How to Protect Yourself in a Lease Option

If you are considering entering into a lease option for purchase with a buyer, there are a number of things that you need to consider doing in order to protect yourself. Here are the basics of how to protect yourself in a lease option.

Qualify Your Tenants

Do not enter into a lease option agreement without qualifications. You need to qualify your tenants and make sure that they can afford to make payments. You also need to find out if they have filed bankruptcy, been through foreclosure or have had any other serious issues.

Setting Rent

Whenever you set the price for monthly rent during the lease period, you need to make sure that you make a high enough so that the tenants can realistically accumulate the down payment. While they may not like the idea of paying higher rents, you want to charge enough so that they can have a good chance of purchasing the house.

Future Sale Price

Whenever you enter into this type of agreement, you are going to have to set the future sales price upfront. This means that you need to try to determine how much the house could realistically sell for in the future, and set the price at that amount.

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