How much of lease payment should be a credit toward purchase - Posted by Mike Oldfield

Posted by Sean on April 22, 1999 at 20:59:14:

Here’s a simple example: You agree to lease-option a $100,000 resident by paying $1,000 rent a month, 100% credit. For the purchase price you agree to pay for an appraisal on the day you close and that’s the purchase price.

Since under normal circumstances you would be paying PITI we’re assuming that takes away at least 20% of the payment you are making. In other words you are paying $800.00 towards interest and principal and getting a $1000.00 credit.

Sell it to someone else on a contract for deed at 0% interest and you’re still making money.

How much of lease payment should be a credit toward purchase - Posted by Mike Oldfield

Posted by Mike Oldfield on April 22, 1999 at 18:41:51:

I have offered owner of a trailer park the following deal

3 year master lease on park with option to purchase in these 3 years. 10% of the option price in exchange for the option. 25% of market lot rent as monthly lease payment. We pay taxes and other operating expenses from cash flow. Option money to be a full credit toward purchase price. 100% percent pf monthly lease payments to be a credit toward option purchase price.

It looks like she is going to take the deal.

The thing is, I got to thinking about this and it seems to me that with a 100% credit for lease payments toward the purchase price that I have pulled off an interest free loan for three years.

I should wait until the very last day of the option period to excercise purchase.

Thank you lease option pros,

Mike Oldfield

I might be even more ruthless than I thought. Oops! Or maybe Im just a lowly idiot.