Original message
| Vlad
  |  "Lease Purchase Question"
, Tue 3 Oct 19:20 
I understand some of you like and use the technique, Lease-Purchase, and some do not.
My question is: since you cannot guarantee that you're going to exercise your option, are you not worried that the seller will be highly p.o. if you don't buy.
I do not feel comfortable doing a deal if I cannot guarantee the results.
Any comments would be appreciated. If I missing something please help me.
Vlad
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Replies:
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| lynnhahn
| "Re(1):Lease Purchase Question" , Tue 3 Oct 20:47
The longer term that you negotiate, the better chance that you will be able to close. We have done several in the last few months for 12 months with the option to renew five times. This in essence gives us six years to move the property.
If you have not sold the property and you are getting down to the end of the term then hopefully the property has appreciated enough that you can buy it yourself or sell it quick at a discount.
Let's assume that you have a 5% appreciation rate in your area, and you get a six year l/o on a $100,000 home. Your option price is $90,000. Six years later the home will be worth $134,000! You now have a $44,000 spread to play with for a quick sale.
When we have that question from sellers we explain to them that it is not likely, but a definite possibility that we wouldn't have the property sold by the end of the term. We also explain to them that they would have complete control. They can have the property back (appreciation and all) or considering that we have taken care of the property and paid them timely for six years, they could also renegotiate with us to do it again.
A great response is to convert them to owner finance with a balloon payment in XX years. It gives them that warm and fuzzy feeling, but actually it doesn't give them any better guarantee than the l/o because you are in the same boat if you don't have the property sold by the time the balloon comes due. It gives you the advantage of principle pay down and depreciation.
Happy Investing!
Lynn 
Those who say it can't be done are usually interrupted by others doing it!
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