WWYD another question

palimpsestJune 8, 2012

I have been approached with a potential Lease-Buy. I know these usually work in the favor of the seller.

All I can see is at the end of the lease period I get it back, they lose the money they put into it, and it's not in the condition I left it to them, and then I try to sell again.

Also I thought because of the circumstances, Lease-Buy offers tended to be strong offers, but this is a weak offer compared to the listed price.

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redcurls

I wouldn't do it unless the the amount they pay is much higher than you are indicating. There should be a significant amount of each monthly payment they would forfeit if they didn't buy within a couple years so it would be an incentive for them to buy! Otherwise, don't fool yourself...it's being RENTED....what you said you DIDN'T want to do.

    Bookmark   June 8, 2012 at 3:23PM
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weedyacres

It's hard to say without having hard numbers. Do you feel comfortable sharing them? Namely:
-asking price
-monthly fees
-market rent

-offer price
-offer rent
-other offer terms (how much of rent towards down pmt, etc.)

    Bookmark   June 8, 2012 at 6:18PM
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palimpsest

This was not a firm lease purchase offer.

But I will say it was more than 20% under listed price, with Rent at market value only.

From what little I know, the offer is supposed to be stronger than what someone would offer with a clear sale and there should be a high enough non-refundable premium in addition to the market rent that goes toward the purchase, that the lessee is discouraged from defaulting.

I turned this one down as it was initially put forth. As redcurls said, she would essentially be renting it with the terms they offered with no incentive to stay.

    Bookmark   June 8, 2012 at 8:48PM
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weedyacres

Yeah, there should be some "extra" rent that goes towards a down payment.

A twist on a "rent to own" would be a lease with an option to purchase, in which case they'd just pay market rent and have the option within a certain period of time to buy it at an agreed-upon price. But it would need to be at a price acceptable to you, which I'm assuming 20% below list isn't. This option is actually more preferable for the buyer, because if the market value goes up they get a good deal down the road, and if it goes down they can not take the option, or negotiate a lower price with you.

    Bookmark   June 9, 2012 at 11:31AM
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