Won,

A lease to purchase can work. There are two sides to every coin though and you need to understand what risk you might be taking.

First, Bill is correct in that you should try and capture at least a sizable down payment so that if the potential buyer decides to back out, you have a sizable nonrefundable deposit of their money to pay for the paint, carpet cleaning and or any repairs that renters or lessors leave behind.

Most lease purchases involve people with bad credit so you need to examine the potential buyers ability to purchase. Have they spoke to a lender already that can issue you a letter stating that in 1 year they would be able to purchase if they pay off their debt and clean up their credit?

I would use a Realtor to orchestrate the transaction that has done lease to purchase sales because you are going to have to negotiate on a price that works for both of you. Attorneys don't do that.

The issue with lease purchases or even Wrap loans carry is that market shift can effect the purchase.

If your home goes down in value even with a sizable deposit the potential buyer might decide to walk away leaving you with two mortgage payments.

If your home goes up in value you may want to increase the price instead of honoring the lease purchase.

We've just touched the tip of the iceberg here.

So many things to think about and that's why you should have an experienced Realtor working with you.

Which ever direction you go, I wish you success.

Sincerely,

Stew Keene
Ph (480) 220-7491
Fax (866) 711 8573
StewKeene@yahoo.com
Keller Williams - Scottsdale, AZ
2008-2009 Master of Real Estate award recipient
ABR, GRI, ePro, CNE, MRE, AHWD

Won,

Great question....

The primary number one concern should be protecting yourself and the best way to do this is to utilize a real estate attorney to draw up your agreement. Additionally, it is critical to get as much money up front as possible. This will serve as a reminder to the buyer why they should honor their committment.

Good luck

Won,

In Arizona a lease to own agreement is typically handled thru a Realtor, we usually do a few of those a year. But it never hurts to consult an attorney and/or accountant if you have other concerns.

There are several factors to take into consideration to protect yourself when doing a lease to own, and they will vary depending on your specific circumstances and what you want to achieve. Those agreements can be very tricky and any overlooked issue can have serious consequences. You need to protect yourself, while following the laws.

Have an expert assist you during the process.

I cannot speak to Arizona law, but I have been involved in several lease purchases throughout my career. My best advice is to make sure you have a qualified person! (Check their credit report, references, etc.) Too many times, someone looks to lease purchases as a way to rent a home they like without any intention to buy. I always like to have an attorney involved in drawing up the contract and terms.
Maryann Lawler, REALTOR
Keller Williams Realty of Greater Manatee
Manatee County, Florida

No matter what have either an attorney or a real estate agent represent you therefore you are within the laws of selling a property in AZ. GREAT question for your own protection.
http://www.lynn911.com http://www.homes-for-sale-dallas.com

Won,

1) I would make sure the tenant is working to repairing their credit, you may want the agent to provide some evidence of this.
2) Purchase contract with a specific close date, usually in a year (or you can lease giving the buyers the option to purchase at the end of the lease for a set purchase price.
3)In most cases an amount of 3-5k down for a non-refundable down payment, to be applied to the balance of the mortgage when the buyers close. (In the event buyer vacates this money stays with you the seller)

If you would like any more ideas, feel free to contact me!

Lucinda