I own a house that I'd like to lease with an option to buy. My spreadsheet looks good to me but I wanted to check with you all. I'd like to know if any of you use specific formulas for lease options?

For instance, what's a normal percentage of the monthly payment that goes towards the principal? Say they pay $1000/month. Would $100 of that towards the principal be reasonable? What if they paid $2000/month, could I credit the entire extra $1,000 toward principal reduction?

Also, I understand that for anything under $300,000 the consideration is typically $3000 or less. Is that reasonable?

The purchase price at the end of the lease...what's the best way to calculate this? How do you determine today's price to get the L/O started? An appraisal, comps or current FSBO prices, what would be best?

thanks,

J

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We always make it that there is enough to cover your holding costs of the property and to make a profit.
I think its about making purchase price ie $300,000 now plus 5% per year.
You can credit whatever you like its about it making financial sense for you.
I would have that thing out there for $345,000 if today's price is $300,000
But these are all so over the place its what you negotiate with the buyer.
LO
Jeanine,

It's probably not what you are looking for, but there is so much room within a Lease to Own that it is really up to you and what the buyer agrees to. Nothing in your scenario above looks like it would necessarily present a problem if both of you feel it is a win-win.

Obviously, you would want to not only work with a Realtor that has completed a handful of successful Lease to Own scenarios, but consult with an attorney to make sure you know exactly what you are offering... a few hundred dollars now is a well spent investment to have that peace of mind.

Good luck!

http://www.EZLandlordForms.com
EZ Landlord Forms- State Specific Legal Landlord Forms & Lease to Own Forms - everything you could ever need to effectively run your properties.
Would $100 of that towards the principal be reasonable?
I am not sure about that. But my personal opinion is it should be reasonable. But you can talk about this with any company. This will make many things clear.



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