Just ask one question of the buyer and then a couple of follow ups based on their answer. The Question: "Why do you want to do a lease-purchase rather than just buying it now?" Their likely answers:
1. Well, our credit doesn't look that great and we can't qualify now for a mortgage. -- They probably won't qualify in a year or 2 either. They are not worth the risk.
2. We don't have any money for a down payment. -- If they have good credit and enough to pay 2 months rent in advance consider the lease purchase at a rental amount that allows them to apply a portion of the rent toward down payment. If they fail to close within the agreed time frame that additional rent they paid remains yours.
3. We just moved to the area and want to get familiar with the are before we buy. Here you have a tenant, not a buyer.
4. Our home in another state hasn't sold, but we have to start work here next month. As soon as our home sells we'll complete the purchase of yours. -- This one is asking you to take on the risk of their home selling and the strain on their financial resources that could end up hurting you in the future. You'll want to see a lot of their personal financial info and verify local employment before doing this transaction.
As to your question to how you make sure this lease purchase ends up in an eventual sale... A non-refundable deposit of 10% of the purchase price and the agreed upon purchase price below current market value.

Hope that helps.

Dan

Is there Option money on the line? In a true lease option, if the buyer ultimately doesn't exercise their option within a specified period of time then they lose their option money. If the size of the option money is large enough, you'll have a pretty motivated buyer.

I would look into the reasons their unable to purchase at this time and try to assess if that realistically can change so that they are ultimately capable of the purchase.

One of the big risks is the market. If pricing declines further - that's a real expense to you. If prices go up, that's an opportunity cost.

Hope this helps and good luck to you.

The pros -- 1) continued reduction in your mortgage obligation (paid by the buyer) while the market potentially recovers 2) The security deposit belongs to you if the option buyer doesn't purchase (this should cover costs to bring property back to original condition) The cons -- 1) it may not end in a sale in which case the home may need repairs after the option buyer moves on 2) You must go through the sale process again 3)You are now a landlord 3) Lenders may not approve a loan for a mortgage (assuming you have a mortgage on your condo) for another property until your condo is sold !!!

JD,the buyer most likely doesnt have enough for down payment and low credit score,most RTO deals,want 3-5k down and how your atty draws it up they buy end of 2 to 3 yrs and whatever portion of rent going toward purchase.There is no guarantee to end up w/ a sale on one of these.Its an option for you.Good luck

TJ

JD,

There isn’t much you an do to ensure the sale. Make sure all your paperwork is well drafted and try to get as much as possible option money. If they don’t purchase you get to keep option money and that is usually very motivating to the buyer.

Hope this helps good luck!