Posted by Rick Wheat on March 15, 2000 at 09:20:41:
A Lease/Option is usually not as attractive to a Tenant/Buyer than a wrap-around mortgage. You’re right, the payments made by the T/B are deductible, and an ownership interest is almost always more attractive than simply leasing with the opportunity to buy at a later date.
One of the only times that might be the case, is when the T/B has just moved into the area, and wants an opportunity to check out a neighborhood before absolutely committing to purchase in it.
On the other hand, a Lease/Option is quite frequently better for YOU, the Seller. With some states, a judicial foreclosure is necessary to regain posession of a property sold and having a mortgage retained. However, with a Lease/Option, it may be as simple as an eviction (which usually takes quite a bit less time).
The reasons I do many more owner financed sales than Lease/Options are these: a) People will pay more to BUY a house (purchase price) with “no qualifying owner financing” that you can offer with a wrap-around; b) the downpayment is usually more for a wrap, because people sometimes have an aversion to putting up large sums of non-refundable money just to rent with an opportunity to close; c) the monthly payments are usually more, since they are tax-deductable and the after-tax implications are better for the buyer than they are for renters; d) the property can usually be sold faster, because “no qualifying financing” attracts buyers like moths to a flame.
Whichever way you choose, the point is to Just Do It! (Sorry Michael J.)