First Post... Lease Option - Good Idea or Stay Away?

[Trent Epley]

Hey all - I'm a newbie about to close on my first rental property in a A-/B+ neighborhood. It'll require less than 5k to get rent-ready and should cash flow about $350/month. Rent will be around $1900 and trying to determine if I should offer a lease option/rent-to-own (if the potential tenant is interested). I wasn't originally thinking of buy-and-hold but have heard from a few sources this is a potential way to increase the ROI. Any insight would be appreciated!

[Ryan Xu]

The short answer is yes you can consider. The key is to do the calculation for the profit margin.

Even though, IMO for a metro city like Chicago with a high population, the majority return is from using the leverage to increase the equity + appreciation. So the lease option is potentially more profitable than rent-to-own.