What Is A Fair Fee For Lease Options? Looking For Insight.

Comments(2)

• 
  pejames24th January, 2004

  Hello Phil,
  Are these numbers acurate for the current mortgage payments? If you have positive cahflow, the next thing to determine is how much cashflow you want from the option and how much you are going to pay the owners. If you are doing a L/O, I would only be paying the owner the mortgage. I hope this helps. Not knowing the numbers before the ones you posted, it is hard to give an accurate answer. I would, however say, those numbers look pretty good if the mortgage is fairly low.
  
  
  
  
  Quote:
  On 2004-01-23 19:13, Pherrejon wrote:
  
  Here is the scenario:
  
  I have become aware of some flexible sellers. I am confident they would be interested in lease options on their properties for a period of 30 months.
  
  The properties will range in cost and cash flow from:
  SFR $150K current price, monthly cash flow $1300
  2 unit: $200K-$250K, monthly cash flow $1600
  3 unit: $275K-$325K, monthly cash flow $2400
  4 unit $350-$4400k, monthly cash flow of $3000
  
  What would be a good number or % as a lease option fee and what would be an appropriate monthly premium?
  
  I do not claim to know the details of lease options, but I believe I possess a fundamental understanding.
  
  This is not an advertisement, but a request for technical understanding. Please advise.
  
  If it matters any, these properties are located in the Chicago area.
  
  Phil

• 
  Kman24th January, 2004

  Jon, I have a few L/O properties. I got them from 'motivated' sellers. Out of state owners or sellers who have had some financial problems. I have asked for terms of 5 years (as a minimum). Any money they have coming will be paid when I get financing for the tenant/buyer. The only thing they get before that is their expenses (mort, taxes,ins,dues,maint) are paid by me. I dont operate on a % basis. My profit comes mothly (the difference between the payment (PITI) and what I charge for rent. For example, if the mortgage payment is $800(PITI) then I will charge $1000 per month in rent. I try to keep a $200 spread. I also require an 'option consideration'. That is usually in the 3% to 5%( of the house value) range. I hope this has helped. I will tell you, I have CHANGED my approach to L/O's. From now on Im interested in 'getting the deed' as v/s a L/O. It gives you MORE control. Good luck