10 situations in when a lease option is a great idea.

[Shiloh Lundahl]

There have been a lot of negative opinions about lease options on BiggerPockets by people that have done a lot of different types of real estate. That's confusing to me since the lease option strategy has worked out well for us and several of our tenants. It got me thinking about why somebody would choose to do a lease option. I can come up with 10 reasons why somebody would choose to do a lease option. Here they are in no particular order. Please feel free To ask any questions about these scenarios.

1. Wanting to buy now but you need to sell your house first
2. Wanting to buy now but you need to save up for a down payment
3. Willing to do work to increase the value of the house but you can still buy it for the contracted price.
4. You think the value will go up and you want to control the house with only a a little bit money.
5. Your credit is too low to qualify for a loan right now.
6. Your credit is low and you can qualify for a loan right now but you want to improve your credit score first in order to get a better interest rate.
7. You have good credit but the interest rates are still too high right now and you want to wait until the rates come down before you get a long term mortgage.
8. You just started your own company and you don’t have 2 years of tax returns so you are not very bankable right now. 
9. You want to pay off the house with big installments and you don’t want to get a loan.
10. You are not sure you want to buy but you do want the option to buy the house in case you decide that you want the house.

[Don Konipol]

@Shiloh Lundahl

Just like subject to, seller financing, and wholesaling, gross misconduct on the part of some “sharp” operators and criminal conduct on the part of some serial criminals have led to “hysteria” about the “evil” of lease options. 

Used properly, with FULL disclosure to all sides, lease options, subject to etc can be beneficial to all sides.  However, beware that certain “passionate” parties posting on BP have taken to an almost “religious” crusade against about anything that can be considered “creative”.  Just yesterday I gave my (imo) balance view of the use of “subject to” in real property transactions, and was told by a very proficient poster in response to my post that anyone who thinks subject to transactions are ok is GARBAGE. Apparently, name calling, hysteria, unwillingness to consider any experiences other than your own, and ideology have replaced willingness to consider others opinions and experiences, common sense, and respect.