Selling at a Premium on a Lease Option

by Dennis Hocker

A few weeks ago, I ordered William Bronchick's Lease Options Step by Step that JP Vaughan had recommended. Well...here is the story.

Two years ago I dropped out of the corporate world and started flipping houses. As frequently happens, we had one house that just would not sell. I swear that Mr. Murphy lived there because his law was never more true! Several offers fell through for financing, one buyer just disappeared. You know the stories.

One day I was telling our Realtor® about Lonnie Scruggs's workshop and mentioned that I was going to get more information on lease options. The next day she called with a potential lease option candidate. A few days later she called with a second candidate--no advertising, just people she knew.

We just settled the deal. The numbers look like this:

Today's list price: $77,900. We agreed to a one-year option. Rent: $800/month
Strike price: $81,000
Option premium: $2,900
Rent credit: $50/month

If the tenant needs a second year, we have suggested...

Second year option premium: $1,600
Rent: $800/$850
Rent credit: $50/$100
Strike price: of $83,500

Not too bad for a house in which we have about $61,000 invested.

On another house that we are renovating, we had six "rent-to-own" calls in the first three days. We didn't lease option the house, but we did just sign a contract to sell the house. We'll net 18% in less than two months! I guess there is something to this lease option stuff. JP, thanks for your help and prompt response to my request for help.