Lease option agreement on office building

[Robin Suh]

I have a small office building in California and someone offered to lease the property from me for 3 years with an option to purchase. 

Some questions for anybody with experience with this:

-how much above market price do I sell the property for since it can potentially be 3 years down the line?

-how do I price the lease payment?

-what is the typical deposit amount I should charge?

[Robin Suh]

Quote from @Chris Seveney:

Quote from @Nathan Gesner:

Quote from @Robin Suh:

Lease option is a bad idea unless you know how to structure them to your favor. You have no idea what the price will be in three years. If you make an agreement today for $300,000 and the price drops to $250,000 then the buyer can walk away. If the price jumps to $350,000 then you'll be selling it at a loss.

I recommend you just lease it. Include a clause that if they are interested in purchasing at the end of three months, then you will give them 30 days to present an offer before marketing the property to any other buyer.

I agree with Nathan, a lease option in this instance gives you no benefit and all the benefit to the buyer as they can walk after 3 years and also they capture the appreciation (if any). The only way around that is to have the buyer provide a non-refundable lease option fee of say $25-$50k now. If they exercise the option that goes toward the price of the building and if they do not exercise it you get to keep it.  In this instance you would also make the sales price based on a solid cap rate which if you have 3%-5% rent growth on it you can determine.

Yeah that was the plan. To charge a non refundable deposit and set a high sales price.