Investor Education

Truly, the best feeling as an investor.

1) The Tenant normally pays an Option Fee for 3-5% of home value, providing the owner with security.

2) Tenant feels an owner, so should financial hardship befall him, he will not immediately trash the home.

3) The Tenant has a much higher incentive to qualify, since the Option Fee is usually non-refundable.

4) Short-term capital gains are avoided if the Tenant is unable to qualify in the first year of ownership (for the Landlord).

1) An extraordinarily low percentage of people end up qualifying for the house*. Although you would like to have owners, you end up with tenants.

2) Tenant/Buyers, no matter how many times they are told that the Option Fee is non-refundable, nevertheless are angry about that policy being practiced. In such a situation, the house and its affixtures can suffer greatly.

3) Tenant/Buyers lease option homes for a reason. Ninety-nine percent of the time, that reason is poor credit. To earn the income landlords are trying to reach, betting on a poor credit may not be the fastest path to success. And it is certainly not for the novice landlord.

4) The tenant may exercise not to purchase the house, especially if housing prices fall. Remember the first part of what makes the Lease Option a Lease Option - the Tenant/Buyer has the right to buy, and the right NOT to buy. You will end up with your house back if values go down.

5) Worse yet, you have given up the value if prices skyrocket above the predetermined purchase price.