All Forum Posts by: Rick Bassett

I'd like to charge an application fee as I do run credit and criminal checks on potential tenants which pass the first level of screening during the property showing as our out of pocket costs do get up there.

Generally I have found that potential tenants, especially thosing coming from CL, resist paying such a fee so I have been absorbing it.

Unless there are tax traps it seems to me that a longer period is better if we really want the tenant to exercise the option.

I know that setting a selling price is harder over a greater period of time but purchase price steps can be put in the contract as the time frame extends. Say the SP was $100k (yr 1-2), $110 (yr 3-4), $120 (yr 5-6). It gives the potential buyer incentive to exercise their option as early as they can (unless too much of the excess rent is be credited against the down payment and it washes out the SP increases).

I am not sure that I would want to charge for an option extension if they are being a good tenant and taking care of my property.

Roy,

Thanks for the feedback.

Yes I have been chasing MLS (Mostly Lousy Stuff) and find that I can sometimes get lucky on the ones that have been listed for a long time or on deals that fall apart because of financing. You are correct the new listings are very picked over.

I also troll and advertise on Craigslist but that has worked better for finding tenants than finding properties.

I do need to expand my marketing and will. I have many contacts who don't know that I do this as they just view me as my 'day job' role which is a college professor.

I've been chasing deals on single family houses for rehab/rent/hold for a long time and probably to no one's surprise on this forum; the numbers rarely work.

Usually the semi-affordable houses with upside potential are so distressed that after adding the purchase price, transaction costs and rehab costs (even with a fair amount of sweat)that it would never provide a good ROI on either renting or selling.

I try to get sellers agents & banks to see that their asking price doesn't work but they don't seem to care.

I've been successful on too few deals and find myself getting impatient at times but not impatient enough to knowingly put myself underwater on a project. I can't say that this true of others in my market as there seems to be a lot of 'stupid cash' chasing bad deals.

Now if only I could profit from that somehow....

It appears that 2-3 years are the typical length of Lease Option Contracts but that does seem too short if you are really hoping that the tenant/future buyer will really repair their credit in time to exercise their purchase option.

Why wouldn't we want to grant a 5, 7 or 10 year option?

We are still getting an option fee upfront, tenants are still taking care of the property and paying a rent premium but we have less turnover every 2-3 years.