DFW REI Club

 Dallas/Fort Worth Real Estate Investor Club

Lease with option to purchase

  • 20 Mar 2020 8:10 AM
    Message # 8844701

    Hello Folks,

    Has anyone recently completed a residential lease with option to purchase? Due to the current state of the economy, we are considering this option but have heard the statute is worded in a way can be very litigious to the seller. Does anyone have experience with this?

    We would like to lease the house short term (6-12 months) with a non refundable deposit towards purchase with x amount of the rent each month also going towards the purchase. At the end of the term the leasee would have the option to buy the home which in this case would likely be owner financed. Thoughts?

    Any feedback would be appreciated! Thank you.

    Rhoda Hale

    DTE Ventures LLC

    408.807.1870

  • 21 Mar 2020 10:31 AM
    Reply # 8846856 on 8844701

    Rhoda:

    I have heard lease-purchase deals can get you into a legal problem. I have not looked up the statutes. I believe most people who are doing these deals are OK skirting the laws because the tenant/buyers are not aware of the regulations.

    Here is how I do it:

    I sign a lease with the tenant using the TREC form.  In the special provisions, I put a statement that if the tenant buys the property under a separate agreement with the landlord, the lease will terminate at closing and the tenant will get their security deposit back.

    Next, I tell the tenant (verbally) that they are welcome to buy the house at any time. If they choose to do so, we will sign a contract to sell the house to them at the then current market price. On that contract, we will give them a credit of $1000 plus $100 for every month they rented the house.

    I hope this helps,
      Neil Aggarwal
      Property Financing, LLC

  • 30 Mar 2020 8:26 AM
    Reply # 8866727 on 8844701

    Thank you Neil for your feedback. We decided to pass.


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