Want To L/O But They Want To Buy
It is a good problem, but a problem. I am new to L/O and do not know how to handle the situation where they want to buy the property now instead of L/O. What is your criteria or how do you adjust your criteria for purchasing now instead of L/O.
My L/O contract states that they can buy it anytime in the 2nd year of the lease. It also state today's price, which is FMV, but adds 5% annual appreciation, compounded monthly to the price. So I get the appreciation when I sell. Also, I have an LLC for quick flips and my own name for long holds. I have my L/O in my own name and do want the tax benefits of LT Capitol gains and not to be labeled a "dealer".
Brenda
If your lease option says they can't buy until the second year you have a negotitation point. They want the house you wanted to hold for at least a year. Explain to them why you set the lease up this way for tax purposes and the cost effect it has on you by selling now. You should be able to negotiate a higher purchase price with this approach. If you don't want to sell it your choice to say no if the lease is set up like you said.
TBARBER
They have not signed the lease yet. It is house that I just purchased and am getting ready to L/O.
Decide what is best for YOU, then proceed. If they really want to buy the house, they will abide by your decision.
One thing you should always remember, what would YOU do on the other side of the fence? Put yourself in their shoes.
Also, I wouldn't worry about being labeled a dealer if this is your only flip, just make sure that it is. Good Luck!
No one will really be able to answer your question. As said above, it's really your choice if you want to sell or not. If you do, do, if you don't, don't. It's really that simple.
My question to you would be if you don't want to sell, then why use a L/O? Why not just rent the property until you do want to sell? The end goal of a L/O is supposed to be to actually get the property sold, correct?
BTW, you don't get "classified" as a dealer. Each transaction will be evaluated on it's own.
If you are going to be "selling" on L/O's, I'd seriously consider revising (or scrapping altogether) your current contract, as you'll probably have a very high turn-over rate with it.
Roger
rajwarrior, why do you say "If you are going to be "selling" on L/O's, I'd seriously consider revising (or scrapping altogether) your current contract, as you'll probably have a very high turn-over rate with it"???
Brenda