Lease Option Strategy

[Clifford Gray]

I am located in Florida and am looking to develop a "Lease Option" strategy.

• Is it more profitable to look for properties that require minimal rehabilitation or fixer uppers?
• Should I look for B to B+ properties or C to C- properties?
• What amount of  up front payment would attract most tenant/buyers, 1% 3% ...? 
• Can this payment be called a down payment or are there legal ramifications to that term?
• Should I offer to "escrow" a portion of their lease payment towards a down payment of their future purchase financing?
• If they can't purchase at the end of the lease, is this escrow'ed money due back to them?

[Joe Villeneuve]

Originally posted by @Clifford Gray:

I am located in Florida and am looking to develop a "Lease Option" strategy.

• 1-  Is it more profitable to look for properties that require minimal rehabilitation or fixer uppers?
• 2-  Should I look for B to B+ properties or C to C- properties?
• 3-  What amount of  up front payment would attract most tenant/buyers, 1% 3% ...? 
• 4-  Can this payment be called a down payment or are there legal ramifications to that term?
• 5 - Should I offer to "escrow" a portion of their lease payment towards a down payment of their future purchase financing?

Answers:

1 - If you're buying, You should never use houses that need rehab.  IF they do, have the owner do it before you make the deal.  If you're selling, I would avoid rehabs.  THe beauty of LO's is the minimal out of pocket (cash) you need.

2 - B - B+ works best

3 - 5% ...and this money is the cost of the Option...100% of the cost of teh Option Contract.  It has nothing to do with a down payment on the property.

4 - No, no and NOOOOOO.  This money is the cost of the Option Agreement.  The OA is a contract that allows the buyer of the Agreement, not the house...yet, the exclusive right to buy teh house for the agreed price and within the term stated in the OA.  It is NOT a down payment.

5 - NO.  This money is NOT the down payment.  THis money is nothing more than the cost of the Option Agreement.