Lease/option: Selling the Seller on the idea - Posted by Billy

Posted by Pascal on April 15, 2002 at 08:20:59:

Paul: The answer to your question is usually ‘YES’, but it can be negotiated into the deal. The owner will usually pay the taxes (deductible), and will want to keep up on the insurance to protect himself. However, it should be a warning that the lease-optionee should also have insurance himself as a renter to protect his belongings. Some owners require lease-optionees to have insurance right in the option agreement.

If you lease a property to ‘sandwich’ it for a profit, don’t forget to make sure your renter has insurance!

Lease/option: Selling the Seller on the idea - Posted by Billy

Posted by Billy on December 10, 2001 at 21:19:04:

I was talking to a Seller tonight about the possibility of L/O her property. She didn’t like the fact that she would still be liable for the property (ie. major problems, repairs). How do I sell her on the idea that it’s a good deal for her too. (by the way, she is selling because she is tired of being a landlord)


Re: Lease/option: Selling the Seller on the idea - Posted by Tony-VA

Posted by Tony-VA on December 11, 2001 at 19:19:42:

It would seem to me that this Seller is ripe for a Lease/Option deal.

Nail her down on it. “Let me make sure I understand you correctly, if I can solve the maintenance/repair concern for you, is there any reason you can’t do this deal today” type approach will set you up for the close.

If she agrees that this is her only objection you are preparing for landing this deal.

Explain that you too have a concern about repairs that might come up on a property you are not yet familiar with. Explain that you assuming such a responsibility could get expensive for you.

Now work in the terms to create a greater profit spread and justify with her own fears.

Take a couple hundred dollars (or whatever you choose) off the monthly payment for taking on the responsibility of making repairs. (Remember, you are going to pass the same responsibility on to your Buyer).

In doing this you create a greater profit spread for yourself (you may even be able to negotiate down that option consideration (if she was asking too much) for assuming the repairs and maintenance.

In a nutshell, agree with her concern. Show her how you can solve it but that you would need a little incentive to do so. Then close this deal and pass the responsibility on to your Buyer as well.

Best Wishes,


Re: Lease/option: Selling the Seller on the idea - Posted by Tim (CT)

Posted by Tim (CT) on December 11, 2001 at 07:35:31:

I have Matt Bowman’s L/O course and in there he suggests that you (as the T/B) should be responsible for all repairs to the home. This will alleviate her concern. If you are doing a sandwich L/O, then when you sign your t/b up, you tell them that they are responsible for all repairs (transfer the responsibility). I think this will work fine for a sfh. Not so sure about a multi. You could have the potential for alot of maintenance issues on a multi. If the homeowners insurance is kept up, any major repairs should be covered by the insurance.

Good luck.

Re: Lease/option: Selling the Seller on the idea - Posted by Pascal

Posted by Pascal on December 10, 2001 at 22:50:42:

Billy, you can show her the financials/tax implications of her selling to you on a lease option. You should understand those well enough, am I right? As far as the major repairs go, have her put a warranty on the home. she can deduct the cost first year as an expense and it will cover all the major systems (roof, water heater, furnace, plumbing, electrical, etc.). You might consider getting your tenant to cover the first $50 of repairs every month by offering him a $50 reduction in the rent – this is not a new idea, everyone does it. In the end, she has told you why she’s selling, now answer her need by making this deal in such a way so she doesn’t have any landlord headaches. Good Luck and keep making offers!

Re: Lease/option: Selling the Seller on the idea - Posted by Paul

Posted by Paul on April 14, 2002 at 10:26:38:

Hello there,

Will the taxes and insurance still be paid by the seller/landloard at least until the option is exercise?