Some Surprising Facts about the Value of Your Lease Option

There’s something going on right now in lending that all investors must be aware of. Lenders are now trying to say that whatever the original Lease Option Price was at the beginning of the Lease Option is all the property is going to be valued at for the entire duration of the Lease Option!

For example, if the beginning of the Lease Option the purchase price is 100k, then five, ten, or even twenty-five years from now the value of the property is 100k.

This is really stupid; however it is the way the trend is going in lending.  Unfortunately, this kills a great part of doing a Lease Options. One of the things you sell your tenant on is the fact that they can get appreciation and lock in their purchase price.

However, there is an easy way to get around this. You can set the lease option purchase price for at least ten percent higher than what you agreed to (I would suggest going with twenty percent myself). Then you can place contingencies within the Lease Option that gets the tenants to pay off back in line to where they would have been with the original price.

This is where you skills as a communicator are going to come in, because you MUST show the tenant how this works out better for them in the long run. This part can get tricky, so if you need help preparing the numbers correctly, be sure to have a professional look at it to make sure it will work!

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