Lease option

[Randy Duke]

I have heard a real estate guru claim that you can get way more rent with a lease option that with just a straight rental, also he said you should get a 5-10k non-refundable option deposit.

My question is, is that true?

I would be inclined to think that if the renter/buyer has bad credit and can't qualify for a mortgage, that he probably does not have 10k sitting around.

[Bill Gulley]

@Randy Duke 

to begin in business the very first thing you need to do is to check yourself out, your attitude, your goals, where do you want to "fit in"......are you just after money or are you interested in a long term profitable business? Check out your moral compass, your ethics in business. Are you being realistic, do you understand the industry and the demands placed on you operating in that industry? This is just general business that applies to any venture.

Then, if you select real estate, and assuming you want a long term successful business, you're attitude is to act ethically and fairly then you can begin learning those paths to take.

Real estate is a basic function of our economy, it carries legal, social, health and welfare, economic and financial aspects that must be understood to successfully invest or operate in this industry. RE is not just a series of moving paper work or widgets through some system and snagging money, that is pretty much where gurus operate, scammers and the dishonest reside.

There is no strategy to use in doing any RE transaction that is not regulated by law, state and federal law, before people listen to some craphead guru that ignores accepted practice and the rules of the game, they need to learn what the requirements are before starting to play the game.

If you go out and do old strategies with lease-options, the penalties can be $100,000.00 in fines and/or 10 years in a federal prison plus damages to those who suffered losses. Dealing in real estate is NOT some casual affair as you hear in forum chatter or blogs or podcasts, mentor programs or as product promotions may suggest.

Asking if you can command more rent than the basic economic justifications allow is predatory dealing. As Jeff pointed out, in the end, fairness prevails.

Your reputation will develop quickly, here in my area, we have some scum balls operating, they also bump into problems that are brought about by others dealing in the industry that deal ethically and professionally. They are reported, their customers are informed, Realtors won't deal with them, closing agents scrutinize there contracts and methods and some refuse to close their deals, their properties are eyed by zoning and building regulations folks, complaints are filed with the RE commission and this is kept up until they are run out of the business. That is the reality of this industry, real estate is a social business that commands social responsibility.

As always, I suggest you learn the basics of real estate before trying to follow some strategy or going into the business so that you understand what you can and can't do, what and who you should avoid, how all transactions are anchored in law, custom and local practice.

Now, don't take this personally, we have 250,000 members here who might take note of these comments, old investors may need to be reminded and newbies need to understand, real estate is not about methods and strategies and it is not easy, it requires knowledge and staying current with the expectations you're required to deal under. If you don't, there will be consequences. Good luck :)