Today we’re talking about why we don’t do lease options as a business model. Actually, the only times when we’re doing short-term lease option is when we’re transferring the deal to medium or long-term owner financing. So we want to compare and contrast lease options vs. owner financing and explain why we’ve chosen the latter.
What is Covered:
- Pro-lease arguments and why they don’t really work
- When having appreciation is not an advantage at all
- Does it make sense to use depreciation for tax advantage?
- What really happens when the deal goes bad and you’re on lease option
- A potential benefit short-term lease option – double dipping
- The benefits of owner financing:
- There is not that much liability when holding notes as opposed to lease contract
- There’s no vacancy in repair with owner finance model, whereas when you get the house back from a lease you always have to do some repair
- You get big down payments so the foreclosures don’t hurt you
- Owner financing is highly scalable
- Con to lease option: from the buyer perspective, you have no control
- Con to owner financing: it doesn’t seem real at first until you cash out the first time
So have a think about these arguments, and email us if you have a question you’d like answered on one of the following Tuesdays.
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