make as much as I would if I continue to rent the property but I guess the trade-off there is that I would then have all the equity available as capital to reinvest into another investment (or multiple investments) which may offer better returns.

I am curious if:

1) Anyone has actually done this and found it to be a better long-term strategy?

2) What sort of numbers on the lease option did you use such that it worked out for you?